Malaysia’s economy has been on a strong recovery path since the country reopened its borders on the 1st April 2022. Supported by its robust industrial ecosystem, an increase in domestic demand, and the easing of containment measures, the Malaysian economy’s performance continues to normalise and grow in strength.
The nation succeeded in attracting a total of RM123.3 billion (USD28.0 billion) worth of approved investments in the manufacturing, services, and primary sectors, involving 1,714 projects for the period of January to June 2022. These projects are expected to create 57,771 job opportunities in the country.
Foreign direct investments (FDI) remained the major contributor, at 70.9 per cent or RM87.4 billion (USD19.9 billion), while investments from domestic sources contributed 29.1 per cent amounting to RM35.9 billion (USD8.2 billion).
The services sector takes the lead
For the given period, the services sector accounted for the largest share of total approved investments – amounting to RM78.0 billion (USD17.7 billion) from 1,351 projects – which contributed to the growth of the country’s economy. This is a significant increase as compared to the RM52.4 billion (USD12.6 billion) investments approved for the services sector in the same period in the previous year, and a total of 22,569 new jobs are expected to be created.
Based on total approved investments for the first half of 2022, foreign investments made up the largest portion, recording RM50.4 billion (USD11.5 billion) or 64.6 per cent of the total for the services sector, while the remaining 35.4 per cent or RM27.6 billion (USD6.3 billion) were from domestic sources.
New services have materialised through the invention of the Internet of Things (IoT), Artificial Intelligence (AI) and the cloud network, which have redefined the service sector’s importance in Malaysia’s economy. In line with the government’s aim to attract RM70.0 billion (USD15.6 billion) investments to accelerate digitalisation efforts by 2025, the Digital Investment Office (DIO) – a fully-digital collaborative platform between MIDA and MDEC – was established to coordinate and streamline digital investments into the country while providing end-to-end facilitation to investors, thus helping investors to realise their business growth expansion in Malaysia.
The information and communications sub-sector dominated the services sector, with approved investments valued at RM53.7 billion (USD12.2 billion) or 68.8 per cent. From the total approved investments of this sub-sector, three (3) data centre projects were approved, with investments totalling RM51.1 billion (USD11.6 billion) or 95.2 per cent.
Gains for the manufacturing sector
Malaysia continued to attract high quality investments in the manufacturing sector for the period of January to June 2022 – a reflection of the country’s competitiveness as a preferred location for investment in the region. The manufacturing sector accounted for RM43.1 billion (USD9.8 billion) or 34.9 per cent of total approved investments across various economic sectors.
Of the total approved investments in 1H2022, FDI amounted to RM35.5 billion (USD8.1 billion) or 82.4 per cent, while domestic investments contributed to the remaining RM7.6 billion (USD1.7 billion) or 17.6 per cent.
From the RM43.1 billion (USD9.8 billion) approved investments, investments for expansion/diversification projects showed positive development, with an increase of 31.9 per cent totalling RM26.0 billion (USD5.9 billion) for the first half of 2022, as compared to the same period in 2021. The remaining RM17.1 billion (USD3.9 billion) were recorded from new projects.
The primary sector benefits from FDI
The primary sector recorded a total of RM2.2 billion (USD0.5 billion) approved investments (1.8 per cent) of total approved investments across the various economic sectors for the period of January to June 2022, compared to RM6.5 billion (USD1.6 billion) approved investments for the same period in 2021. FDI dominated the primary sector with investments valued at RM1.5 billion (USD0.3 billion) or 68.2 per cent, while the remaining RM0.7 billion (USD0.2 billion) or 31.8 per cent came from domestic sources.
Malaysia remains steadfast in its fundamentals as the pre-eminent preferred investment destination in the region, and is set to catapult the nation to stage its most robust recovery as we enter the stage of endemicity. As we forge ahead on the path of economic revitalisation – supported by ongoing policy reforms and accelerated digitalisation – the government remains committed to prioritising the needs of our people and businesses.