2Q FDI growth achieved on the back of sustained economic growth, says Guan Eng

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KUALA LUMPUR (Aug 20): Finance Minister Lim Guan Eng said Malaysia's sustained economic growth was one of the reasons for the rise in the country's foreign direct investment (FDI).

In a statement today, Lim noted that the total stock of FDI in Malaysia rose by 10.3% to RM667.5 billion in the second quarter of 2019 (2Q19), from RM605.1 billion a year ago.

"The steady rise in total FDI stock shows the continuing attractiveness of Malaysia as an international investment destination, amid rising trade tensions across the world," he said.

Lim said the country's gross domestic product (GDP) in 2Q19 expanded 4.9% year-on-year, an acceleration from 4.5% growth in 1Q19, at a time when various regional economies are experiencing synchronised growth slowdown.

"The 4.9% GDP quarterly growth is better than market expectations of 4.7% as compiled by Bloomberg," he said.

Lim noted that the stronger-than-expected 2Q19 GDP numbers has convinced rating agency Fitch Solutions to revise its 2019 GDP forecast for Malaysia, to 4.6% from 4.2% previously.

The government, he added, expects the GDP to expand between 4.5% and 5% this year, based on the first half-year trend.

Lim said the International Investment Position and Balance of Payments define FDI as a lasting investment made by foreign parties into domestic companies, thus giving the foreign parties a lasting controlling stake — adhering to the International Monetary Fund's definition of FDI.

"It is not the only definition available, however, and the Malaysian Investment Development Authority (MIDA) defines FDI as investment into projects. Furthermore, approved FDI functions as a leading indicator to actual FDI as defined by MIDA," he said.

Last week, MIDA announced that approved FDI across all sectors rose 97.2% to RM49.5 billion in the first half of this year (1H19), from RM25.1 billion in the same period last year.

Specifically, approved manufacturing FDI rose by 74.2% to RM33.1 billion during the first half of 2019, from RM19 billion in the same period last year.

Of this amount, RM11.7 billion came from the United States, making Washington the biggest source of approved manufacturing FDI during the period.

"China is the second biggest source with RM4.8 billion. Meanwhile, Singapore is third with RM3.1 billion and Japan is fourth with RM2.1 billion," Lim noted.

MIDA has stated that the RM33.1 billion approved manufacturing FDI would create 30,449 jobs in the near future.

"The government will maintain its business-friendly approach to attract investment into the country and create quality jobs for all Malaysians," Lim said.