Focus could now be on enhancing local supply chains to support MNCs
KOTA KINABALU: Foreign direct investments (FDI) into Malaysia could be subdued in 2018, in line with the global FDI inflow trend, and as such, analysts believe focus could be on developing and enhancing local supply chains to support multinational companies.
The research arm of AmInvestment Bank Bhd (AmInvestment) said: “Going into 2018, we believe FDI flows into manufacturing will remain subdued in 2018 due to the increasing focus on quality investments in the targeted ecosystems that should yield positive impact on the domestic economy.
“Thus, we expect the strategy to zoom in on developing and enhancing local supply chains to support multinational companies.”
On the services side, the research team believed that the main drivers would be global establishments, healthcare, education and hospitality.
Meanwhile, it noted that Malaysia’s total FDI slipped 12.7 per cent year-on-year (y-o-y) to RM41 billion in 2017 due to slower growth in investments from the manufacturing and construction sectors.
It also pointed out that the slower FDI inflows could be due to the government becoming more selective in its investment agenda that focuses on quality projects in targeted ecosystems that would have a significant positive impact on growth.
“It fell in line with global FDI inflow which dropped by 23.5 per cent to an estimated US$1.43 trillion due to moderate global economic growth and world trade volume,” it added.
Overall, AmInvestment said: “Despite the current volatilities on the global front driven by noises like the risk of emerging market debt crisis, trade war and currency war, we are off to a good start in 2018.
“A total of 402 projects with a proposed investment of RM75 billion came in as at May. On an annualised basis, we could reach around RM180 billion in 2018, supported by a healthy global GDP of 3.6 per cent in 2018 added with favourable world trade projected around four to 4.4 per cent.
“Furthermore, our focus to become a leading F&B exporter through FDIs could drive investments. Such focus would attract established brands with the right support for local companies in meeting global standards.”