Malaysia’s 2013 FDI Soars to Record High

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Last year, Malaysia’s FDI inflows hit RM38.8 billion (US$11.7 billion), breaking the previous record of RM37.3 billion (US$11.3 billion), set in 2011. The 2013 figure represented a strong increase of 24 percent from 2012, which saw RM31.1 billion (US$9.5 billion) in FDI inflows.

The Ministry of International Trade and Industry (MITI), which announced the figures last week, added that increases in FDI inflows were seen across all sectors in 2013. The top three sectors for investment were manufacturing (37.6 percent), services (28.8 percent) and mining (28.7 percent). Over half (55 percent) of the services sector consisted of the financial and insurance, and information and communications sub-sectors. However, the MITI did not release any details of where Malaysia’s FDI inflows came from.

The MITI also commented that Malaysia’s FDI increase compared favorably to increases in global FDI of 11 percent, in developing countries of 6.2 percent, and in Southeast Asian nations of 2.4 percent, as reported by the United Nations Conference on Trade and Development (UNCTAD).

Malaysia’s robust economy and investment-friendly government policies have made it an increasingly desirable location for foreign companies, leading to the country’s rise in numerous international investment rankings.

The World Bank’s Doing Business 2014 rankings placed Malaysia at 6th place (up from 8th place in 2013) in terms of its overall “Ease of Doing Business” — the only ASEAN member in the top 10, apart from Singapore.

Singapore, the largest FDI recipient in the Southeast Asia region, saw its inflows stagnate at US$56 billion, according to the UNCTAD. In contrast, Malaysia was 11th among the UNCTAD’s top 20 economies with the highest FDI rates of return in 2011, boasting a 17 percent return on investment. The UNCTAD also placed Malaysia in 16th place among the top prospective host economies for the period 2013 to 2015 (up from 19th place in 2012).

The MITI observed that many large and prominent MNCs are choosing Malaysia to establish their regional and global operations, integrating their value and supply chain activities to take advantage of the country’s strong eco-system. It predicted that this trend would gain momentum going forward, given the government’s continued efforts to create a conducive environment for conducting business in Malaysia.

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