Investors flock to Malaysia's Super Corridor

KUCHING, Malaysia (MarketWatch) -- It's called the MSC, the Malaysian Super Corridor, and it's attracting the investment attention of big money and institutions all around the world.

Malaysia is poised for enormous growth. Predictions for the economy in 2008 are robust. Venture capitalists and developers are investing in real estate, technology and communications. The country is looking like it will become a major business hub in years to come.


Take a look at Kuala Lumpur. Built out of the jungle, the city is thriving with shopping malls like the KLCC and the famous Petronas Twin Towers attracting people in droves. When I was there, business meetings and conferences were being held all over. Pete Sampras and Roger Federer were holding an exhibition tennis match and the city pulse was on par with that of New York. The hotels and buildings are sparkling new, and more are going up every day.

If the MSC takes hold it will be a force to be reckoned with. Here's why: Malaysia is just Western enough to attract investors from Australia, Europe and the U.S. And it is just Eastern enough to attract investors from China and Japan. China is already taking the lead. A local businessman told me that Chinese interests control about 50% of the businesses near him.

The Malaysian government and the MSC, an organization in its own right, aren't keeping the place a secret. Advertisements are all over the international news networks and the local papers.

The Malaysian government sees the MSC as its big chance to compete on the international level. It boasts a hub, or corridor, that is being developed rapidly and attracting businesses ranging from real estate to telecommunications to technology. It is sparking job growth, stock growth, economic growth -- growth with a capital G.

To be sure, Singapore, its neighbor, has already proven to be a major business success. Malaysia faces competition from the rest of the world as well as very little infrastructure to begin such a 21st century endeavor.

Jungle transformation
Besides, the MSC will ravage the land here more than it already has. Malaysia is a pristine place, full of jungle and unspoiled natural resources. That will all change if the various stages of the corridor take hold and envelop the states of Sabah and Sawarak, where myriad species roam wild.

Officials from the state of California were visiting when I was in Kuala Lumpur, vetting the MSC. They said they are interested in pursuing relationships in the area -- potential investments and sharing of resources.

What will attract people here are the prices. Malaysia is cheap. A two-story compound of a home on Sawarak is about $100,000. You can get a full dinner, including appetizers, drinks and dessert for a little more than ten bucks.
In terms of stock prices, Malaysia has followed Asia and the rest of the world of late, seesawing. But values are said to be available.

The Malaysian government admits that the MSC will corrupt land, but says the economic benefits of jobs and industry will outweigh that and help its people.
It won't be up to them, however. There isn't enough local wealth to put Malaysia in riches. It knows that. It needs outside investors to reach the type of growth it has in mind.

That means it will have to rely on the business strategies of foreign firms to propel its growth. And that may not so neatly mean jobs for the Malaysian people. There is a huge influx of Indonesian labor in the country. Outsourcing capital also means outsourcing the management of the economy to an extent.

By those rules, the market will win, even if that means at the sacrifice of the people and the land that it is built upon. Whether the MSC will fulfill the high hopes the Malaysian government has remains to be seen. One thing is for sure: It will have a dramatic effect on how things are here.