Connecting globally and Matrade’s role

By Stephanie Jacob

Matrade is one of the main agencies responsible for encouraging and supporting local companies looking to go global. Kinibiz speaks to Matrade’s CEO to find out what its role in the process is, and why going global is good for Malaysia.

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Given the size of the Malaysian market, it is imperative that local companies venture overseas, said Malaysia External Trade Development Corp (Matrade) chief executive officer (CEO) Wong Lai Sum.

“Companies have to go overseas In the world of business today, you cannot remain in the country and expect to maintain your competitiveness,” Wong emphasised.

Furthermore with a market as small as Malaysia’s, companies have little choice but to go abroad, she added.

Expanding overseas can be done through various ways. These include  by establishing new operations overseas; collaborating or having joint ventures with strategic partners abroad; or by exporting products from Malaysia.

Matrade is a facilitator

In any of these instances, the Ministry of International Trade and Industry (MITI) and its agencies like Matrade and Malaysian Investment Development Authority (Mida) believes in encouraging the efforts of local companies in their pursuit of foreign expansion.

But Wong said that they try to do more than just provide encouragement. She explained that “our role is to be a facilitator. We connect companies, sort of like marriage partners – if you will. And hopefully we find the right chemistry (between local companies and foreign partners).”

The CEO said that as facilitators, Matrade seeks out high value clients for Malaysian companies looking to export; or identify good partners for them if they are looking to collaborate or form joint ventures.

Matrade aims to help Malaysian companies establish sustainable connections, said Wong. “We seek out good partners, so that it can be a sustainable type of collaboration and not just another memorandum of understanding that will not lead anywhere,” she emphasised.

How the agency helps those going global

The decision to go overseas is one that must be made by the company itself. And there are several factors that a business owner must consider before making that final decision, noted Wong.

A company must ask if there is a business case that warrants its expansion into foreign markets. Next, the owner must believe that the move will enhance its position locally. And finally, the company must have the right people to staff and run the new operations.

It is only after this evaluation has been made and a final decision has been reached by the company, that Matrade comes into the picture, said Wong.

“We provide them with the scenarios, for example what is the tax regime in that country. Or would it be better if they entered into a partnership with a local organisation or body – will that help or hinder them? Our job is to present them the facts and open doors for them when they need to meet up with contacts,” explained Wong.

Matrade does this by running numerous programmes such as expos, specialised marketing missions and direct communication with buyers.

The agency also has a publication that showcases new technological products that Malaysian companies have to offer – this is sent directly to buyers or industrialists who are manufacturers or distributors, who might want to source the product.

FTA’s help and protect Malaysian companies

Companies can also use free trade agreements (FTA) to improve market access in countries with which Malaysia has such partnerships with, said Wong.

Businesses can use the agreements to improve trade conditions when venturing into those markets, the most obvious of which is obtain lower the tariffs on the products they are exporting.

FTAs are also beneficial for trade facilitation, as they can be used to deal with restrictions faced when they venture to that specific country.

For example, companies facing issues with the customs department of the other country can call rely on clauses within the agreement to overcome those problems quicker, said Wong.

Going global benefits Malaysia too

There are concerns that an increase in investments overseas by Malaysian companies might result in a lack of investment locally.

But Wong believes that “it is not really a concern, because trade is always two ways…if money is going out for doing business abroad, then that will have to happen. However what is important is money gets to be repatriated back into the country and this will create more businesses within the country.”

Using the the growth stories of multinational companies (MNC) as examples, Wong highlighted that these businesses grew to such a size by venturing overseas, and not merely staying in their home markets.

Wong pointed out that the MNCs growth was achieved by growing linkages across the various markets. She added that there are many Malaysian companies who have done this successfully, such as Sime Darby Bhd and Khazanah Nasional Bhd.

It is the linkages with their sister-companies abroad which help strengthen the groups as a whole, she said.

Wong said even when companies have their factories overseas and source material from foreign markets, Malaysia can still benefit from the success of these businesses.

“Often the patent is owned by a Malaysian, the services are rendered by Malaysians and so is the expertise. So when these companies make profits, it is then repatriated back into the country,” she pointed out.

For its part, Matrade also works with companies who have secured major projects overseas, to see how there can be spillover effects for local businesses.

For example, the agency works with Malaysian property developers or construction companies with big overseas contracts, to encourage them to consider tenders from local companies when sourcing for materials.

She emphasised that Matrade does not expect special treatment for local companies. Rather they ask for them to be given the opportunity to participate in the tender for the projects.

It is then up to the local companies to ensure that they are competitive enough to secure the deal.

Malaysian companies have cornered markets globally

The Matrade chief is keen to point out that many Malaysian companies are more than competitive enough to take advantage of opportunities that come their way.

For example in Uganda, people refer to all furniture products by a single brand name, and which is a Malaysian one. Wong explained “like how we refer to all toothpaste by a brand name in Malaysia, the Ugandans all refer to furniture using the brand name of a Malaysian company.”

Wong said she believes that there are many brands that can stand on their own and even corner entire markets overseas. And Matrade’s goal is to continue to encourage and push them to go global.