KUALA LUMPUR, Feb 16 ― Positive assessments on the country’s economy by international banks and rating agencies such as Moody’s, Barclays Research and Nomura prove that the government is on the right trajectory in strengthening the economy as the measures taken are bearing fruition.

Policies are certainly yielding the desired results as evidenced by Malaysia securing the highest foreign direct investments (FDIs) last year at RM38.7 billion, up a sizeable 24 per cent from 2012.

The previous record high was RM37.3 billion in 2011. InvestKL chairman Datuk Seri Michael KC Yam said last year alone, 15 multinational corporations established regional headquarters in Greater Kuala Lumpur, with investments totalling more than RM600 million.

These multinationals contributed a significant RM471.5 million to the gross national income and created 610 high-skilled jobs.

He said multinationals offered high-skilled jobs to Malaysians and tend to pay a higher wage premium which will help raise per capita income from US$6,700 to at least US$15,000 by 2020.

“Their contributions are not only limited to the country’s development and economic growth but also have multiplier effects and generate economic activities as multinationals' expatriates normally took their families along,” he told Bernama.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the record FDI represented a respectable growth as the economy decelerated to 4.7 per cent in 2013.

He said the quality of the FDIs should be stressed by looking at more high-value added FDIs that can promote research and development initiatives.

Subsequently, this would create high-skilled workers among Malaysians and the positive benefits would be absorbed by the economy, he said.

Mohd Afzanizam said the recent outturn of private investments in the fourth quarter of last year when the growth remained at double-digit pace, also suggested that the corporate sector was taking the lead to generate economic growth.

He said this scenario was something that banks would like to see happening in the future as the economy would be private sector-oriented and thus resource allocations would be much more efficient.

“Therefore, it is important that government finances remain strong and it continues to be the enabler for the private sector to flourish,” he said.

Dr Jorah Ramlan, an independent economist and visiting lecturer at Asia-Europe Institute, University Malaya, says the country now needed to focus on improving investment inflows to offset FDIs' outflows from Malaysia.

“In the past, the FDIs’ outflow from Malaysia has exceeded FDIs inflow. So, it would be good if the government focuses more on improving the FDIs’ inflows rather than to look at FDIs in general,” she said.

Malaysia’s FDI grew as many large corporations and multinational companies established their operations in the country to take advantage of the country’s strong ecosystem.

Jorah was also optimistic that the country would reduce its fiscal deficit to three per cent by 2015 based on its fiscal consolidation measures.

“The government has obviously performed very well with fiscal deficit having been reduced to 3.9 per cent last year from 4.5 per cent in 2012.

“I believe it's possible for the government to achieve three per cent by 2015,” she added. ― Bernama