Friday 29 Mar 2024
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KUALA LUMPUR (July 21): United Overseas Bank (M) Bhd (UOB) anticipates a larger decline of 12% for this year’s real private investment growth due to a slower pace of project materialisation.

The bank’s projection in a note today is a noticeably larger decline compared to Bank Negara Malaysia’s forecast of a 9.7% slump.

UOB economists Julia Goh and Loke Siew Ting also estimate total full-year investment at RM100 billion, about half of last year’s RM211 billion figure due to lingering downside risks and uncertainties from Covid-19 and the Movement Control Order (MCO)

Meanwhile, the bank also said 1Q20 investments fell 34% to RM37.4 billion amidst the Covid-19 pandemic, compared to RM57 billion in the same period last year.

Of the total investments approved, domestic investments constituted RM26.3 billion or 70.4% while RM11.1 billion or 29.6% came from foreign sources, Goh and Loke said.

Manufacturing attracted the bulk of investments with RM25.2 billion, or 67.5% of the total approved, while investments in services and primary sectors were significantly lower at RM11.9 billion and RM300 million respectively, or 31.7% and 0.8% of total investment.

Approved investments in the manufacturing sector fell only marginally by 0.6% year-on-year (y-o-y), thanks to support from domestic investments that accelerated over 180% y-o-y to RM14.6 billion, making up 58% of total manufacturing investments in 1Q20, the economists said.

Meanwhile, approved foreign manufacturing investment fell 47.6% y-o-y to RM10.6 billion, with the major contributors being Switzerland, Singapore, United States, China, Japan and South Korea.

By sub-sector, manufacturing investments were focused on petroleum products (including petrochemicals) and electrical and electronics. Key manufacturing projects approved include the production of medical device product and a manufacturing facility in the industrial and automotive sector.

Approved investments in the services sector fell 58.1% y-o-y in 1Q20, with 98% or RM11.6 billion sourced domestically.

The top five services sub-sectors that garnered the highest investment value were real estate, support services, utilities, hotel and tourism, and financial services, representing a combined RM11.7 billion or 99% of total approved investments.

The support services industry that covers integrated logistics, research and development, green technology, integrated circuit design, oil and gas services, and licensed warehouse recorded an investment of RM1.6 billion, an increase of 178.5% compared to the same period last year mainly attributed to a surge in green technology activities and integrated logistics services that accelerated 214% and 165% respectively.

Approved investments for the primary sector, which comprises mining, plantation and commodities, and agriculture, were the worst affected, plummeting 91% y-o-y and fairly balanced between foreign and domestic sources.

Total investments approved involve 892 projects and could potentially create 19,134 jobs, with Sabah, Penang, Johor, Selangor and Kuala Lumpur receiving the most investments.

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