Prospects stable for Malaysia to attract foreign direct investment funds

International Business News  –  In 2021, Malaysia will attract foreign direct investment (FDI) totalling RM48.1 billion (approximately US$10.81 billion). The biggest beneficiary was the manufacturing sector at RM29.5 billion, followed by the services sector at RM12 billion and mining at RM5.8 billion.

This is the year that Malaysia has attracted the highest total amount of foreign direct investment funds. During the period from 2010 to 2019, Malaysia attracted an average of RM35.9 billion in foreign investment annually.

In terms of approved investments, according to the latest statistics from the Malaysian Investment and Development Authority (MIDA), as of the first quarter of 2022, Malaysia has attracted a total of RM42.8 billion in foreign investment in manufacturing, services and key sectors, involving 910 investments project.

As of June 7, there were 268 proposed investment projects in Malaysia’s manufacturing and services sectors, totalling RM14.4 billion. Manufacturing and services clearly dominate in attracting foreign direct investment. These sectors play an important role in Malaysia’s economic growth.

In the manufacturing sector, the biggest beneficiaries were electrical equipment, transportation and other manufacturing industries, which attracted RM18.4 billion in foreign investment. While the services, finance and insurance sectors attracted RM5.8 billion in FDI capital.

Experts believe that after the COVID-19 pandemic, foreign investors’ attention to Southeast Asia has increased significantly. The economies of the region attracted a total of US$ 175.3 billion in foreign investment. Among them, Indonesia, Vietnam and Malaysia are the leading economies.

For foreign investors, Malaysia is an attractive market first because of the robust regulatory framework that provides stability and security for long-term investors who want their investments, research results and products to be protected.

The second reason is that Malaysia’s extensive financing channels allow businesses to easily obtain capital and loans or list on the stock exchange.

In addition, the Malaysian government has also introduced many preferential policies. Under Budget 2022, the Malaysian government has set aside a special fund of RM2 billion to attract foreign companies to invest in Malaysia, with a tax holiday of up to 15 years on the income of manufacturing and service companies that relocate their operations to Malaysia.

According to the World Bank’s (WB) Business Report 2020, Malaysia ranks 12th out of 190 economies globally (with a score of 81.50) in attracting foreign investment. This is an improvement from 15-24 years ago. In Southeast Asia, only Singapore ranks higher than Malaysia.