KUALA LUMPUR, Sept 30 — Malaysia today made a major breakthrough in economic ties with Saudi Arabia, setting up a US$2.5 billion joint-venture company with the oil-rich kingdom.
The company is expected to spearhead flow of foreign direct investments (FDI) from the Middle East into Malaysia as well as make strategic investments in high-impact projects here.
The partnership between Malaysia Development Berhad (1MDB) and PetroSaudi International Limited (PSI) also comes at a time when the global economy is recovering and countries are in great competition for FDI.
This venture is the first undertaken by PSI in this region and will be read by analysts and government officials as a sign of confidence in Malaysia and economic prospects here.
The 1MDB is wholly owned by the government of Malaysia and was established recently to drive strategic initiatives for long-term sustainable economic development and promote flow of FDI into the country.
PSI, based in Al-Khobar, Saudi Arabia, is mandated to carry out investments which can strengthen the relationship between the Kingdom of Saudi Arabia and key countries worldwide.
In a joint press release, the 1MDB and PSI said that the aim of the joint venture company is “to seek, explore, and participate in business and economic opportunities which results in the enhancement of and promotion of the future prosperity and long-term sustainable economic development of Malaysia.” It is also expected to actively make investments in the renewable energy sector.
The JVC is also expected to be a vehicle for investments from the Middle East into the region, thereby giving Malaysia the edge in drawing investments from the cash — and resource — rich region.
PSI’s Chairman HRH Prince Turki Bin Abdullah Bin Abdulaziz Al-Saud said: “Malaysia has long been a model of stability and development for developing countries. We believe that recent economic liberalisation policies announced by the Prime Minister will only make Malaysia a more attractive place for investors.
“We envisage Malaysia becoming an important partner for the Kingdom of Saudi Arabia.’’
Also lauding the setting up of the JVC was 1MDB’s chairman Datuk Mohd. Bakke Salleh.
He said: “The JVC is set to further increase foreign direct investment from the Middle East, in particular Saudi Arabia. We will leverage on PSI’s strong international presence, their networks and expertise to promote Malaysia as the preferred investment destination.”
This is the first major economic initiative with a Middle Eastern nation since Datuk Seri Najib Tun Razak became the Prime Minister in April.
Several countries in the region, notably Singapore, have been courting Middle East investors in recent years.
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