Net foreign direct investment (FDI) inflows into Malaysia rose to RM74.6bil in 2022 as compared to RM50.4bil in 2021. The Statistics Department noted that as at the end of 2022, the country’s total FDI position was RM879.1bil, up from RM782bil in 2021. Meanwhile, the country’s direct investment abroad (DIA) for 2022 amounted to RM58.6bil as compared to RM19.4bil in 2021.
The Statistics Department said Malaysia’s FDIs and DIAs were encouraging and reflected the favourable economic situation in the country that attracted foreign companies to continue their investments and local companies to expand and diversify their business activities abroad.
By sector, Malaysia’s manufacturing sector contributed to the largest FDI inflows, expanding RM17.1bil for a net inflow of RM49.5bil for last year. It was followed by services and then the mining sector.
The Americas surpassed Asia as the top region for source of FDIs into Malaysia last year with net inflows of RM42.6bil. This was mainly from the United States which accounted for RM37.8bil of investments.
Asia region has been the predominant source for FDI position in total with a value of RM449bil followed by Europe at RM224.5bil and the Americas at RM187.3bil as at the end of 2022.
The country’s total DIA position stood at RM607.5bil as at end-2022, compared to RM546.5bil a year before. The services sector remained the primary sector for DIA. The sector contributed 72.2% of the total investment, especially in financial activities. The mining and quarrying and manufacturing sectors contributed 12.5% and 10.2% of the DIAs respectively.
On average, the return on investment for FDI companies in 2022 decreased to 12 sen from 13 sen in 2021 for every RM1 of investment. Conversely, Malaysian companies received eight sen for every RM1 of investment made abroad.
The services sector attained the highest income from FDI, while the manufacturing sector secured the highest income from DIA.
Malaysia jumped from 32nd to 27th in the 2023 IMD World Competitive Ranking (WCR), reflecting investor confidence and reaffirming the country’s commitment to current economic policies and strategic direction as the preferred destination for investment and trade.
This is positive news outcome but the “hot” money in the capital markets does not reflect the confidence of our longer-term investors. We are second to Singapore in net FDIs for the ASEAN region. To keep pace, we need to re-examine incentives and investment packages for those investing in Malaysia.
References:
Foreign direct investment on the rise, The Star, 17 June 2023
Economists: Improvement in IMD World Competitiveness Ranking reflects investors’ confidence in Malaysia, Malay Mail, 22 June 2023
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