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Tengku Zafrul: Govt targets 20% growth in FDI, DDI this year

Tengku Zafrul: Govt targets 20% growth in FDI, DDI this year

09 Mar 2023

The government is aiming fo 20% growth in foreign direct investment (FDI) and domestic direct investment (DDI) this year, according to International Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz.

Last year, FDI was the major contributor to total approved investments with 61.7% or RM163.3 billion while DDI contributed 38.3% or RM101.3 billion.

Noting that it was a tall order to achieve, given the many challenges faced, Tengku Zafrul said investments are more long-term in nature and companies that look at Malaysia will look at longer-term horizons.

“To attract investments into Malaysia, what is important is to improve the ease of doing business in the country, the talent pool, infrastructure (physical and digital), and governance,” he said during his panel session entitled ‘Enhancing Malaysia’s Competitiveness’ at Invest Malaysia 2023 today.

Stating that FDI has a positive correlation with DDI, Tengku Zafrul observed that, when a new multinational company (MNC) enters, it will receive support both from local SMEs as well as local investors who will invest in the DDI related to the MNC.

“(As an example) a company like Intel, they would need support from SME. The bigger the FDI, the local companies will also invest in the DDI to make sure that they can support the MNC. Once the local companies (which has invested) becomes larger, they (will) export. Many companies in Penang have benefited from this ecosystem,” he said.

Last year, Malaysia registered approved investments totalling RM264.6 billion, which translates to 4,454 projects, with 140,370 job opportunities to be created.

The services sector is the major contributor with RM154 billion, followed by a RM84.3 billion boost in manufacturing sector, and RM26.3 billion in the primary sector.

Touching on Tesla, Tengku Zafrul shared that Malaysian companies that are supporting Tesla today are contributing close to RM240 million of services to the latter.

He added that the electrical and electronics (E&E) sector, has an established supply chain and strong ecosystem. Malaysia holds the seventh largest market share, in the E&E global space.

Citing Miti’s battery electric vehicles global leaders programmes, he said they are designed to attract companies such as Tesla to enter the country to develop the latter’s technology using the existing ecosystem.

“Tesla is not just looking to set their head office here but also working closely with SME,” he said.

Meanwhile, Economy Minister Rafizi Ramli said the government is changing its approach and form of aids for industries to focus more on changing the industry structure that addresses its issues, rather than the normal practice of ”injecting money in the form of subsidies”, in order to ensure industry sustainability.

“We are open to working and assisting (industries) but any form of assistance must be structural in nature, then it will affect and uplift the competitiveness and robustness in the long run, we cannot continuously give money but it doesn’t change the structure because then you don’t fix the root cause. We are going sector by sector,” he told reporters after his panel session titled “Strengthening Economic Resilience and Sustaining Development”.

On the 12th Malaysia Plan, he said that he is “confident” that the government will be able to deliver on the RM400 billion worth of development expenditure, all the way to 2025.

“I am quite confident that we will stick with that. What we want to ensure is that all the amount that has been earmarked for development expenditure, go to actual development expenditure.”

Source: The Sun Daily