Malaysia’s private investment to maintain a faster pace of 4.6 per cent
KUCHING: Analysts believe Malaysia’s private investment will maintain a faster pace of 4.6 per cent in 2017 from 4.1 per cent this year.
This forecast came from RHB Research Insitute Sdn Bhd (RHB Research) in response to the recent data released by the Malaysia Investment Development Authority (MIDA), that showcased Malaysia recording a total of RM150.8 billion worth of investments in the manufacturing, services and primary sectors for the first nine months of 2016 (9M16).
This represented a 3.7 per cent decrease when compared to the RM156.6 billion approved for 9M15, and is cited to be a direct result of global economic slowdown by the government agency.
Despite this decrease and the challenging economic environment, the research house defended its forecast justifying that this increase in private investment was on account of overall resilient investment approvals by MIDA, and on- going implementation of infrastructure projects under various economic programmes.
“Malaysia continued to attract quality private investments bearing testament to the resilience of Malaysia’s economy and the Government’s efforts to promote investment,” said the research house.
The forecast was further supported by realised private investments, measured in terms of gross fixed capital formation in current prices, that recorded a total of RM77.6 billion in the third quarter of 2016 (3Q16), which is 7.2 per cent higher than RM72.4 billion recorded in the corresponding quarter last year.
Looking abroad, in tandem with a reduction of global foreign direct investment (FDI) flows, FDI flows into Malaysia also saw a decline of 2.9 per cent year over year (y-o-y) to RM30.4 billion for 9M16. Despite this decrease, the research house noted that it remained high compared to RM31.3 billion recorded for 9M15.
Netherlands topped the list of foreign investors, accounting for 15.6 per cent of the total approved FDI investment in the manufacturing sector for 9M16.
RHB Research noted that this increase in FDI’s from the country came from a total of 16 approved projects, which is higher compared to 9 projects approved for the whole of 2015.
This is followed by investment from China which makes up 12.9 per cent of total approved FSI and consists of 22 projects. Following behind China and the Netherlands, are the UK, Singapore, Japan, Germany, and Korea Republic.
Notably, 55.8 per cent of foreign investments were for expansion or diversification projects.
The bulk of approved FDI investment in the manufacturing sector was found to be in the electric and electronics segment (E&E) at 33.6 per cent, followed by petroleum products at 22.3 per cent, chemical and chemical products at 7.4 per cent, food manufacturing at 6.6 per cent, basic metal products at 4.7 per cent, and transport equipment at 4.6 per cent.
In a recent statement from MIDA, Datuk Seri Mustapa Mohamed, Minister of International Trade and Industry, anticipates that FDI’s are likely to increase overall in 2017 due to reflection of the optimism of investors who continue to find Malaysia as a strategic location for their investments.
Based on the minister’s personal experience participating in the recent Malaysian international investment missions, the minister noted that there was positive indication from the business communities abroad to invest in a wide range of manufacturing and services projects in Malaysia.
“In fact, the recent visit by Prime Minister, Datuk Seri Najib Tun Razak to China was very successful with the signing of 14 agreements worth RM144 billion in various areas such as tourism, infrastructure, manufacturing and Research and Development (R&D),” shared the minister.
“Therefore, we encourage more SMEs to grab the opportunities to participate in the CASTPP to tap into the mega Chinese market with a population of 1.9 billion,” he said.
CASTPP is a one- day seminar which aims to provide insights on export opportunities for Malaysia and China through strategic collaborations, partnerships and joint ventures.
It also serves as a platform to increase Malaysian exporters’ knowledge of business opportunities and enhance the bilateral trade with China.
Also present was Matrade chief executive officer Datuk Dzulkifli Mahmud. — Bernama