Malaysia attracted an inflow of US$11.97 billion last year, an increase of 31.5 per cent from 2010.
Malaysia emerged as the fifth most popular destination for foreign direct investments (FDIs) in Asia last year with inflows of US$11.97 billion (RM37.83 billion), an increase of 31.5 per cent from 2010.
The figures, released by United Nations Conference on Trade and Development (UNCTAD) yesterday, showed that the manufacturing sector continued to be the largest contributor to FDI inflows at 44 per cent.
This was followed by the services sector (35 per cent), mining and quarrying (20.1 per cent) and agriculture, forestry and fishing (0.3 per cent).
"If I am an investor, Malaysia to me is a place of strength, the country to come to. It is an excellent place to be," said UNCTAD investment and enterprises division chief, Professor Hafiz Mirza, who presented the report here yesterday.
The only shortcoming for Malaysia in attracting FDI would be the size of its small local economy, which makes it necessary for the country to upgrade its global value chain.
"From the broader perspective, Malaysia is strong in manufacturing and so the question next is whether it should expand beyond that, like going into research and development," he said.
Hafiz added that instead of relying on the country's strength in manufacturing, Malaysia could start producing new designs for the global market.
He noted that Malaysia had been very successful in attracting investment through its policies, adding that under UNCTAD's new FDI Contribution Index, Malaysia was in a strong position to introduce its new set of "next-generation" investment policies.
In 2009, FDI inflows to Malaysia was only US$1.45 billion, compared with US$7.17 billion in 2008.
Malaysia was ranked fifth after China, Hong Kong, Singapore and Indonesia.
The UNCTAD figures were disclosed in conjunction with the release of The World Investment Report 2012, subtitled "Towards a New Generation of Investment Policies", which was launched by International Trade and Industry Minister Datuk Seri Mustapa Mohamed.
Hafiz said Malaysia was among the few countries that exceeded UNCTAD's expectations in terms of the FDI Contribution Index.
The index ranks economies on the basis of the significance of FDI and foreign affiliates for their economies in terms of value added, employment, wages, tax receipts, exports, research and development expenditures and capital formation.
The other countries with better-than-expectation performances were Cambodia, Poland, Romania, Thailand and Britain.
Meanwhile, Mustapa said in his speech Malaysia's investment policies were aligned with UNCTAD's policy framework for sustainable development.
"We made good progress in delivering social development and economic growth last year under the Government Transformation Programme and the Economic Transformation Programme," he said.