PETALING JAYA: Although Malaysia is on the radar of foreign investors, challenges persist in further boosting foreign direct investment (FDI) into the country.
AmBank Group managing director for business banking Christopher Yap (pic) told StarBiz that key challenges in attracting FDI include limited supply chain connections, currency exchange volatility, differences in international payment systems and navigating Malaysia’s regulatory framework.
“One of the primary challenges is the limited supply chain access for foreign investors new to Malaysia. Another challenge is managing exchange rate fluctuations between foreign currencies and the ringgit, which can impact budgeting and financial statements for investors,” he said.
Realising the importance of FDIs to the country’s economy, the group has put in several initiatives to further spur foreign investment.
“For example, to mitigate the issue of limited supply chain access, our dedicated teams for China and South Korea desks connect clients to a network of over 100,000 business contacts.
“This extensive supply chain access is complemented by our AmInvestment Banking division, which helps source potential acquisitions and supports ecosystem establishment through partnerships with reputable industry players.
“Additionally, we assist with land sourcing by connecting clients to reliable local developers within our network,” Yap said.
To manage exchange rate fluctuations between foreign currencies and the ringgit, he said AmBank offers a wide range of foreign exchange (FX) solutions, including e-FX for convenient rate booking.
“We are also the only local bank to have successfully completed ringgit to Korean Won FX trades for South Korean clients in Malaysia,” he noted.
To navigate Malaysia’s regulatory framework, Yap said to assist investors, the group provides regular economic updates and thematic market research to facilitate informed decision-making.
The bank also partners with consultancy firms whose Chinese desk offers specialised consultancy services for new foreign investors, covering licensing, visas, and other regulatory requirements.
On the current global trends in FDI, and its contribution to Malaysia’s economic growth, he said recent global trends in FDI are significantly influenced by the diversification of investments and evolving supply chains.
“Investors are increasingly adopting the China+1 strategy, aiming to reduce over-reliance on China by expanding into other regions, which has led to a 24% rise in FDI inflows into Asean countries between 2020 and 2022.“Malaysia, in particular, has benefited from these shifts due to sustainable development initiatives and investor-friendly reforms. FDIs play a vital role in Malaysia’s economic development. Between 2017 and 2022, FDI projects created approximately 133,117 jobs, significantly contributing to employment and human capital development.
“The presence of multinational corporations has also enhanced innovation, with technology and skills transfer benefitting local firms and boosting competitiveness, Yap added.
He said there are several sectors currently which have seen strong inflows of FDIs. Yap said the services sector, particularly information and communications technology and real estate, continues to attract significant investments.
The manufacturing sector, led by the electrical and electronics industry, is also a key area of interest, he said, adding that moreover, the green technology sector is on the rise, driven by the government’s focus on sustainable initiatives.
“AmBank has played a vital role in supporting these high-growth sectors.
“We offer structured financing solutions, access to capital markets, and green financing options specifically tailored to the needs of these industries.
“Additionally, our industrial park programme exemplifies our commitment to fostering industrial growth.
“For instance, we offer up to 200% margin of financing for buyers of industrial park properties, such as Ideal Property Group’s Penang Technology Park in Bertam
, with high loan-to-value packages for end-buyers.
“These packages align with our focus on environmental, social and governance initiatives and responsible investment practices, making us the first bank to provide distinctive end-financing solutions for customers seeking to improve resource efficiency and adopt sustainable practices,” he pointed out.
AmBank’s BizRACE programme has also been instrumental in building the capacity of local businesses, so that they are ready to benefit from FDI, according to Yap.
One participant from the current BizRACE Season 4, HMF International Sdn Bhd, successfully expanded into markets such as India, Japan, Thailand, and the Philippines after adopting Industry 4.0 practices and significantly enhancing production efficiency.
