Malaysia’s FDI inflow at RM40.4b DIA outflow at RM40.6b in 2023

Malaysia’s FDI inflow at RM40.4b DIA outflow at RM40.6b in 2023

26 Jun 2024

Malaysia achieved foreign direct investment (FDI) net inflow of RM40.4 billion in 2023 while direct investment abroad (DIA) totalled RM40.6 billion according to the Department of Statistics Malaysia.

Chief Statistician of Malaysia Datuk Seri Dr Mohd Uzir Mahidin said the FDI net inflow in 2023 decreased from RM75.4 billion in the previous year mainly due to equity and investment fund shares, reflecting the global economic slowdown.

“This was in line with Unctad’s 2024 Global Investment Trends Monitor report which highlighted that the FDI flows to developing countries declined approximately 9%, totalling US$841 billion in 2023. Notably, developing Asia dropped around 12% to US$ 584 billion, with Asean’s FDI decreasing about 16%,” he added.

However, the cumulative value of foreign investment, known as the FDI position rose to RM926 billion at the end of 2023, making up 50.8% (2022: 49.0%) of gross domestic product (GDP), primarily attributed to non-transaction categories.

Meanwhile, DIA net outlow fell from RM62.8 billion in the preceding year, while the stock increased to RM664.4 billion, representing 36.4% (2022: 33.8%) of GDP.

Looking at the sectoral distribution, the services sector emerged as the primary recipient of FDI, with a net inflow of RM35.4 billion, surpassing the manufacturing sector. Within services, information and communication contributed the highest share, which is in line with emerging digital global business and data centre related activities, followed by the financial and insurance/takaful sub-sector.

The manufacturing sector remained the highest contributor to total income despite lower net inflow, generating RM41.9 billion, largely driven by the electrical, transport equipment, and other manufacturing sub-sectors. Cumulatively, both services and manufacturing sectors significant value in position, with RM468.2 billion and RM391.3 billion, respectively.

Geographically, Asia remained the dominant source of FDI, contributing RM54.3 billion in 2023 with a position valued at RM508.4 billion. Leading investors from the region included Singapore, Hong Kong and Japan. The Americas, particularly the United States, earned the highest income from FDI, totalling RM41.4 billion.

On Malaysia’s investments abroad, Mohd Uzir said, “The DIA net outflows were mostly contributed by the services sector with a value of RM34.5 billion, primarily in financial and insurance/takaful activities and utilities. This sector also generated the highest income at RM23.9 billion, followed by mining and quarrying RM10.7 billion.

Seemingly, the services sector remained the primary contributor of DIA in 2023 by registering the accumulated position at RM461.1 billion, trailed by mining and quarrying at RM80.5 billion and manufacturing at RM60 billion.

In terms of region, Asia remained the leading destination of DIA flows in 2023 with RM29.9 billion, particularly to Singapore and Indonesia.

The highest income was also generated from Asia, amounting to RM24 billion, especially from Singapore, Indonesia and Vietnam. Hence, the DIA position of Asia stood at RM365.1 billion at the end of 2023, the highest contributor among other regions. The Americas was the second largest contributor for DIA outflows and income, both amounting to RM7.5 billion, with a total position of RM156.2 billion.

On average, the return on investment for FDI companies in 2023 decreased to 10 sen from 12 sen in the previous year for every RM1 of investment. Concurrently, Malaysian companies received 6 sen for every RM1 of investment made abroad.

Source: Bernama