4 Ways to Keep German-Malaysia Trade Ties Growing

"It's the red tape, the administrative hurdles, the intransparent (business registration) processes...Our members are 80% SMEs. They're very risk averse, very sensitive to changes and risks in their environment." - Daniel Bernbeck, CEO of the Malaysian-German Chamber of Commerce and Industry (MGCC) listing the concerns of German companies that Putrajaya should address to ensure Malaysia remains Germany's top trading partner in ASEAN.

With more than 700 German companies doing business in Malaysia, Daniel highlights 4 key areas where Putrajaya should improve to strengthen business ties with Germany - and keep foreign direct investment flowing into Malaysia.

1. Make business easier to conduct

Bernbeck thinks Malaysia has come a long way in streamlining registration and renewal processes for new and existing German companies to do business in the country. But he urges Putrajaya to cut the administrative hurdles and red tape that German companies still have to deal with.

"Malaysia has come a long way to also look at Singapore to see how they do it. But still, companies face issues. Sometimes they don't understand why things aren't moving, why they don't get replies to their e-mails, why there's nobody picking up the phone, why applications are rejected without reason. The only thing we can tell them is, 'just reapply', and then they reapply with the same documents and it gets approved. So it looks like it's not really predictable, not really transparent," Bernbeck observes.

2. Ensure English proficiency among the workforce

The MGCC CEO cites Malaysia's system of law as an advantage that allows German companies to easily navigate business regulations. "What Malaysia has to offer are fundamental aspects that are really positive...(such as) a common law system that Europe is familiar with. And that's not the case with competitors like Indonesia, Thailand, and Vietnam. German companies and investors in Vietnam are reporting difficulties with understanding the rule of law in the country," Bernbeck noted.

On the flipside, he says that the government should invest in boosting English proficiency among the population to attract and facilitate business with foreign investors. "Malaysia should put a lot of focus on keeping up good English language command in the population, because that is absolutely crucial for being competitive, being approachable and open to foreign investors," he stresses.

3. Improve digital infrastructure

Bernbeck goes on to add that Malaysia needs to strengthen its digital infrastructure, especially in areas like internet connectivity. "Of course, infrastructure (is important) - (like) 5G. We have to be stronger and faster in internet connection. In Malaysia it's strong, but it needs to stay strong and go into the next generation of internet infrastructure."

4. Properly equip the workforce with the necessary experience

Finally, Bernbeck urges Putrajaya to focus on upskilling Malaysia's workforce, especially in terms of vocational training. While the government has invested RM6 billion in the national Technical and Vocational Education and Training Program (TVET), he argues that it falls short of equipping fresh graduates with the practical skills they need.

"(TVET is) mostly a train and place (model). They're being trained offsite, somewhere in a school. They have no idea what real work looks like, they haven't been part of a workforce. They look at the door of a factory, and they're asked 'what do you know?' Then they hold up a certificate, but they have to start from zero," says Bernbeck.

He adds that MGCC is willing to help Malaysians upskill through its own program, given that many local businesses are reluctant to train their employees due to cost concerns. However, he says that Putrajaya is unwilling to bear the cost for MGCC's initiative. "Our model is cheaper for the government (versus TVET). But they haven't been willing to invest a single dollar into it. Our program has been proven much more successful when it comes to high quality, high tech, forward looking, and Industry 4.0 jobs. So participants are mostly (foreign) companies. The majority of (Malaysian) SMEs aren't tapping into it, because it's simply costly for them," Bernbeck shares.

Listen to the full podcast with Daniel Bernbeck below.

Written by Hezril Asyraaf, edited by Shawn Tanis and Sara Kok.