THE inflow of foreign investments (FDIs) into Malaysia is still resilient for 2013 although the global scenario remains fraught with significant risks, says a United Nations report.
United Nations Conference on Trade and Development (UNCTAD), which is entrusted with international investment issues, said the trend of FDI inflows into Malaysia indicates that it is still on the increase, with US$10.07 billion (RM32.12 billion) recorded in 2012.
Although it marked a drop compared to the previous year, it was in line with the global drop in manufacturing. UNCTAD attributes it mainly to the decline in the value of greenfield projects.
The manufacturing sector is going through a period of transformation and restructuring in Malaysia and industry players are expected to reduce their investments in low-value sectors and instead increase their activities in research and investment, high-knowledge, high value-added and high-tech industries.
Malaysia, however, maintained its ranking as the third largest recipient in FDIs in Asean. In the first quarter of this year, Malaysia attracted RM9.1 billion in FDIs.
UNCTAD also ranked Malaysia 11th among the top 20 economies with the highest FDI profitability - recording 17 per cent in terms of rate of returns.
"Rates of return on FDI testify that Malaysia is a profitable location to do business," said UNCTAD.
According to its latest World Investment Report 2013, global FDI inflows fell by 18 per cent last year to US$1.3 trillion from US$1.6 trillion in 2011. Africa is the only region which has bucked the trend.
Masataka Fujita, who presented the report at the Malaysian Investment Development Authority (Mida) office yesterday, described the FDI recovery road as bumpy.
Global FDIs for this year are expected to remain close to last year's level and may slowly increase to US$1.6 trillion next year and US$1.8 trillion in 2015.
For last year, developing economies were the largest FDI recipients, accounting for 52 per cent of the world total. China, Hong Kong, Brazil, British Virgin Islands and Singapore ranked in the top five.
International Trade and Industry Minister Datuk Seri Mustapa Mohamed, who launched the report, said Malaysia's strategic policy measures are in line with UNCTAD's recommendations.
"The government has undertaken various measures to promote value-added activities, which include an ecosystem approach to promote private investments, encourage outsourcing activities to enhance efficiency and gain competitive edge as well as introduce domestic investment initiatives such as the Domestic Investment Strategic Fund."
He said many large corporations and prominent multinationals, which have chosen Malaysia for their regional and global operations, have structured training programmes to transfer their key competencies to Malaysian employees.
This will create high-income employment opportunities in sectors such as business, accounting, finance, IT, engineering, technical and other new services sectors such as designing and analytical sciences.
UN Resident Coordinator ad interim Wivina Belmonte said Malaysian transnational corporations operating in energy, construction, plantations, information and telecommunications, and manufacturing have expanded their operations and activities in Asia and Africa.
In terms of FDI stock, Malaysia, South Africa, China and India are the largest developing-country investors in Africa.