2010/02/05

Investments in Malaysia’s manufacturing sector halved last year, bitten by the global recession, but foreign direct investment (FDI) is expected to recover moderately this year.

This is because the economies of its foreign investors are set to improve. The International Monetary Fund, for instance, has raised its global economic growth forecast to 3.9 per cent for this year from 3.1 per cent.

The government approved manufacturing investments worth RM32.6 billion last year, down from RM62.8 billion in 2008.

Out of the 766 projects approved by the Malaysian Industrial Development Authority (Mida), foreign investments made up 67.8 per cent, or RM22.1 billion.
“Foreign investments in projects with investments of RM1 billion and above accounted for 37.3 per cent of the total (investments approved), indicating FDI inflows into the country were mainly for quality investments,” International Trade and Industry Minister Datuk Seri Mustapa Mohamed said at the investment agency’s annual media conference in Putrajaya yesterday.

FDI was mainly in industries manufacturing chemicals and chemical products, non-metallic mineral products, and electronics and electrical products.

In 2008, before the global economic crisis, the country attracted RM46.1 billion of investments

“(The year) 2009 has been tough for all of us. But we also see a better balance between foreign and domestic investments,” Mustapa said.

Domestic investments amounted to RM10.5 billion, or a third of the total approved. They were mainly in industries making basic metal products, chemicals and chemical products, are among countries with RHD markets.

“RHD passenger cars make up about 15 per cent of the global passenger car market, with Asean accounting for over one million vehicles,” he said.

Apart from Asean, Australia, New Zealand, South Africa and the UK and non-metallic mineral products.

The government plans to encourage more domestic investments by holding more roadshows, Mustapa said.

Japan was the largest foreign investor last year with RM7 billion of investments. That by Tokuyama Corp accounted for RM5.6 billion. Hong Kong was the second biggest with approved investments of RM5.3 billion.

Although investments from the US fell sharply owing to the global economic meltdown, it remained the third largest foreign investor, with major investments in electronics and electrical products and food manufacturing.

When implemented, the 766 manufacturing projects will create 64,330 jobs out of which almost two-thirds will comprise managers, supervisors and skilled workers.

Mida approved RM36.3 billion of investments in the services sector.

Unlike manufacturing, services attracted stronger domestic participation with RM32.9 billion worth of investments, or 90.6 per cent of the total. Most of these were in transport (RM7.9 billion), energy (RM6.8 billion), financial services (RM4.3 billion), real estate (RM4.2 billion) and telecommunications (RM3.8 billion).

Mustapa also noted that new measures under the National Automotive Policy Review had attracted 10 applications for investments in 1800cc and above projects.

(Source: New Strait Times)