Malaysia is set to accelerate its already aggressive investment push into UK property in a move that underscores the country’s eagerness to extend its corporate reach beyond Asia.
The country is at the start of an important upswing in its investment into the UK that will turn it into a “major player in the London property market”, according to Najib Razak, Malaysia’s prime minister.
In an interview with the Financial Times, Mr Najib added that the Employees Provident Fund, the largest Malaysian government pension fund by assets, is “flush with cash and needs to take some of the surplus abroad”.
The statement of ambition comes at a time when Malaysia is already outgunning most of its international rivals in terms of investment into UK property. The country spent £1.4bn, almost all of it in London, last year, more than any other Asian state, snapping up City of London offices and the redevelopment site at Battersea power station. Mr Najib is due to preside over a groundbreaking ceremony there today.
“We like London,” said Mr Najib. “We know it well and understand it and you can get a very good yield on London offices.”
The move by its sovereign and pension funds into the London market comes at a time when the Malaysian economy is facing what looks like a perfect economic storm, including the slowdown in the Chinese economy, plunging commodity prices and the looming end of the US’s quantitative easing programme.
Malaysia is a commodity producer that exports to China and has benefited handsomely from the cash that washed through emerging markets as a result of the US Federal Reserve’s aggressive bond-buying programme.
However, Mr Najib played down the likely effects of the threats to growth coming from the world economy and insisted Malaysia remained on course to grow at 5 to 6 per cent annually and achieve the government’s target of joining the ranks of the world’s high-income countries by 2020.
The country is at the start of an important upswing in its investment into the UK that will turn it into a “major player in the London property market”, according to Najib Razak, Malaysia’s prime minister.
In an interview with the Financial Times, Mr Najib added that the Employees Provident Fund, the largest Malaysian government pension fund by assets, is “flush with cash and needs to take some of the surplus abroad”.
The statement of ambition comes at a time when Malaysia is already outgunning most of its international rivals in terms of investment into UK property. The country spent £1.4bn, almost all of it in London, last year, more than any other Asian state, snapping up City of London offices and the redevelopment site at Battersea power station. Mr Najib is due to preside over a groundbreaking ceremony there today.
“We like London,” said Mr Najib. “We know it well and understand it and you can get a very good yield on London offices.”
The move by its sovereign and pension funds into the London market comes at a time when the Malaysian economy is facing what looks like a perfect economic storm, including the slowdown in the Chinese economy, plunging commodity prices and the looming end of the US’s quantitative easing programme.
Malaysia is a commodity producer that exports to China and has benefited handsomely from the cash that washed through emerging markets as a result of the US Federal Reserve’s aggressive bond-buying programme.
However, Mr Najib played down the likely effects of the threats to growth coming from the world economy and insisted Malaysia remained on course to grow at 5 to 6 per cent annually and achieve the government’s target of joining the ranks of the world’s high-income countries by 2020.

Mr Najib’s government is settling back into office after the ruling United Malays National Organisation overcame the biggest challenge to its power in May’s parliamentary elections. The opposition won 51 per cent of the vote, but Umno and its partners in the ruling coalition secured 60 per cent of the seats under Malaysia’s constituency-based voting system.
We like London. We know it well and understand it and you can get a very good yield on London offices- Najib Razak
The prime minister pledged to accelerate economic reforms and show that the country could be modernised “from within” the existing framework – a riposte to the opposition’s election claims that Malaysia needed a change of leadership after decades of unbroken Umno rule.
He said: “I want to prove the point that we can make changes from within. We can transform the government and the economy, as well as democracy in Malaysia.”
Asked about the coming end of the Fed’s QE3 effort, Mr Najib said money would “flow back into the United States”, but the US would “probably become a stronger market” for Malaysian exports.
While some emerging market turmoil might occur, “people are still positive about the capital markets in Malaysia”, the prime minister said. Mr Najib was equally sanguine about China’s growth slowing from last year’s 7.8 per cent to 7 per cent or lower. A Chinese slowdown would mean Malaysia’s trade would “probably not grow as fast as we expected”, but Chinese investment “probably won’t change very much”.
Nor would the impact of a decline in Chinese demand on weakening commodity prices have a serious effect. Mr Najib said prices for palm oil, Malaysia’s biggest commodity export, might weaken, “but we are looking at finding new markets”, he said, listing Africa and South America.
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For Mr Najib the challenges at home remain substantial. The softening in support for Umno and its allies was in part the result of what he dubbed a “Chinese tsunami” in which disenchanted ethnic Chinese voted against the government. The shift was due in large part to frustration among ethnic Chinese over longstanding pro-Malay affirmative-action policies.
Mr Najib said he believed the government needed to phase out gradually such policies and to address better the concerns of the ethnic Chinese as part of a national reconciliation.
Other domestic economic concerns remain. The government had to cut its bill from fuel and other subsidies and Mr Najib said he believed “we do need to introduce [a goods and services tax] to improve government revenue”. Household debts – at 82 per cent of GDP – were also unsustainable and had to be reined in, he said.
“People willy-nilly borrow for consumption,” Mr Najib said. “Civil servants willy-nilly borrow for consumption and then wonder why they don’t have enough money at the end of the month.”
By Ed Hammond and Stefan Wagstyl in London
http://www.ft.com/cms/s/0/68e8e302-e40f-11e2-b35b-00144feabdc0.html#ixzz2Y4dX8BUC
We like London. We know it well and understand it and you can get a very good yield on London offices- Najib Razak
The prime minister pledged to accelerate economic reforms and show that the country could be modernised “from within” the existing framework – a riposte to the opposition’s election claims that Malaysia needed a change of leadership after decades of unbroken Umno rule.
He said: “I want to prove the point that we can make changes from within. We can transform the government and the economy, as well as democracy in Malaysia.”
Asked about the coming end of the Fed’s QE3 effort, Mr Najib said money would “flow back into the United States”, but the US would “probably become a stronger market” for Malaysian exports.
While some emerging market turmoil might occur, “people are still positive about the capital markets in Malaysia”, the prime minister said. Mr Najib was equally sanguine about China’s growth slowing from last year’s 7.8 per cent to 7 per cent or lower. A Chinese slowdown would mean Malaysia’s trade would “probably not grow as fast as we expected”, but Chinese investment “probably won’t change very much”.
Nor would the impact of a decline in Chinese demand on weakening commodity prices have a serious effect. Mr Najib said prices for palm oil, Malaysia’s biggest commodity export, might weaken, “but we are looking at finding new markets”, he said, listing Africa and South America.
More video
For Mr Najib the challenges at home remain substantial. The softening in support for Umno and its allies was in part the result of what he dubbed a “Chinese tsunami” in which disenchanted ethnic Chinese voted against the government. The shift was due in large part to frustration among ethnic Chinese over longstanding pro-Malay affirmative-action policies.
Mr Najib said he believed the government needed to phase out gradually such policies and to address better the concerns of the ethnic Chinese as part of a national reconciliation.
Other domestic economic concerns remain. The government had to cut its bill from fuel and other subsidies and Mr Najib said he believed “we do need to introduce [a goods and services tax] to improve government revenue”. Household debts – at 82 per cent of GDP – were also unsustainable and had to be reined in, he said.
“People willy-nilly borrow for consumption,” Mr Najib said. “Civil servants willy-nilly borrow for consumption and then wonder why they don’t have enough money at the end of the month.”
By Ed Hammond and Stefan Wagstyl in London
http://www.ft.com/cms/s/0/68e8e302-e40f-11e2-b35b-00144feabdc0.html#ixzz2Y4dX8BUC