Foreign Investments in Malaysia

KUALA LUMPUR: Malaysia broke its 2012 total direct investment of RM167.8 billion with a 29% rise to a record RM216.5 billion in 2013.

Nevertheless, when pressed to give his outlook for 2014, International Trade and Industry Minister (MITI) Mustapa Mohamed remains cautious about giving a targeted amount in 2014.

“We are looking at a modest increase in 2014,” Mustapa told the media in Kuala Lumpur yesterday.

Mustapa highlighted the nation’s foreign direct investments (FDIs) inflow has grown every year since 2010 and had surged by 25% in 2013 to reach RM38.77 billion, the highest ever for FDI.

Manufacturing sector continues to be the largest contributor to FDI in 2013, taking up RM14.57 billion followed by services with RM11.16 billion and primary sector (more specifically mining and quarrying) with RM11.147 billion.

Of the RM216.5 billion approved direct investments, services sector driven by domestic investments continues to dominate the approved investment pie, taking up 66.8% (RM144.7 billion) while manufacturing sector was at 24.1% (RM52.1 billion) leaving the balance to the primary sector with 9.1% (RM19.7 billion).

Domestic investments still drove private investments with a 72.5% share (RM157 billion) but foreign investments exhibited strong growth capturing 27.5% (RM59.5 billion).

Malaysian Investment Development Authority (Mida), as the agency given the power to act as a centre for collection, reference and dissemination of information relating to investment across all sectors of the economy was able to furnish more detailed data on the manufacturing sector.

In the manufacturing sector, the upward trend of direct investment is maintained, garnering 58.5% (RM30.5 billion) up from 50.9% (RM20.9 billion) a year ago, with domestic direct investment taking up the remaining 41.5% (RM21.6 billion) of the total RM52.1 billion.

US led the FDI in manufacturing with RM6.32 billion invested, followed by South Korea with RM5.48 billion, European Union with RM5.12 billion, Singapore with RM4.52 billion, Japan with RM3.59 billion and China with RM3.02 billion.

There is less data made available on the service sector but value of investment has steadily increase from RM39.7 billion in 2010 to RM144.7 billion in 2013.

Domestic investment continue to dominate in the sector taking up 87% (RM125.7 billion) with FDI account for 13% (RM19 billion) from the service sector.

When asked about when Mida will be able to furnish more details on direct investments especially in the service sector, Mustapa said the coordination task is not easy with many agencies involved.

Lastly, moving to the approved investment targets for 2014, Mustapa gave a RM54 billion target for manufacturing and RM63 billion for services (excluding real estate).

In 2013, real estate took up RM83.3 billion of RM1.45 billion investments in the service sector.