Need to spruce up investment flow

WHEN data for investments into Malaysia was announced on Thursday, the one thing the government was keen to emphasise is the number of jobs being created.

The headline number of approved investments fell 28%, with investments in services falling the most by 41%, meant that there was still growth but it was slowing. With the economic growth projected to cross 5% this year, the fall in investments is something the International Trade and Industry Ministry was keen to see rectified as soon as possible.

It remains optimistic that projects in the pipeline were healthy when it comes to foreign companies establishing principal hubs in Malaysia.

The drop in investments in services was to be expected. Housing has a huge multiplier effect on the domestic economy and with that sector in a slump with new launches slipping substantially, the spillover into other sectors will not be great.

Construction activity, which is not tracked by the ministry, has shouldered the overall investment amount in Malaysia but for longterm job creation, the services sectors needs to see some for of rebound.

The other interesting note is that foreign direct investment was RM9.6bil for the first half of the year with the larger investors not from traditional countries. Netherlands, Switzerland and Germany were the top three investors so far with Hong Kong and Singapore rounding off the top five.

With electrical and electronics demand seeing a boom internationally, investments into Penang was the strongest, followed by Melaka where there is a strong investments from Germany’s Infineon.

With labour issues figuring prominently among the issues involving investments, it was no wonder why the Government recently relaxed rules whereby exporting firms can hire a fully foreign workforce.

The last thing the government needs is a bottleneck that can hinder the flow of export receipts at a time when the trade surplus is growing and also international reserves at a slower pace.