Foreign direct investments hit RM33bil, surpassing pre-crisis level

PETALING JAYA: Despite prevailing global economic uncertainties, Malaysia's total foreign direct investment (FDI) inflows sprung a surprise and climbed to RM32.9bil last year, eclipsing the pre-crisis level of RM29.1bil achieved in 2007.

International Trade and Industry Minister Datuk Seri Mustapa Mohamedsaid the manufacturing sector accounted for the largest share of FDI inflows, comprising 50.1%, followed by the services sector with 27.3%, and mining and quarrying at 22.2%.

Brazil's Vale Group, the world's second-largest mining company, Agilent Technologies Inc and Infineon Technologies are among the foreign companies that expanded their operations in Malaysia last year.

Mustapa: Manufacturing sector accounted for the largest share of FDI inflows last year.

About 72% of FDI came from Asian countries, with Japan topping the list with RM10.1bil, followed by South Korea at RM5.1bil and Singapore RM2.47bil, while US contributed RM2.5bil, and Saudi Arabia RM2.17bil.

With the intensified efforts to attract investments, he hoped the country could achieve similar numbers this year.

Data released by the Malaysian Industrial Development Authority (MIDA) showed total investments approved in the manufacturing, services and primary sectors leaping by 40.7% to RM148.6bil on the back of 4,964 projects, compared with RM105.6bil (4,368 projects) in 2010.

Mustapa also said the domestic investments in 2011 continued to dominate the approved investments, accounting for 55.4% or RM82.3bil of the total approved investments, while foreign investments totalled RM66.3bil.

The manufacturing sector accumulated a total of 846 projects valued at RM56.1bil, an increase of 18.8% from RM47.2bil recorded in 2010, while the services sector recorded investments totalling RM64.4bil, surging by 75.5% from RM36.7bil previously.

Sarawak attracted the most approved investments at RM14.35bil, followed by Penang with RM14.04bil and Sabah at RM13.68bil.

Meanwhile, he said the country had surpassed targets for realised private investments by achieving RM94bil in realised investments in 2011, exceeding the RM83bil target set previously. He said he hoped the country could achieve the target of RM115bil in annual average realised private investments set under the 10th Malaysia Plan.

Bank Islam chief economist Azrul Azwar Ahmad Tajudin said it was a good thing to see a revival in private investments with the country surpassing targets set.

“However, the private investment share to gross domestic product (GDP) ratio is still at low levels despite the revival of private invesments,” he said.

He said before the Asian financial crisis, share of private investment to GDP took between 20% to 30%, and just before the crisis hit, it was at a peak of 35%, however currently it was hovering at about 11% only.

“Although the data presented is very clear, I would like to see data that shows FDI inflows by state,” he said.

RAM Holdings Group chief economist Dr Yeah Kim Leng also echoed the same sentiments and said the fresh data should help boost investors' sentiments given that FDI inflows were still present despite the perceived economic slowdown.

“This points to Malaysia's ability to attract foreign investments, however we still have to see in relation to the overall FDI inflows of other countries, and compare the share with them,” he said. - The Star