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UOB keeps its RM200 bil projection for Malaysia’s approved investments in 2022

UOB keeps its RM200 bil projection for Malaysia’s approved investments in 2022

17 Jun 2022

UOB Global Economics and Markets Research has maintained its total approved investment projection for Malaysia at RM200 billion for this year, which is around pre-pandemic’s five-year average level of RM204.5 billion.

“The government’s approach to managing endemic Covid-19, namely uplifting almost all containment measures from mid-May 2022 and keeping borders open since April 1, 2022 along with ongoing efforts in maintaining external connectivity and ensuring business continuity, is expected to uphold Malaysia’s investment momentum,” said UOB senior economist Julia Goh and economist Loke Siew Ting.

Malaysia’s investment momentum, they said, will be driven by the government’s targeted trade and investment missions, and medium-term prospects amid multiple external headwinds on the horizon.

“The government aims to ratify the Comprehensive and Progressive Agreement for Trans-Pacific Partnership by the third quarter this year. This together with the Regional Comprehensive Economic Partnership Agreement will provide greater market access,” Goh and Loke said in a note.

“Several trade and investment missions (TIMs) have helped attract more FDIs (foreign direct investments) to Malaysia. This was evident by the recent TIM to US in May, which secured RM16.5 billion or US$3.8 billion in committed investments for this year.

“The country’s National Investment Aspirations and environmental, social and governance principles are expected to draw more new investments into green sectors,” they added.

The UOB economists also noted that the Malaysian Investment Development Authority has identified 446 high-profile investment prospects, including Fortune 500 companies, in the manufacturing and services sectors with a combined potential investment value of RM150.4 billion.

Goh and Loke, however, warned that there are multiple external headwinds on the horizon, including global recession risks.

“Malaysia has to also contend with more reshoring activity back to home countries and regional competition for new high value-added investments.

“Our channel checks suggest that some of the key investor concerns include labour shortages, slow approval of work permits for skilled workers/expatriates, lack of domestic skilled labour, supply chain constraints and travel connectivity issues that affect capacity, lack of execution and implementation of policies, need for more conducive tax policies with lesser tax burdens, and continuity of business friendly policies,” they said.

Source: The Edge Markets

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