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Malaysia forecast foreign direct investment inflow to rise

Foreign direct investment (FDI) inflow into Malaysia is expected to increase, experts have said.

Last year, the Southeast Asian country recorded net foreign investment inflows of 48.1 billion RM (10.93 billion USD), the highest since 2016. The manufacturing sector attracted 61.4% of the total with 29.5 billion RM in 2021. It was followed by the service and mining sectors with 12 billion RM and 5.8 billion RM, respectively.

Malaysia has attracted a total of 42.8 billion RM approved investments in the manufacturing, services and primary sectors, involving 910 projects from January to March 2022, according to Malaysian Investment Development Authority (MIDA).

As of June 7, there were also 268 projects in the pipeline with proposed investments of 14.4 billion RM in both the manufacturing and services sectors.

Foreign investors’ interest in Southeast Asia has increased significantly after the pandemic. Regional economies recorded total inflows of 175.3 billion USD, led by Indonesia, Vietnam and Malaysia.

One of the reasons that make Malaysia an attractive FDI destination is its strong regulatory framework that provides stability and security for long-term investors who want their investments, research and products to be protected.

The second reason is that the country’s extensive access to finance allows businesses to easily obtain capital and loans or be listed on the stock exchange.

New fundraising methods such as crowdfunding and peer-to-peer lending platforms that have grown significantly during the pandemic are also reasons why foreign investors are approaching the Malaysian market.

The Malaysian government also provides many incentives. Under Budget 2022, the government has allocated a special fund of 2 billion RM to attract foreign companies to invest in Malaysia and does not impose income tax for up to 15 years for manufacturing and service companies moving their operations to the country.

According to the World Bank’s Business Report 2020, Malaysia ranked 12th out of 190 global economies in terms of foreign investment attraction with 81.50 points. This is an improvement from 15 – 24 years ago. It ranked second in the region, only after Singapore.

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