Malaysia sees a moderate recovery in foreign direct investment (FDI) this year, International Trade and Industry Minister Datuk Seri Mustapa Mohamed said.
“We want to focus more on high-value added investments such as in the research and development (R&D) and high-tech industries,” he said yesterday at a luncheon talk entitled International Trade and Industry as the Drivers of Growth by MIDF Amanah Investment Bank Bhd.
He said Malaysia was no longer as attractive as Indonesia or Thailand for investments of labour-intensive nature as the country was undergoing a transformation.
However, Mustapa expected private investment growth to maintain its momentum this year, especially with projects from the Economic Transformation Programme (ETP).
Mustapa had previously said that in line with the ETP objective, domestic investments were the main driver of private investments last year, accounting for 78% (RM127.6bil) of the total investments approved in 2012, while the remainder 22% (RM34.8bil) came from foreign investments.
“Over the longer term, we hope to achieve 72% domestic investments and 28% foreign investments,” he said.
He also said Johor was at a very exciting stage for investors this year. “Iskandar development has a huge future and would be a new growth area for Malaysia.”
“This year will be a better year and trade will continue to be the main driver for the economy,” he noted.
He said the January data was showing improvement in trade performace but it was too soon to determine the whole year trade performance yet.
January's exports were largely boosted by the rise in shipments of electrical and electronic (E&E) as well as refined petroleum products.
“We expect export growth of betweeen 4% and 5% this year,” he added.
Mustapa said last year export performance was affected by lower commodity prices, especially that of crude palm oil and crude oil.
On another note, Mustapa welcomed Japan's interest in joining the Trans Pacific Partnership (TPP) negotiations.
“As a major economy in the region, Japan's membership would add value to the TPP. The TPP, which could be the platform for a future free trade arrangement across the Asia-Pacific region, would be enhanced by Japan's participation,” he said.
Last Friday, Japan announced its interest to join the TPP negotiations.
Asked if Japan's participation may delay the conclusion of negotiations, Mustapa said “it won't delay the process”.
The current participants in the negotiations are Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, United States and Vietnam.
MIDF Amanah Investment Bank chief economist Anthony Dass told StarBiz he expected trade to improve this year compared to last year.
“This year we would see a pickup in the electrical and electronic sector at least by the second half of this year as well as stable commodity prices,” he said.