KUALA LUMPUR: The Malaysian Investment Development Authority (Mida) is currently reviewing some 42 applications involving RM812 million worth of projects for the second batch of the Domestic Investment Strategic Fund (DISF).
Its chief executive officer, Datuk Noharuddin Nordin, said those who applied would be subjected to a very stringent vetting process and only those who met the objectives of the fund, would get it.
“More importantly, it is not just about disbursing the money but making sure that the DISF generates the impact as desired by the government.
“We are hoping that if this programme works, we can then go to the government and ask it to be extended to 11th Malaysia Plan. However, we need to show results first,” he told Bernama in an interview here.
He said some of the mistakes made by most companies that applied during the first batch was to think that the DISF was a start-up fund and could also be used for normal expansion.
“One of the criteria for DISF is that the company needs to invest using their own money first,” he said.
However, some of these companies were not investors, he added.
“The second reason is some of the applications do not match the goal of DISF which is to upgrade technology and capabilities of the company so that they can become a part of global supply chain,” he said.
Some the previous applications were merely for the normal expansion of a company, Noharuddin said.
“We believe that there are many companies that can take advantage of this fund but my advice to them is to understand carefully what DISF is all about,” he said, adding that this was specially relevant to companies that had already invested.
The second thing, he said, was to understand that this fund, for example, could assist them acquire technology, train their people so that they could match the standard of the global value chain or if they needed certain certification to be part of the global value chain.
“We don’t want our local companies just to be local heroes. We want them to be relevant to global value chain and this is not easy as they will face challenges in terms of capacity and technology so we need to assist them to upgrade themselves,” he said.
At the moment, not even a quarter of the RM1 billion DISF has been tapped with the full amount expected to be fully untilised by end-2015, which is also the last year of 10th MP, he said.
To date, Mida has approved some RM220.5 million under the DISF for 36 projects.
It is believed that the successful applicants for the second batch of the fund is likely to be announced before the year-end.
Meanwhile, Noharuddin said, the encouraging growth number of domestic direct investments (DDIs) since last year was not only contributed by the launch of DISF but also continuous effort by Mida in recent years.
“While the incentives and new incentives and support given by the government would encourage more domestic investment the impact is more in the nature of investment rather than total value of investment.
“(It is) because the idea behind the new incentives was to encourage Malaysian companies to be part of the global value chain, in other words to be part of the high value-added activities, so it does not really translate into total investment but rather strategic investments,” he said.
Noharuddin said with the bulk of DDIs still very focused on the services sector, like real estate, hospitality and tourism, transportation, utilities, and telecommunications, the investment promotion agency also wanted to see more DDIs in other value-added activities.
He said this included sectors that could contribute to improving the life of humanity in the future like advanced electronics, green technology and aerospace industry.
On the ratio of DDI to total investment, Noharuddin said, the focus would be mostly DDI, with a consistent contribution of DDI of an average 70 per cent of total investment every year after 2020.
Under the Economic Transformation Programme, the government has targeted that DDIs will account for 70 per cent and the rest from foreign direct investment, of the total investment, by 2020.
At the moment, the ratio of DDI was not consistent with 56 per cent in 2011 and 78 per cent in 2012, he said.
On whether the negative rating by Fitch Ratings could affect Malaysia’s reputation as investment destination, Noharuddin said, that would only affect portfolio investors but not necessarily direct investors.
“For MIDA, we are wooing direct investors. There are differences between the two. Direct investors are those who invest in assets, activities and projects.
“As far as direct investors are concerned, they will do their own due diligence as to whether Malaysia is a good location for them. In that context, as long as we ensure that our ecosystem is attractive to direct investors, then we are good,” he said. — Bernama