Malaysia - Bilateral ties grow as large South Korean investments flow in

MALAYSIA is still very much the preferred choice for South Korea enterprises.

Major South Korean firms are continuing to make significant investments with bilateral trade also set to pick up the pace.

South Korean ambassador to Malaysia Lee Yong-joon says joint trade volume grew 6.7% to a record US$16.7bil (RM50.93bil) last year.

“In 2011, investments from South Korea totalled US$1.7bil (RM5.18bil) and this was the second largest foreign investment in Malaysia that year.

“We are expecting another favourable year with Malaysia this year as big South Korean names, led by Samsung, continue to show their commitment by reinvesting large amounts here,” he tells StarBizWeek in an interview.

Lee says Samsung Electronics has to-date invested US$1.3bil (RM3.96bil) in Malaysia, adding that South Korea’s flagship brand continued to be very popular in Malaysia with its LCD (liquid crystal display) and LED (light-emitting diode) flat TVs and other electronic products.

Samsung Electronics maintains one of its largest overseas operations in Seremban, employing 6,000 workers in Malaysia. Samsung’s second plant is in Klang.

The envoy says Samsung was constructing two other factories in Seremban to produce rechargeable batteries and solar energy glass panels, with an investment of about US$1bil (RM3.05bil).

He cites Lotte Group’s purchase of an existing petrochemical plant of Titan Chemicals in Johor as another major breakthrough, adding that the group had invested US$1.5bil (RM4.57bil) via its subsidiary, Honam Petrochemicals.

“Lotte could be poised to overtake Samsung in terms of investments in Malaysia,” he adds.

On other developments, Lee says conglomerate OCI Group was also building a factory in Banting, Selangor, to produce metal silicon.

South Korea’s CJ CheilJedang Corp and France’s Arkema SA were working on an RM2bil joint-venture to build the world’s first bio-methionine plant to produce animal feed in Malaysia, he adds.

The plant together with Asia’s first thiochemical platform, considered the country’s largest industrial biotechnology investment to date, is being built on 70ha in Terengganu’s Kertih Polymer Park in the East Coast Economic Region’s special economic zone.

“The plant is expected to begin operations by year-end,” Lee discloses.

The plant will have a production capacity of 80,000 tonnes per annum. Methionine is a primary protein amino acid which is used in animal feed additives, food additives, flavour enhancers and artificial sweeteners.

The envoy says Pohang Iron and Steel Company, the world’s fourth largest steel maker, was also eyeing further investments after its acquisition of a steel firm in Klang in 2008, which was the company’s first South-East Asian venture.

UBcare, a subsidiary of the famed SK Group of Companies, is the latest from the republic to establish its regional office in Kuala Lumpur.

UBcare is engaged in the provision of healthcare solutions and mainly provides four categories of healthcare solutions.

Last month, UBcare (M) Sdn Bhd managing director Rou Jong-hyub led a team of 18 officials picked from the Malaysian healthcare sector on a familiarisation visit to the SK Group headquarters in Seoul and to the group’s other facilities.

“We see great potential in the Malaysian market in advanced healthcare facilities as the sector is being given greater emphasis by the Malaysian Government and private hospitals,” Rou says.

Hyundai Rotem Co is also among 28 companies pre-qualified by Mass Rapid Transit Corp Sdn Bhd for six MY Rapid Transit system work packages. These companies were shortlisted from a total of 51 submissions.

The six work packages include electric trains, depot equipment and maintenance vehicles, signaling and train control system, platform screen doors, power supply and distribution system and track works.

On another note, Lee believes more South Korean companies would invest in Malaysia if the price of electricity and gas stabilises here.

“The price of electricity here is more expensive than in South Korea but our companies still come here due to the lower price of gas. What if the price of gas too increases?” he asks.

Lee says South Korea would also focus on the greentech sector in Malaysia, and its pursuit for a contract to build a nuclear power plant here.

PAUL GABRIEL

The Star

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