Investor confidence in Malaysia continues to be strong, with foreign direct investment (FDI) increasing to RM18.3bil in the first quarter of this year against RM9.6bil in the same quarter last year.
Malaysian Investment Development Authority (Mida) deputy chief executive officer II Datuk Phang Ah Tong said the bulk of the FDI, or about RM11.7bil out of the RM18.3bil, was for manufacturing, while Asian countries continue to be the top investors in Malaysia.
“We expect interest to pick up. Many companies had put on hold their business plans due to the general election. Now that the election is over, they are undertaking their business plans. Continuity of the Government will provide consistency to investors,” Phang told StarBiz.
For the full year, Mida is targeting a total FDI of RM48bil for the manufacturing sector, RM60bil for the services sector and RM40bil for the primary sector.
Asked if Chinese investors were investing heavily in Malaysia, Mida anticipated the FDI from China to be about the same level as last year, and said there was an uptrend beginning from 2010 to March 2013. The investment value for manufacturing projects approved from China in 2012 stood at RM1.97bil, compared with RM1.19bil in 2011 and RM639.5mil in 2010.
While the investments are important, Phang said the employment generated from these investments were equally important as it created a spin-off effect.
Phang said traditionally, states like Selangor, Penang, Johor and Malacca garnered a high level of investor interest, while Sarawak and Sabah were the emerging states. He added that resource-based industries were now mainly investing in Sabah, while energy-intensive companies were venturing into the Sarawak Corridor of Renewable Energy.
He pointed out that Malaysia was rebranding itself and was no longer a “low-cost manufacturing hub”. Phang said the agency wanted to attract quality investments, as it was currently moving up the value chain to become a high-income, knowledge-based economy. The quality investments approved encompass elements such as high value-added, high-technology, knowledge-intensive and skills-intensive components.
Phang said the approved projects had an 80% implementation rate. “We cannot have 100% and 80% is very encouraging,” he said, adding that on certain occasions, implementation did not take place due to economic conditions. He cited the solar panel industry as an example. The overcapacity in the industry has caused prices to nosedive. In line with this, Germany's Bosch announced that it was pulling the plug on its solar panel operations, including its planned RM2.2bil solar panel manufacturing plant in Penang.
In the first quarter, Malaysia recorded RM49.3bil of approved investments, up 44% compared with RM34.3bil in the same period a year ago. A total of 1,224 projects were approved during the period, expecting to generate 41,885 job opportunities.