- Kuala Lumpur, Malaysia (CNN) – When Facebook went public in May it became the biggest stock launch of the year, but the two next biggest initial public offerings had something in common - they were both Malaysian companies.
In June, Felda Global Ventures Holdings raised $3.1 billion in shares, and a month later IHH Healthcare raised $2.1billion. Both are Malaysian and for both, key investors came from the Middle East.
“Middle East investment is highly important,” Fung Siu, Asia editor for the Economist Intelligence Unit, told CNN’s Ayesha Durgahee.
Siu added: “There are synergies to be had between the two countries - not least because they are Muslim-dominated countries, they have that in common. Sharia law is common to both countries and they try to leverage that in the Islamic finance sector - particularly Malaysia which is at the vanguard of Islamic finance.
“So the Middle East could actually use and tap Malaysia as its financial center and hub, and source of finance as well.
“Foreign direct investment is crucial to Malaysia's transformation into a high-income economy by 2020."
Malaysia's economy is growing rapidly, with the country's GDP rising by 5.4% over the past three months.
A report by HSBC in January predicted that Malaysia will be the world's 21st-largest economy by 2050, with income per capita jumping from $5,224 to $29, 249.
“It’s still an export-led economy, buoyed by palm oil, the oil and gas sector, the manufacturing sector is also very strong ,” said Ahmad Jauhari Yahya, CEO of Malaysia Airlines. “You can only export to a certain extent. What the government is trying to do is to encourage more the consumer economy.”
Boosting visitor numbers could be part of the formula. Tourism currently accounts for 8% of the country's GDP. A change in foreign-ownership rules could increase it to 13%, which could generate a total of $54 billion in revenue by 2020.
“We have nine airlines flying from the Middle Eastern region,” said Chong Yoke Har, director of Tourism Malaysia. “Malaysia is very strategically located in the middle of Southeast Asia, and therefore foreigner investors look at this as a very attractive area to invest in.”
And they've already started to bite. Qatar Holding, owner of Harrods department store, announced in July that its first Harrods hotel will be built and launched in Kuala Lumpur.
A launchpad for hotels and a potential springboard for investment, Malaysia's multicultural roots are helping to change the economic landscape of the country, whilst moving the Middle East closer to Asia.