Your Excellency, Monsieur Axel Cruau, Ambassador of France in Malaysia
Datuk Zainal Amanshah, Honorary Chairman, CCI FRANCE MALAYSIA (The Malaysian French Chamber of Commerce & Industry)
Richard Fostier, President of CCI FRANCE MALAYSIA (The Malaysian French Chamber of Commerce & Industry)
Good evening,
Let me begin by thanking the Malaysian-French Chamber of Commerce and Industry (CCIFM) for inviting Yang Berhormat Senator Tengku Datuk Seri Utama Zafrul Tengku Abdul Aziz, the Minister of Investment, Trade and Industry Malaysia to deliver a speech at the CCIFM Gala Dinner 2024. Unfortunately, he is unable to join us tonight and has asked me to convey his warmest regards to everyone present.
I am glad to share that Malaysia and France have built strong trade and investment ties over the past decades. Last year, France was ranked as Malaysia’s third largest trading partner within the EU, with total trade amounting to RM16.72 billion, accounting for about 8 per cent share of our total trade with the EU. French investments into Malaysia are very diverse, ranging from E&E, infrastructure, aeronautics & defence, manufacturing, retail and services sectors.
I am also very pleased to learn that about half of the 600 French companies present in Malaysia are actually built by French entrepreneurs who started their operations in Malaysia. Some of them are here today and we would like to thank them for choosing Malaysia.
Making Malaysians and the people of ASEAN richer
As we celebrate the very close economic partnership between Malaysia and France tonight, the world is watching how Americans will vote tomorrow. Whether it’s Donald Trump or Kamala Harris, we can safely assume that the United States and the world are unlikely to revert to the old free trade agenda of unfettered capitalism and trickle-down economy.
In Europe and in the United States, inequality has fueled the rise of right-wing populism. French voters certainly had a taste of right-wing surge during the European Parliament election and the French election this year.
I believe we have a collective responsibility to ensure that societies are more equitable to prevent populism from gaining ground here in Malaysia and in this region.
Since the end of the Second World War, successive Asian economies have grown rich by mainly exporting to the United States. However, with the shrinking of the American middle class, that assumption is not going to work any longer, whether Trump or Harris is elected.
The world can no longer view the United States as the importer of the last resort, and has to create more markets beyond the United States consumer market. To create a market, we need to first create consumers. To create the consumers, we need to make them rich enough and feel secure enough to consume.
We all have a mission to make Malaysians and the people of ASEAN richer. ASEAN has a population of 670 million. Assuming that in 15 years with 800 million people, half of them, or 400 million people, living a middle class life and consuming as such, the future ASEAN middle class would be the size of the current China’s middle class.
While the world currently relies on the United States, Europe, and China to consume the goods and services produced globally, we should be brave enough to envisage a world with a few more consumer markets, namely ASEAN, South America, and the Middle East and Africa.
To create these markets, the French companies in Malaysia or ASEAN will have to pay better salaries to Malaysian workers and the workers in the ASEAN region to enable them to become middle class. In exchange, the French companies benefit by creating a market for their products outside the United States, Europe and China.
I am also asked by the organiser to address the question of the global minimum tax (GMT). I hope French companies will be at the forefront in welcoming the Global Minimum Tax.
GMT works in such a way that if a French company is not paying income taxes in Malaysia, the home country, in this case France, will have to collect 15% taxes from the said company. The objective of GMT is to ensure that countries do not compete to race to the bottom in terms of offering tax holidays to multinationals.
If we are serious about creating middle class markets outside the United States, Europe, and China, Malaysia and ASEAN governments will need to collect enough taxes from multinational companies to pay for health care, aged care, child care, and public security of their respective nations so that their people will remain healthy for work, and feel emotionally and physically secured, therefore comfortable to spend as consumers.
In this context, the Malaysian government, as announced by Prime Minister Dato’ Seri Anwar Ibrahim in his capacity as Finance Minister during his Budget 2025 speech that a New Investment Incentive Framework will be drawn up to ensure that Malaysia only incentivizes investments that fulfill the National Investment Aspirations.
Gone were the days when all sorts of foreign direct investments would be given blanket incentives. Malaysia wishes to be more selective in giving investment incentives.
But the most important incentives Malaysia has given to investors are actually the intangibles: political and societal stability, a very capable multilingual workforce, good infrastructure, and rule of law.
Therefore, in a much more volatile and unpredictable world, I know we can count on the French business community which is generally less susceptible to Milton Friedman-type neoliberal economic view, and I sincerely hope that the French business community in Malaysia will work with us and the people of ASEAN to create a prosperous community and a middle class society for the benefit of the world.
Thank you, members of the Malaysian-French Business Community. Let’s work together to build stronger ties between Malaysia and France, not just in business but also in culture and people-to-people relationships.