Higher approved manufacturing investments in 2011
Malaysia attracted some RM56.1billion in approved investments in 846 projects in the manufacturing sector last year from RM47.2 billion in 2010, an increase of 18.8%, the Minister of International Trade and Industry, Dato’ Sri Mustapa Mohamed said.
The Minister announced the 2011 full-year data at the Malaysian Investment Development Authority (MIDA) Annual Media Conference on Malaysia’s Investment Performance in 2011, at the MIDA Headquarters in Kuala Lumpur yesterday.
Malaysia remains a competitive investment destination for foreign investors. Last year, approved foreign direct investments (FDIs) in the manufacturing sector totalled RM34.2 billion representing some 61% of total manufacturing investments from RM29.1 billion in 2010.
Domestic investments took up the balance RM21.9 billion or 39% of total investments from RM18.1 billion in 2010, registering a significant increase of 21%.
The country continued to draw new investments in 2011 with RM33.1billion or 59% of total approved investments of which RM20.2 billion or 61% were foreign investments while the remaining RM12.9 billion or 39% were from domestic investors.
Compared to 2010, foreign investments in new projects surged almost 73% from RM11.7 billion in 2010. From the projects approved, foreign investors had shown keen interest to invest in new growth areas and emerging economies, which are technology or knowledge-intensive.
Existing companies in Malaysia continued to reinvest and expand or diversify their businesses. In 2011, reinvestments for expansion/diversification amounted to RM23billion or 41% of total investments.
The bulk of the reinvestments came from foreign companies including multinationals in the country, which had planned to reinvest some RM14billion, a strong indication of the rising confidence in the local economy.
The Minister attributed the investors’ confidence to the country’s political stability, well-developed infrastructure and the support by government agencies like MIDA to ensure ease of doing business in Malaysia.
Japan continued to be the top foreign investor with investments of RM10.1 billion, followed by South Korea with RM5.2 billion, the United States, RM2.5 billion, Singapore, RM2.5 billion and Saudi Arabia, RM2.2 billion.
In terms of industry, electronics and electrical (E&E) continues to be the mainstay of the manufacturing sector, with some RM20billion in approved investments last year, registering a 50% increase over the RM13.3 billion approved in 2010.
Malaysia has built up a strong cluster of E&E companies particularly in the semiconductor, consumer electronics, home appliances, industrial electronics and related supporting industries as well as a pool of talents, who are capable of absorbing new technologies and undertake research and development work in the country.
Other industries which had generated substantial interests from investors include the basic metal products industry with RM9.9 billion; transport equipment with RM6 billion; chemical & chemical products with RM5billion and food processing with RM3.7billion.
As the country gears towards a high-income economy, it is of significance to note that as at 31 December 2011, 73% of the 72,704 employment opportunities generated from the approved projects in 2010-2011, which had been implemented, were in the managerial, professional, technical, supervisory and skilled categories.
Malaysia continues to move away from labour-intensive operations to focus on attracting high technology, high value added and capital-intensive industries in line with the country’s move towards achieving a developed nation status by 2020.
In this context, the capital intensity of projects as measured by the capital investment per employee (CIPE) ratio of projects approved in the manufacturing sector had increased from some RM167,638 in 1990 to RM484,767 in 2010 and RM557,894 in 2011.
Among the notable quality investments approved in 2011 were from Panasonic Energy Malaysia, Sahz, Infineon, Intel, Agilent Technologies Microwave Products, Sony EMCS, Aviatron, Malaysia Marine & Heavy Engineering, Petronas Gas, Flexsys Chemicals, a unit of Solutia Inc, Tokyo Rope, Galperti, Favelle Favco Cranes, Metabolic Explorer, GlycosBio Asia, Formedic Technologies and Palsgaard. Representatives from some of the companies were also present at the media conference.
In terms of location, Penang emerged with the highest approved manufacturing investments of RM9.1billion last year, followed by Selangor with RM8.7billion, Sarawak with RM8.5 billion, Johor, RM6.6billion and Kedah, RM6.1billion.The five states accounted for close to 70% of the total manufacturing investments.
Among the five designated economic corridors in the country, the Northern Corridor Economic Region (NCER) secured the highest investments of RM15.3billion in projects with Manufacturing Licence, followed by the Sarawak Corridor of Renewable Energy (SCORE) with RM8.2 billion, Iskandar Malaysia, RM5.7 billion, East Coast Economic Region (ECER) with RM4.6 billion and Sabah Development Corridor (SDC) with RM0.9billion.
In terms of implementation as at 31 December 2011, 76.4% of manufacturing projects approved from 2007-2011 have taken off and have invested some RM258.6million while another 19.5% of the projects were in active planning/site acquisition..
The manufacturing sector remains a key sector in the local economy contributing 27.5% of gross domestic product (GDP) and providing employment for 3.5million people or 28.7% of total workforce in the country. Manufacturing exports in 2011 reached RM470.3 billion accounting for 67.7% of the country’s total exports.
The sector also turned in a strong performance in terms of sales value last year, posting a double-digit increase of 10.0% or RM53.5 billion to reach RM588.9 billion compared with 2010 while output in the sector rose 4.7% in 2011 year-on-year.
Adapted from MIDA’s Report on Malaysia’s Investment Performance 2011, Media Statement, NST Business Times and StarBiz, 22 Feb 2012
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