PETALING JAYA: Malaysia’s investment landscape remains robust with a positive foreign direct investment (FDI) outlook in the short to medium term, according to UOB’s Global Economics and Market Research report.
It said with the absence of any unexpected economic shocks, the FDI inflows should sustain its average long-term 15-year growth trend of 3.6% per annum in the medium term.
This is said to translate to an absolute annual FDI inflow of RM51.6bil by 2030.
In 2023, Malaysia FDI’s dropped 48.9% to US$8.7bil as the tightening of global monetary conditions weighed on investments.
“Our projection is supported by the 2024 year-to-date performance of FDIs, whereby Malaysia has attracted a total of US$3.1bil FDI inflows in the first half of 2024 (1H24), which was 17.9% higher than US$2.6bil recorded in the first half of 2023 (1H23),” it said.
According to the research house, between 2021 and 2024, the Malaysian Investment Development Authority (MIDA) approved almost RM1 trillion worth of investments.
Of that, RM474.3bil were manufacturing investments, RM461.8bil were from services investments and RM54.2bil were from the primary sector investments.
“Approximately 77.2% of approved manufacturing projects have been implemented while about 21.1% are in the planning phase and the balance of 1.6% remain unimplemented. This is in addition to ongoing projects in the pipeline that totaled RM128.4bil as of May 31, 2024,” the report noted.
It added there were various projects under government policies like the New Industrial Master Plan 2030, National Energy Transition Roadmap and Mid-Term Review of 12th Malaysia Plan that are set to enhance opportunities for investments in Malaysia’s high-growth high-value (HGHV) sectors.
Additionally, the Johor-Singapore Special Economic Zone (JS-SEZ) will create a platform to position the country as a key Asian hub for global companies and investors in the coming years despite challenges of talent, resources and government policies.
“The nation’s five regional economic corridors, namely Iskandar Malaysia (IM), Northern Corridor Economic Region (NCER), Sarawak Corridor of Renewable Energy (SCORE), East Coast Economic Region (ECER) and Sabah Development Corridor (SDC) aim to attract a combined investment of at least US$161.2bil between now and 2030,” the report stated.
Moreover, it said Malaysia has taken the position of staying open for business to accelerate existing trade ties while diversifying to new markets.
So far, 16 Free Trade Agreements including, seven bilateral and nine regional have been implemented and other partnerships have been joined such as the Regional Comprehensive Economic Partnership (RCEP), Indo-Pacific Economic Framework (IPEF) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Meanwhile, the report said there are some risks including competition between global superpowers, expanded universal US tariffs, export controls and secondary sanctions to countries that are part of China's “Plus One” Strategy.
“The United Nations Trade and Development (UNCTAD) has also cautioned in its World Investment Report 2024 that the global environment for international investment “remains challenging” in 2024 due to economic fracturing trends, trade and geopolitical tensions, industrial policies and shifts in supply chains reshaping FDI patterns, prompting some multinational enterprises to stay cautious on overseas expansion.”
