digitaledge Daily 1H15 FDI almost halves to RM21.3b

by **Cals** Thu 20 Aug 2015, 20:36

digitaledge Daily
1H15 FDI almost halves to RM21.3b

KUALA LUMPUR: Foreign direct investments (FDI) into Malaysia shrank 41.8% to RM21.3 billion in the first half of 2015 (1H15), compared with RM36.6 billion in 1H14, mainly because of a higher base effect from several high-profile investments, boosting FDI inflows into the country that year, according to International Trade and Industry Minister Datuk Seri Mustapa Mohamed.
“Firstly, last year there was a big investment when Tokuyama Malaysia (Sdn Bhd) went to Sarawak in the solar sector for RM6 billion. It was a lumpy investment year. Secondly, Petronas’ Johor project also came up and the investment in Johor was up for approval,” explained Mustapa.
Hence, the FDI made up only 18.8% of total 1H15 investments, which came in at RM113.5 billion, compared with 32.6% of the total RM112 billion investments recorded in 1H14.
Mustapa was speaking to reporters during the Malaysian Investment Development Authority (Mida) media briefing on Malaysia’s 1H15 investment performance, which saw total investments grow 1.3% year-on-year (y-o-y).
The bulk of FDI inflows into the country came from East Asian economies, such as Japan, Hong Kong, China, South Korea and Taiwan at RM7.4 billion, followed by the Americas at RM2.3 billion and Europe at RM1.9 billion.
Approved FDI for the manufacturing sector in 1H15 dropped to 22% out of a total of RM49.5 billion investments in 1H15, compared with 55% of RM43.1 billion in 1H14.
Under the manufacturing sector, the largest FDI contributor was Hong Kong at RM3.1 billion, followed by Japan at RM2.6 billion, the United States at RM2.2 billion, China at RM1.2 billion and Singapore at RM700 million.
The FDI into the services sector, meanwhile, slipped to 12% out of RM61.7 billion total investments in the sector, compared with 13% out of RM58.8 billion in 1H14.
Meanwhile, total approved investments in the manufacturing sector grew 14.9% y-o-y to RM49.5 billion (1H14: RM43.1 billion), while the services sector, which saw the largest value of investments for 1H15 at RM61.7 billion, was up 4.9% y-o-y (1H14: RM58.8 billion).
With the latest 1H15 figures, Mustapa said the government had exceeded its 10th Malaysia Plan’s (10MP) target of RM740 billion of total investments realised in five years by 9.9%.
“Investor confidence sustained Malaysia’s growth as total investments realised to date under the 10MP period (2011 to 2015) were RM813.5 billion, exceeding the plan’s target of RM740 billion, despite the slow private investment growth,” said Mustapa.
The state breakdown saw Johor registering the highest amount of investment at RM27 billion in the manufacturing sector, an increase of 72% from RM15.7 billion in 1H14.
The other top 10 states in terms of investment value for 1H15 were: Melaka (RM6.2 billion), Penang (RM4.3 billion), Selangor (RM4.2 billion), Perak (RM3 billion), Kedah (RM1.1 billion), Pahang (RM1 billion), Negeri Sembilan (RM940 million), Sarawak (RM640 million), and Sabah (RM340 million).
Moving forward, the government plans to attract more quality FDIs with trade and investment missions to major capital-exporting countries in North America, Europe and Asia, particularly China.
“In tandem with China’s current overseas investment policies, we see encouraging investments from China into the country. For the first half of this year, Malaysia attracted 10 manufacturing projects from China worth RM1.2 billion.
“In addition, there has also been an increase in merger and acquisition activities in the eco-glass and metal industries. To further facilitate Chinese investments, Mida has expanded its overseas network in China by establishing a new office in Beijing, in addition to its existing ofices in Shanghai and Guangzhou,” said Mustapa.
This article first appeared in digitaledge Daily, on August 20, 2015.