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Investment momentum stays strong for Malaysia

Investment momentum stays strong for Malaysia

20 Dec 2023

Malaysia continues to chart a strong upward trajectory in garnering investments from both global and domestic investors.

UOB Research said that for the first nine months of 2023 (9M23), the country saw a 6.6% increase year-on-year (y-o-y) in terms of total committed investments to RM225bil from RM211bil previously.

This involved 3,949 investment projects that are expected to create 89,495 job opportunities in the country (9M22: 2,918 projects and 99,305 jobs).

“The services sector (RM117.7bil or 52.3% share) continued to be the top beneficiary, followed by the manufacturing (RM99.8bil or 44.4% share) and primary (RM7.4bil or 3.3% share) sectors.

“Favourable states or federal territories were Kuala Lumpur, Penang, Selangor, Kedah and Johor with combined investments of RM178bil or 79.1% of the total amount,” the research house said in a report yesterday.

Of the total approved investments in 9M23, foreign direct investments (FDIs) make up 55.9% or totalling RM125.7bil, mainly channelled into the manufacturing sector which has a 67.5% share or RM84.8bil.

On the other hand, domestic direct investments (DDIs) contributed 44.1% or RM99.3bil to the overall quantum of committed investments. This was an increase of 45.2% y-o-y from RM68.4bil in 9M22.

“The bulk of the DDIs were injected into the services sector (RM78.7bil or 79.2% share).

“The top five sources of FDI were the Netherlands (RM35bil), Singapore (RM20.4bil), the United States (RM18.9bil), China (RM11.6bil) and Japan (RM11.2bil), which jointly contributed 77.2% of total FDI in the 9M23 period,” UOB Research said.

More specifically, the information and communications technology sector was the largest recipient of investments (RM45.6bil or 38.8% share) among the services sub-sectors.

This was followed by real estate (RM44.4bil or 37.7% share), distributive trade (RM9.2bil or 7.8% share), utilities (RM6.3bil or 5.4% share) and financial services (RM6bil or 5.2% share).

“Notable projects approved in the services sector in 9M23 included a hyperscale data centre; a RM1.4bil investment for the development of a smart warehouse including an e-fulfillment hub; a cutting-edge solar technology project by a Malaysian multinational electricity company’s special-purpose vehicle company; and a standout venture by a local retailer specialist,” it said.

Additionally, investments in green technology have surged by 24.6% y-o-y to RM1.5bil, in line with the transition to the green economy as outlined in the National Transition Energy Roadmap and the New Industrial Master Plan 2030.

“These investments encompass various green technology initiatives including renewable energy generation, energy conservation, waste management, green buildings and green services,” UOB Research said.

Meanwhile, the manufacturing sector saw a 53.9% y-o-y growth in approved investments in 9M23 to RM99.8bil.

UOB Research said expansion and diversification projects dominated the landscape, amounting to RM62bil, in addition to RM37.8bil from new projects.

“Within the whole manufacturing sector, electrical and electronic products (RM57.4bil), machinery and equipment (RM10.8bil), non-metallic mineral products (RM6.9bil), fabricated metal products (RM5.5bil) and transport equipment (RM5.4bil) were top five sub-sectors gaining the highest committed investments in 9M23.

“Collectively, these five industries contributed 86.1% to total approved investments in the manufacturing sector,” it said.

Despite the lingering macro headwinds, UOB Research revised its forecast for approved investments higher to RM300bil for 2023, given that the 9M23 approved investments have met 98.7% of its full-year target of RM228bil.

“The revised outlook takes into consideration Malaysia’s decent growth prospects, political stability, strategic geographical location, government’s ongoing efforts in luring investments and the existing pipeline of proposed investments overseen by the Malaysian Investment Development Authority.

“Moreover, major blueprints, which were launched this year, have collectively offered multi-trillion ringgit investment opportunities to investors with bold initiatives and catalytic projects identified,” the research house said.

Source: The Star