KUALA LUMPUR (July 25): AmBank Group Research expects foreign direct investment (FDI) flows into manufacturing will remain subdued in 2018.

In a note today, AmBank group chief economist and head of research Dr Anthony Dass said total FDI slipped 12.7% year-on-year (y/y) to RM41 billion in 2017 due to slower growth in investments from the manufacturing and construction sectors, and the government becoming more selective in its investment agenda that focuses on quality projects in targeted ecosystems that will have a significant positive impact on growth.

He said it fell in line with global FDI inflow which dropped by 23.5% to an estimated US$1.43 trillion due to moderate global economic growth and world trade volume.

“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,” he said.

Dass said on the services side, the main drivers will be global establishments, healthcare, education and hospitality.

“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,” he said.  

He said on an annualised basis, Malaysia could reach around RM180 billion in 2018, supported by a healthy global gross domestic product of 3.6% in 2018 added with favourable world trade projected around 4.0%–4.4%.

“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,” he said.