Malaysia’s surging FDI signals rosier outlook, says economists
15 Sep 2021
Malaysia’s soaring approved foreign direct investment (FDI) points to a brighter prospect for the country’s recovery, said economists.
It also sent a strong message to the local and international investors that Malaysia was moving faster in terms of macroeconomic stability and delivering economic outcomes, they added.
International Trade and Industry Ministry disclosed on Monday that the country’s approved FDI surged 223.1 per cent year-on-year to RM107.5 billion in the first half of 2021.
This involved 2,110 projects and was expected to generate 44,994 job opportunities, Senior Minister and International Trade and Industry Minister Datuk Seri Mohamed Azmin Ali said.
“This signals the confidence of foreign investors in the country’s stable and conducive economic climate and business ecosystem.”
The performance also demonstrated Malaysia’s strategy of positioning the country as an attractive investment destination of choice and a supply chain hub in Asean, particularly for manufacturing operations, was showing positive results, Azmin added.
Juwai IQI chief economist Shan Saeed said the stellar performance brought economic confidence back in the investment circles and provided an opportunity for global investors to rethink their investment strategy for Malaysia.
“Malaysia will never lose her importance in the global trade and commerce landscape due to her macroeconomic stability, strategic geography, productive labour force and modern infrastructure.
“We stand buoyant on Malaysia’s economic outlook due to effective handling of Covid-19 situation, speeding up the vaccination and above all bolstering business and economic outlook for achieving growth trajectory and stabilisation of the economy at the macro level,” he told the New Straits Times.
MIDF Research economist Abdul Mui’zz Morhalim said the FDI surge reflected continued confidence in Malaysia as one of the attractive investment destinations in the region.
Mui’zz said apart from the unique position and involvement in the global supply chain, Malaysia had been ranked among the highest in terms of ease of doing business, compared to other regional peers.
“I think we can expect more inflows to come to Malaysia given the continuity in the government’s policy direction and the commitment to attract more high quality investment based on the National Investment Aspirations and the drive to make Malaysia as the regional technology hub.
“The confidence in the economy will also improve with the progress in the National Recovery Plan while the country is doing its best to put the ongoing Covid-19 pandemic under control,” he said.
Putra Business School business development manager Associate Professor Dr Ahmed Razman Abdul Latiff said Malaysia was on track to get higher FDI because it had started to open up the economic sectors.
This is due to the successful campaign of getting a high vaccination rate among the population as well as government commitment to keep spending on development and fiscal expenditures for this year and beyond, he added.
“We are on the right track when compared with last year’s performance and the challenges ahead is to better the FDI performance pre-pandemic back in 2019.
“At the same time, we have to ensure more high tech investment (such as AI, hybrid, etc) in the country to provide more job opportunities to high skilled Malaysian workers rather than continuing depending on foreign workers in this country.”
Ahmed Razman added that there was a need to ensure that these FDIs would benefit the country not just in term of setting up the infrastructure but also transfer of knowledge and technologies, upskilling of local workers and majority of return of investment reinvested back in the country, rather than going out of the country as a form of dividend.