This article first appeared in The Edge Financial Daily on February 2, 2018

KUALA LUMPUR: Even in the face of mounting competition from its Southeast Asian neighbours, the majority of Swedish businesses in Malaysia have a positive outlook on the future of investments in the country and plan to expand their business operations here in the long term, according to a survey by the Swedish Trade and Invest Council, more popularly known as Business Sweden.

Of the 46 companies who participated in the survey, 74% of those polled plan to invest more in their business operations here. In contrast, only 4% intend to decrease their exposure or leave the country, while 22% want to maintain their business here. Over 59% of the survey’s participating companies are large industry leaders with annual global turnovers of over €50 million (RM242.7 million).

“They (Swedish companies) see Malaysia as a good entry point to Southeast Asia,” said Swedish Ambassador to Malaysia HE Dag Juhlin-Dannfelt in a recent interview with The Edge Financial Daily. Singapore is regarded as the No 1 Southeast Asian destination by Swedish companies, but Malaysia comes in as a close second, followed by other countries in the region, he said.

“A lot of companies could go either way (Malaysia or Singapore). It’s close. Many tend to follow where everyone else is going and Singapore has a good reputation. But when you look at the business climate, I’d say probably 50-50. Finance tends to be Singapore’s edge. Otherwise you’d come here, because cost is lower ... IT (information technology) is [also] a new trend here, so we see a lot of [Swedish companies] developing and selling into the region wanting to come here,” said Business Sweden’s Trade Commissioner in Malaysia, Carl Malmqvist, who was also present at the interview.

And it helps that the ease of doing business has improved, like the time it takes to set up a business, which has become much shorter, noted Malmqvist, who has been in Malaysia for over eight years. “The troublesome part is not so much government [red tape] but rather the banks. But that’s a global problem, not just in Malaysia. There’re a lot of regulations and paperwork. Setting up a company here, that’s easy,” he said.

As for the ambassador, who has served 22 years in the Middle East before coming taking up his role here in September 2016, he has very few complaints about Malaysia.

“If I compare Malaysia with all other countries where I have served, I must say I’ve never been in a country where there’re so few complaints, though we also take into consideration the number of companies present. I think my impression is that when issues are being raised, there are people who listen to the complaints and take them seriously. It’s not always that the complaints are well deserved — for sometimes some people’s expectations are too high or exaggerated. But when there is reason to remedy a situation, our sense is that the Malaysian authorities do take the situation into account,” said Juhlin-Dannfelt.

The ambassador first set foot in Malaysia 32 years ago, when he was backpacking around East Asia before deciding to take up his law degree and apply for foreign service. Among the countries he visited during that seven months of travelling, Malaysia, which he said had an “astonishing number of Volvo cars on the road then”, made the strongest impression on him with its friendly people and untouched natural beauty.

“After my tour, I’ve always wanted to work in Southeast Asia, but whenever it’s my turn to rotate, there was never any vacancy in the region, so I ended up working in the Middle East for a very long time,” he said.

But he never forgot how much he liked Malaysia and his positive image of the country was reinforced when he was on duty in Pakistan and managed to take a three-week vacation with his family here in 2002. “Finally, during the end of my posting in Saudi Arabia [in 2016], I saw Malaysia was up for grabs and the country was my No 1 choice,” Juhlin-Dannfelt shared.

The Swedish embassy reckons there are over 90 Swedish or Sweden-linked companies, excluding one-man companies here. As at September 2017, the Malaysian Investment Development Authority had approved a total of 126 manufacturing projects with Swedish participation and investments worth RM2.7 billion. Foreign direct investment inflow from Sweden, from 2012 to 2016, amounted to about RM606 million.

Still, the ambassador acknowledged that no country is perfect, and that Malaysia has its fair share of challenges to overcome. In terms of doing business, he thinks it will be good if there’s more transparency.

“With business it’s always good with transparency, so that you know you have a legal system that allows for predictability; to have in all interactions with the public authorities or state controlled companies, a maximum sense of transparency, [so that] companies can foresee the rules that will prevail when choosing to make an investment. This is what we strive for in Sweden and also within the EU (European Union), because with full transparency, everyone knows what’s going on, what rules to follow, and it minimises the risk of misunderstanding,” he said.

Cutting down on the red tape would be great too, said Malmqvist. “Red tape and changes in policies, those are a big problem. Visa handling takes a long time — those things are actually more troublesome than corruption,” he added.

Still, red tape and lack of transparency can be some of the things that can lead to corruption. “There could be a connection,” Juhlin-Dannfelt acknowledged.

Interestingly, the survey showed corruption was seen as the main obstacle to business growth in Malaysia, with 41% of Swedish companies polled choosing that, though only 11% reported exposure to some kind of corruption in 2016. Bureaucracy was the second main issue, which was selected by 37% of respondents. These are typical issues for emerging markets and are not unique to Malaysia, said Malmqvsit.

“It (corruption) is a tough beast to tackle. I work in the whole region and I would say Malaysia is really good compared to others. This is very important to highlight because you can’t take Malaysia out of the context of the region. Everyone looks at Singapore, but it’s a city state, easily controllable. If you look at the Philippines, Indonesia, Vietnam, and Thailand, then you see Malaysia has limited issues. That’s what companies see too and why they choose Malaysia and not other countries. There are issues here, but there are issues in Sweden as well,” said Malmqvist.

“Lack of transparency allows certain behaviours that are not necessarily compatible with higher ethical standards. That’s a problem in vast parts of the world, and we certainly would not claim to be perfect. As Carl [Malmqvist] said, it’s a continuous struggle [everywhere],” said Juhlin-Dannfelt.

Obstacles aside, a particular issue the ambassador said Malaysia faces pertains to climate change, global warming and the increased need for businesses to adopt sustainable practices.

“Malaysia is, together with Indonesia and Brazil, custodian of the last green lungs of the world ... There is a growing sense of the need to properly care for natural resources. But still, from what I’ve heard, seen and read, about Fraser’s Hill and the Cameron Highlands, the deforestations ... There are challenges. We really hope there will be a sense of proper custodianship of the blessings this country has,” he said.

On that note, he said Sweden is keen to share its experience on the issue of sustainable business at the second Sweden-Southeast Asia Business Summit, which Kuala Lumpur is hosting this year at the JW Marriot Hotel Kuala Lumpur on Feb 6 and Feb 7. The business summit aims to provide a platform for Swedish, Malaysian and regional businesses to gain insights from industry peers and policy experts, as well as to connect with potential partners.

Malaysia, he said, is a very promising country that is eager to move on to the ladder of development and increasingly takes responsibility for the actions it takes. These are the “basic preconditions for long-term viability and competitiveness”, he said.

This is going to be the theme for the upcoming business summit the embassy is arranging, he said, “because tommorrow’s commercial winners are those who will manage to become sustainable, to limit the negative impact of their activities on nature”.

He cited Malaysia’s uncommonly cold weather recently and the extreme weather changes seen in many parts of the world in the past few years, including Scandinavia and North America, as indications of a global environment that is increasingly imbalanced.

“This imbalance is going to cost us. It goes back to social responsibility, government responsibility, and collective responsibility. Who is going to foot the bill for all the environment-caused calamities? At the end of the day, it’s taxpayers. So there’re all the more reasons for concerted efforts now,” he stressed.

From landfills to embracing waste

Sweden, he shared, realised the consequences of pollution as early as the 1960s and took steps to arrest its impact on the environment. The first UN Scientific Conference, also known as the First Earth Summit, was held in Stockholm in 1972.

“Sweden was in the same situation as Malaysia, with huge landfills, polluted lakes, rivers and ground water. Today, we are a country with 99.4% recycling and reusage — 50% goes to recycling, the other is reused for industrial or energy purposes. We don’t have waste; we have eliminated waste,” he said. The ambassador’s passion for the topic was palpable.

But how has Sweden done it? “It’s a change of mindset about how we perceive waste. In Sweden, waste is regarded as a resource, like oil. But in Malaysia, you see waste you say ‘take it away, get rid of it’,” observed Juhlin-Dannfelt.

Most Swedish cities, he shared, practise the principle of a circular economy, which is one of the topics the business summit will address. Essentially, it is about recycling and reusing waste that a city produces. “In Stockholm, nearly all energy used by households comes from recycled waste and all the buses run on biofuel,” he added.

“We need to solve the issue on a global level. If Sweden fixes this, but our neighbours do not, it doesn’t make a difference in the world. It’s a global teamwork,” Malmqvist said.

“There is still time to take preventive actions. We’ve done this for over 40 years, and made vast amounts of mistakes, which have caused us to constantly adjust our course. There is no shame in failure because failure is the mother of invention, so celebrate the failure and share the experience with others. This is the message from us. We are very happy to share, and to engage, possibly to the extent that Malaysia will be able to follow the same course and adapt what is needed to suit the country,” the ambassador added.