KUALA LUMPUR, June 27 ― Malaysia edged out other developing nations to become Africa’s biggest investor, according to a report by the United Nations yesterday, leaving even South Africa, China and India behind.
This comes as foreign direct investment (FDI) into the continent almost tripled last year to US$14 billion (RM44.8 billion), while inflows into East and Southeast Asia lost steam and fell 5 per cent to US$326 billion ― its first decline since 2009.
“Malaysia, South Africa, China and India (in that order) are the largest developing-country sources of FDI in Africa,” said the United Nations Conference on Trade and Development’s (UNCTAD) “World Investment Report 2013”.
“Malaysia, with an FDI stock of US$19 billion in Africa in 2011 has investments in all sectors across the continent, including significant FDI in agribusiness and finance.”
UNCTAD had in March reported that Malaysia was the third-biggest investor in Africa in terms of flow, and fourth in terms of stock. Only France, the United States, and the United Kingdom ranked higher.
The report yesterday noted that Malaysia invested in agribusiness mostly in East and West Africa, but focused its finance FDI on Mauritius.
Despite having its roots in agriculture and tourism, UNCTAD pointed out that Mauritius has moved towards offshore banking and business outsourcing, among others.
“Mauritius offers investors the advantage of an offshore financial centre in the Indian Ocean, with a substantial network of treaties and double-taxation avoidance agreements, making it a gateway for routing funds into Africa and India,” said the report.
Malaysia also has stepped up investments in “least developed countries” (LDC), as developing economies made up 59 per cent of greenfield investment in the nations.
UNCTAD noted that banks from developing countries have led 70 per cent of projects in LDC over the past decade, with Malaysia’s Maybank Bhd holding the bulk of investments.
LDC is a term used by the UN to describe nations with the least indicators of socioeconomic development, including countries such as Mozambique, Sudan, Myanmar, and Afghanistan.
Southeast Asia’s performance has been helped mostly by higher inflows to Singapore, Indonesia and the Philippines. Despite being ranked third in total FDI, Malaysia was the only country with falling investments from 2011 to 2012.
UNCTAD’s data also showed that Malaysia has consistently recorded higher outflows compared to inflows for the past five years, which analysts commented might be caused by the dominance of government-linked companies (GLC).
Last available data from 2011 showed that Malaysia’s FDI stock stood at RM337.5 billion, mostly contributed by the financial and insurance sector in destinations such as Singapore, Indonesia, and Mauritius.
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