His visit did offer him a chance to immerse himself to the local culture as he sampled goreng pisang (banana fritters) and visited famous attractions such as the National Mosque and Jalan Bukit Bintang.
As his understanding towards Malaysia grew during his visit, so did his interest to cement a robust and engaging two-way economy. This was evident when the historical visit ended on a sweet note as both governments had the chance to sit down together in various meetings to discuss and execute commercial and government deals.
The U.S. was Malaysia’s 4th largest trading partner in 2012 with the U.S. goods exported to Malaysia valued at USD 12.8 billion, while U.S. goods imported from Malaysia totalled USD 25.9 billion.
According to Bank Negara Malaysia, the U.S. continues to have the largest stock of foreign investment in Malaysia, totalling USD 2 billion in 2013, and was the third largest source of new actual investment in 2011 and 2012.
Corporate giants ink deal for growth
President Obama’s visit to Malaysia served as an assurance for both countries that our cultural variances will not stop us from growing parallel towards our economic goals.
Though his visit would be the first in Malaysia by a sitting U.S. president since 1966 by former president Lyndon B. Johnson, American companies have long contributed to Malaysia’s development goals throughout its stages of economic transformations, to the benefit of both national economies.
General Electric (GE), for example, is one such US company whose presence in Malaysia since 1975, has grown from a small sales and service centre into becoming an integral part of the local business landscape.
Today, many deals have been set in motion with the recent being a signing of a Memorandum of Understanding (MoU) between AirAsia X, the long haul, low fare airline affiliate of the AirAsia Group and GE.
The MoU presided over the selection of CF6-80E1 engines to power AirAsia X’s 25 new firm Airbus A330-300 aircraft, with options for an additional three A330 aircraft. The list price for the engine order is valued at close to USD 1.5 billion.
The signing of the MoU was made extra special as President Obama was at hand to witness the occasion during his short stay to Malaysia. Coincidentally, the new engines that will power Air Asia X’s new fleet comes from the same family of engines used by the Air Force One, the USA’s Presidential aircraft.
AirAsia X chairman, Tan Sri Rafidah Aziz, was confident over the decision which was based on GE’s technical reliability, fuel efficiency performance and combined competitive pricing.
“This move will ensure AirAsia X in maintaining their competitive advantage as the world’s lowest unit cost airline operator, with industry-leading reliability performance,” she says as AirAsia Group long-standing relationship and track record with GE grows stronger by the day.
Once such momentum has been set in place, expanded trade and investment between both countries creates a win-win situation that goes beyond economic benefits to aspects of sustainable development and innovation, says GE CEO Stuart Dean.
“It will attract more technology to Malaysia in keeping with its energy policies to increase efficiencies and alternative energy,” he opines.
Such is apparent on the downstream as GE Engine Services Malaysia Sdn Bhd (GEESM) is one example of how foreign corporation involvement contributes to the growth of Malaysian supply chains.
GEESM provides maintenance, repair and overhaul (MRO) services for aircraft engines; servicing over 30 airlines and employing more than 250 employees in Malaysia.
Its operations support the employment of workers in 156 local manufacturing companies which form a part of the domestic supply chain and a total of USD 1.8 million was invested in purchasing materials from local suppliers in 2012.
Fostering cross border ties
On the flip side, a free trade agreement (FTA) plays an integral role for Malaysia to continue gaining access in the international market as the existing domestic market of 29.5 million people and a GDP of USD 300 billion is small compared to a potential market of 792 million people currently living in Trans-Pacific Partnership (TPP) countries.
As a country exporting USD 17 billion worth of goods and services, the success of TPP creates greater access for Malaysia to the American region, with additional trading partners such as the U.S., Canada, Mexico and Peru.
The American Malaysian Chamber of Commerce (AMCHAM) through their AMCHAM: ASEAN Business Outlook Survey 2013 highlights that U.S. companies remain optimistic about business prospects in Malaysia and ASEAN, with 78% of a total of 475 senior executive respondents projecting a positive profit outlook in 2014; 72% of respondents expect business expansion; and 75% expect workforce expansion. Additionally, Malaysia was ranked the 2nd best destination in ASEAN for expatriates.
With the ushering in of a new era of partnership, this is a golden opportunity for both Malaysia and the United States alike. As the two nations forge ahead together, maximising cooperation on the basis of comparative advantage, one can expect great things to come, both now and in the future.
Top Image: President Barack Obama and Prime Minister Najib Razak preside over a business event in which executives from three U.S. firms, General Electric, Verdezyne and MetLife, announce new investment deals with Malaysian companies, at the Ritz-Carlton in Kuala Lumpur, Malaysia, April 28, 2014. Official White House Photo by Pete Souza