Despite hit in 2014, investor confidence in Malaysia remains steady

Malaysia’s net FDI inflows dropped to RM35.3 billion in 2014 from RM38.2 billion the year before, according to the World Investment Report 2015. — File pic
Malaysia’s net FDI inflows dropped to RM35.3 billion in 2014 from RM38.2 billion the year before, according to the World Investment Report 2015. — File pic

KUALA LUMPUR, June 25 — Malaysia weathered a global drop in foreign direct investment (FDI) last year, with International Trade and Industry Minister Datuk Seri Mustapa Mohamed attributing the resilience to the restructuring of the country’s economy.

Malaysia’s net FDI inflows dropped to RM35.3 billion in 2014 from RM38.2 billion the year before, according to the World Investment Report (WIR) 2015 launched by the United Nations Conference on Trade and Development (Unctad) yesterday.

The country’s drop of 7.4 per cent was marginally lower compared to the 16.4 per cent fall of global FDI to US$1.23 trillion (RM4.64 trillion), as the East and Southeast Asia region grew its inflows by 10 per cent last year.

Malaysia’s gross FDI inflow also rose 8.9 per cent from RM103.9 billion in 2013 to RM112.1 billion in 2014.

The trend is set to continue this year, as Mustapa highlighted that FDI inflows in the first quarter of 2015 grew 37.1 per cent compared to the same period last year.

“We will able to at least maintain the amount of net inflows … We will be able to achieve a modest increase,” Mustapa told reporters after the launch.

According to the WIR, Malaysia was ranked the sixth biggest recipient of FDI in the region last year, below China, Hong Kong, Singapore, Indonesia and Thailand.

Mustapa claimed that the figures were proof that investors still have high confidence in Malaysia, despite its economic slump and the fall of ringgit.

“We believe that our fundamentals are strong, some have overreacted to external situation ... There continues to be strong interest in Malaysia,” the minister said, even as the ringgit fell as much as 0.5 per cent to 3.76 per dollar yesterday, its weakest since June 17.

To back his argument, Mustapa cited the RM28.8 billion worth of investments in the pipeline through the Malaysian Investment Development Authority as at June 15, 2015, with RM19.5 billion alone in the manufacturing sector.

Economist Dr Masataka Fujita, who was the lead writer of the report, also downplayed the fall in Malaysia’s net FDI inflows last year, claiming it could also be attributed to divestments and loans pay-off towards parent companies.

“I don’t say Malaysia is more or less attractive now, but about the same,” commented Fujita, who heads Unctad’s Investment Trends and Issues Branch.

In the same report, Malaysia was also ranked 17th in terms of FDI outflow, making it among the nine developing or transition economies in the top 20 list.

“It is also a reflection of Malaysia’s foray into the global arena to seek new market opportunities and it indicates that local firms are capable of competing effectively with multinational companies on the world stage,” said Mustapa.

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