KUALA LUMPUR (March 16): The 48% jump to RM80.5 billion in approved foreign direct investments (FDI) recorded last year shows that Malaysia is enjoying encouraging economic growth, said the Ministry of Finance.

The approved FDI figure is “an important leading indicator that can provide crucial information about the health of the economy,” its minister Lim Guan Eng said in a statement today.

He credited the FDI growth to “the steady hands provided by the government in steering the economy”, while pointing out that approved FDIs for all sectors was only RM26.5 billion in the first half of 2018, but grew significantly and came in at RM54 billion in the second half.

“The FDI growth is augmented by a healthy 3.2% year-on-year expansion in January 2019 for the Industrial Production Index (IPI), which is better than the market consensus of 2.3% as compiled by Bloomberg.

“This is consistent with the overall positive numbers Malaysia is recording and the trend will likely continue in the near future despite external challenges,” Lim said.

His statement came after the Ministry of International Trade and Industry released the investment figures on Thursday (March 14). The country approved a total of RM201.7 billion in investments last year, a marginal 0.55% more than the RM200.6 billion it recorded in 2017.

At the same time, MITI revealed that domestic direct investments (DDI) had fallen 17% to RM121.2 billion from RM146.2 billion in 2017, which shrank the DDI’s share of the approved investments pie to 60% from 72.9% previously – though no particular reason was given to explain the fall.

MITI then set what its agency Malaysian Investment Development Authority termed a “realistic” target of RM200 billion for approved investments this year, indicating a flat growth expected overall, given prevailing economic conditions.

Lim, meanwhile, went on to say that the FDI growth also highlights the crucial role Malaysia plays as a stable regional manufacturing hub, as well as a safe haven for international supply chains amid the continuing trade war between China and the United States.

“Indeed, FDI planned by manufacturers from China rose 410.8% or RM15.8 billion from RM3.9 billion in 2017 to RM19.7 billion in 2018. At the same time, approved manufacturing investment from the United States grew by 184.9% or RM2.1 billion from RM1.1 billion in 2017 to RM3.2 billion,” Lim said.

Besides manufacturers from China and the US, Indonesian investors are also widening their footprints here, he indicated.

“Indonesian investors intended to invest RM9.0 Billion in 2018 from a mere RM0.5 Million in 2017, which makes Indonesia the second largest source of foreign manufacturing investment after China,” he said.

On that note, he said the Malaysian government will continue with its reforms to raise the quality of growth and to ensure that the fruits of Malaysian growth are shared across all segments of society.