‘Annual FDI set to hit RM50B by 2030’

‘Annual FDI set to hit RM50B by 2030’

03 Sep 2024

Investment landscape remains robust with positive outlook in short to medium term

MALAYSIA is poised to record absolute annual foreign direct investment (FDI) inflows of more than RM50 billion by 2030, according to UOB Global Economics and Markets Research.

This is supported by the robust FDI performance so far this year, with Malaysia having secured US$3.1 billion in FDI inflows alone in the first half, or a 17.9 per cent increase from US$2.6 billion recorded a year ago.

UOB Research said in the absence of any unexpected economic shocks, it expected FDI inflows to sustain the average longterm 15-year growth trend of 3.6 per cent per annum in the medium term, or around RM51.6 billion annually by 2030.

It added that despite a challenging and complex global environment, Malaysia’s investment landscape remained robust with a positive FDI outlook in the short to medium term.

The Malaysia Investment Development Authority approved almost RM1 trillion worth of investments between 2021 and March this year, with committed manufacturing investments making up RM474.3 billion (47.9 per cent), services investments at RM461.8 billion (46.6 per cent) and primary sector investments totalling RM54.2 billion (5.5 per cent).

About 77.2 per cent of approved manufacturing projects have been implemented, about 21.1 per cent in the planning phase, and the balance are unimplemented.

This is in addition to projects in the pipeline that totalled RM128.4 billion as of May 31.

UOB Research said various catalytic projects identified in national masterplans, such as the New Industrial Master Plan 2030, National Energy Transition Roadmap and Midterm Review of 12th Malaysia Plan, would further enhance opportunities for investments in Malaysia’s high-growth, high-value sectors.

The planned Johor-Singapore Special Economic Zone and Malaysia’s five regional economic corridors will also work to bring in more investments.

To date, Malaysia has also implemented 16 free trade agreements (seven bilateral and nine regional) and joined the Regional Comprehensive Economic Partnership, Indo-Pacific Economic Framework, and Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

However, it cautioned that the possibility of expanded universal United States tariffs, export controls and secondary sanctions to countries that were part of the China “Plus One” strategy remained a key risk, particularly for Malaysia and other Asean members that had benefited from diverted “China-US” flows.

The United Nations Trade and Development, in its World Investment Report 2024, also said the global environment for international investment “remains challenging” due to economic fracturing trends, trade and geopolitical tensions, industrial policies and shifts in supply chains reshaping FDI patterns, prompting multinational enterprises to stay cautious on overseas expansion.

Source: NST