KUALA LUMPUR (June 25): There is no need to be alarmed regarding the 7.4% drop in net foreign direct investment (FDI) into Malaysia to RM35.3 billion in 2014 compared with RM38.2 billion in 2013, as global FDI inflows have also fallen – and that by 16% to US$1.23 trillion last year, said International Trade and Industry Minister Datuk Seri Mustapa Mohamed.
“This is due to Malaysian economic transformation and restructuring. Our thrust is to focus on attracting high knowledge, high value-added and high technology industries.
“On the global decline in FDI inflows, it could be due to global economic fragility, policy uncertainty for investors, and elevated geopolitical risks,” he told reporters after the launch of the United Nations Conference on Trade and Development (Unctad)’s World Investment Report 2015 yesterday.
Themed ‘Reforming international investment governance’, the report showed that FDI inflows grew 37.1% quarter-on-quarter to RM9.9 billion in the corresponding period in 2015 compared with RM7.2 billion in the same period in 2014.
It also showed that 2014 recorded the highest net Malaysian (domestic) investments abroad since 2008, at RM53.8 billion.
But the first quarter of 2015 (1Q15) showed a 48.6% decline to RM11.1 billion compared with the RM21.6 billion achieved in the same period last year.
Mustapa said it was probably based on the advise given by the federal government to government-linked companies during last year’s budget to cut down their investments overseas in light of the present economic downturn.
“We are ranked number 17 in net exporter of capital according to Unctad. We are becoming a big player in terms of investments abroad, particularly in the oil and gas sector involving Petroliam Nasional Bhd (Petronas).
“The others include Telekom Malaysia (Bhd), Maybank (Malayan Banking Bhd), CIMB Group (Holdings Bhd), AirAsia (Bhd) and Axiata (Group Bhd). Malaysian companies go abroad to gain market access, higher technology and lower their costs.
“But there was a steep drop after the government issued an advice to discourage some GLCs from investing abroad in light of the current economic situation,” he said, adding that mining and quarrying sector made up 39.6% or RM4.4 billion of total investments abroad.
As for investment income received, Malaysia charted RM24.1 billion in 2014, from RM22.3 billion in 2013.
But, conversely, 1Q15 saw a 37.9% drop to RM4.09 billion from RM6.6 billion in 1Q14 last year, he said.
On sustained growth of gross FDI inflows for all sectors, RM112.1 billion was recorded in Malaysia, up 8.9% from RM103.9 billion in 2013; for 1Q15, it was at RM28.7 billion compared to RM26 billion in 1Q14.
“Realised private investments for 2014 reached a record RM183.9 billion, up 13% from RM162.8 billion previously,” he said.
He added that private investments in Malaysia saw a 10.9% rise to RM146.1 billion in 2014 while public investments featuring government-linked companies (GLCs) dropped 5.3% to RM81.9 billion last year.
As for growth rate in FDI inflows, the developing economies’ region saw a 1.5% hike globally while the rest of the regions – world (-16.3%), developed (-28.4%), and transition economies (-52%) saw negative growth rates.
By virtue of being in the developing economies sector, Malaysia scored a plus for remaining attractive in the region where a further 9.9% growth was recorded by Unctad in the breakdown of the South, East and South-East economic category.
“We wish to be in the top 10 FDI recipients in the world but we did not make it. Among ASEAN countries, Singapore is at number five with US$68 billion FDI, China is number one at 4% growth (US$129 billion) after being number two in 2013.
“US was the biggest recipient of FDIs for many years but China has emerged in that spot now. The US saw a steep drop from US$231 billion in 2013 to US$92 billion last year,” he said.