Wave of FDIs into Malaysia

Kuala Lumpur: Malaysia attracted RM31.7 billion in foreign direct investments (FDIs) for the first seven months of this year, said International Trade and Industry Minister Datuk Seri Mustapa Mohamed.

Read more: Wave of FDIs into Malaysia http://www.btimes.com.my/articles/rup2900a/Article/#ixzz1WfNxIRp8

Last year, Malaysia attracted RM47.2 billion in total investments, both foreign and domestic. Mustapa said the government's initiatives, namely the Government Transformation Programme and the Economic Transformation Programme (ETP), have raised the interest of the investing community. "In July alone, we approved 61 manufacturing projects investments - mostly domestic (55.8 per cent) - totalling RM4.3 billion," the minister pointed out. For the first seven months of the year, he added, the manufacturing sector attracted 514 projects of which RM15.8 billion are foreign investments. These projects are expected to generate 63,387 employment opportunities. Speaking to Business Times, Mustapa said Malaysia saw a 76 per cent jump in FDIs in the first half of the year with RM21.3 billion versus RM12.1 billion in the same period last year. Some 52 per cent of these FDIs valued at RM15 billion were in the manufacturing sector. Japan led the pack with RM3.4 billion worth of investments followed by the US (RM2.3 billion) and Singapore (RM1.4 billion), the Netherlands (RM1.2 billion) and Taiwan (RM1.2 billion). Elaborating on the figures, Mustapa said electrical and electronics products (RM6.5 billion) continue to be the main industrial sector draw to foreign interest in Malaysia, followed by basic metal products (RM2.4 billion), chemicals and chemical products (RM1.7 billion) and food manufacturing (RM1.1 billion). He disagreed that Malaysia was losing out in terms of capital-intensive investments. "Malaysia continues to be an attractive location for quality projects, including capital-intensive projects." With rising competition from low-cost producers such as China, India and Vietnam, Malaysia is no longer competitive in low-end manufacturing. "Capital intensity, (as measured by the capital investment per employee or CIPE ratio) of manufacturing projects approved, climbed from RM167,638 in 1990 to RM484,767 in 2010. This reflects the general trend towards more capital-intensive, high value-added and high technology projects," Mustapa said. For the first half of the year, 58 projects with an investment value of RM100 million or more each were approved. Most of these projects were in sectors such as electrical and electronics, basic metal, transport equipment and petrochemicals. Several other projects are in the pipeline and are currently being negotiated. These cover both expansion and diversification by existing investors and also new projects. Mustapa expects domestic private investment to serve as a key engine of growth. Vast business opportunities will be created through new growth areas, especially as the ETP is being rolled out. Under the ETP, private investment will account for 92 per cent of the RM1.4 trillion investments required from 2010 to 2020. Domestic investments will account for 73 per cent of total private investments, he said. Since the introduction of the ETP in October 2010, six announcements have been made on its progress covering a total of 87 projects valued at RM170.28 billion and estimated to create 362,000 jobs. Of this total, RM16.45 billion has been committed for 2011, and RM10.84 billion (66 per cent) is expected to come from domestic sources.