Malaysia has become increasingly attractive to foreign investors due to several factors, including the country’s political stability and track record in exercising fiscal responsibility, said UBS Global Research.

It said Malaysia’s competitiveness in the electrical and electronics (E&E) sector, as well as energy policies leading to net zero targets are other factors attracting investors.

UBS analyst Nicole Goh said the country also has a deep talent pool with a high number of STEM graduates, numerous free trade agreements and good scores regarding ease of doing business factors.

“Localisation of foreign direct investment (FDI) has been fairly successful in Malaysia. For example, the E&E ecosystem had benefitted from demand from large multinational company investments; the positive spillovers also extended to construction companies and the labour market,” she said in a note today.

Goh believes the implementation of the global minimum tax of 15 per cent in 2025 would have a negligible impact on competing for FDI.

Although de-globalisation trends have intensified, with many countries seeking to reshore companies through subsidies, it would not stop large players from expanding globally.

“Notwithstanding this, Malaysia has implemented a 40 per cent local content criteria, which is in line with World Trade Organisation standards.

“From a business owners’ perspective, FDI into Malaysia has benefited companies greatly, especially with regard to sub-industries supporting the E&E industry, which saw a large inflow of FDI,” she said.

Goh added that the outlook for FDI inflows in the second half of 2024 is positive, with good traction from China, Europe, the United States, Japan, and South Korea.

The FDI inflow was concentrated in the E&E space, but there is also interest in chemicals, green technology, machinery, and metal fabrication.

Apart from E&E, green technology, machinery, and metal fabrication were also sectors of interest, and there remained strong interest in data centre investments.

“If Malaysia becomes a regional data centre hub, this will be a major draw for companies at the forefront of technological innovation to deepen investments in Malaysia,” she said.

With Malaysia assuming the chairmanship of Asean in 2025, there could be opportunities to improve intra-trade within Asean countries, which only make up 23 per cent of the bloc’s current trade.

“In terms of free trade agreements, Malaysia could restart negotiations with the European Union on the stalled Malaysia-European Free Trade Association’s (EFTA) Economic Partnership Agreement, which is an economic partnership agreement between Malaysia and EFTA members including Switzerland, Norway, Iceland, and Liechtenstein,” Goh said.

Source: Bernama

Malaysia increasingly attractive to foreign investors — UBS Global Research

Malaysia and the United Arab Emirates (UAE) have successfully concluded the negotiations for a Comprehensive Economic Partnership Agreement (CEPA), set to eliminate or reduce tariffs, lower trade barriers, foster private-sector collaboration, and create new investment opportunities.

Minister of Investment, Trade and Industry Tengku Datuk Seri Zafrul Abdul Aziz said the CEPA, as Malaysia’s first free trade agreement (FTA) with a Gulf Cooperation Council (GCC) nation, will enhance trade, boost investments, and deepen Malaysia-UAE economic ties.

“We view the UAE as a strategic hub for Malaysian exporters to access markets in the Middle East, North Africa and certain parts of Europe, particularly as Malaysian exports, such as electrical and electronics, machinery, jewellery, prepared foodstuff, tropical fruits, palm oil, cocoa and rubber, will immediately enjoy zero import duties when this agreement comes into force.

“The CEPA is also a strategic leverage for UAE-based companies to optimise Malaysia as a gateway into the ASEAN market, which, in turn, will provide tremendous opportunities for our businesses – particularly small and medium enterprises (SMEs) – through integration into regional supply chains, capacity-building and knowledge sharing via the UAE investors.

“The Ministry of Investment, Trade and Industry (MITI) looks forward to working closely with UAE Minister of State for Foreign Trade Dr Thani Ahmed Al Zeyoudi and the UAE Ministry for Foreign Trade to ensure the swift ratification and implementation of the CEPA,” he said in a statement today.

Meanwhile, Thani said the CEPA reflects the productive ties that have developed between the UAE and Malaysia, as well as Southeast Asia as a whole.

“Malaysia is a long-standing and trusted trade partner that, like the UAE, is seeking to enhance its economic prospects through increased trade and targeted investment.

“As the fourth largest economy in the Southeast Asia region, and with economic growth in 2024 set to outstrip forecasts, Malaysia offers substantial opportunity for our exporters, industrialists and business leaders, especially in high-growth sectors such as energy, logistics, manufacturing and financial services,” he said.

According to MITI, the UAE’s CEPA initiative aims to elevate its non-oil foreign trade to US$1 trillion (US$1 = RM4.29) by strengthening relationships with key markets worldwide.

“This ambitious strategy not only enhances ties within the ASEAN bloc but also positions Malaysia as a key player in this economic landscape, benefiting from existing CEPAs with Indonesia and Cambodia that further stimulate bilateral trade opportunities,” it said.

MITI added that the CEPA also underscores the strengthening economic relationship between Malaysia and the UAE, with bilateral non-oil trade surpassing US$4.9 billion in 2023.

In the first half of 2024, non-oil trade reached US$2.5 billion, reflecting a 7.0 per cent increase from the same period in 2023.

“The UAE is Malaysia’s second-largest trade partner in the Arab world, constituting 32 per cent of Malaysia’s trade with Arab countries, while Malaysia ranks as the UAE’s 12th-largest trading partner in Asia and fifth among ASEAN nations.

“The UAE is a vital market, accounting for 40 per cent of Malaysia’s merchandise exports to the Arab World, highlighting Malaysia’s strong trade presence in the region,” MITI said.

Source: Bernama

Malaysia, UAE enhance trade prospects after concluding CEPA negotiations – Tengku Zafrul

Malaysia has expressed its desire to resume discussions on the Malaysia-EU free trade agreement (FTA), said Prime Minister Datuk Seri Anwar Ibrahim.

In a bilateral meeting with European Council President Charles Michel, Anwar also shared several views on the EU’s Deforestation-Free Regulation (EUDR), which has a direct impact on the nation’s palm oil industry.

“I used this meeting to strengthen bilateral relations between Malaysia and the EU, in addition to exchanging views on regional and international geopolitical developments.

“Among other things, we agreed to work towards enhancing Asean-EU strategic cooperation, particularly during Malaysia’s chairmanship of Asean next year,” he said.

The bilateral meeting took place on the sidelines of the 44th and 45th Asean Summits and Related Summits at the National Convention Centre (NCC) here.

Last month, Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz announced that Malaysia is officially ready to resume FTA negotiations with the EU, aiming for a final agreement.

He said the government would ensure that the negotiations result in a win-win situation for both parties.

Negotiations on the FTA began in October 2010, involving eight rounds of discussions up until September 2012, but were put on hold due to Malaysia’s concerns over several aspects, such as palm oil, procurement policies, subsidies, and the EU’s sustainability clauses.

Meanwhile, Anwar today also received a courtesy call from a delegation of the World Economic Forum (WEF), led by its executive chairman, Professor Klaus Schwab, who is also the prime minister’s long-time friend.

“Our discussions touched on various important issues concerning regional and global economic developments.

“Prof Schwab also extended an invitation for me to attend the WEF in Davos in January next year. InsyaAllah, I will consider it,” he said.

Source: NST

Anwar: Malaysia seeks to resume FTA talks with EU

Malaysia is aiming to strengthen economic cooperation with Vietnam by exploring opportunities for private sector involvement in emerging industries.

Prime Minister Datuk Seri Anwar Ibrahim emphasised that Vietnam’s rapid industrial growth presents significant potential for partnerships that would benefit both economies, particularly as global demand for advanced technologies rises.

“Malaysia is keen to explore opportunities for private sector involvement in emerging value chains, particularly in the electric vehicle (EV), electronics, semiconductor, and advanced materials industries,“ Anwar said in a statement on Thursday.

Anwar had earlier held a bilateral meeting with his Vietnamese counterpart, Prime Minister Pham Minh Chinh, on the sidelines of the 44th and 45th ASEAN Summits in Vientiane, Laos.

He also stated that Malaysia is ready to assist Vietnam in enhancing its fisheries monitoring, control, and enforcement systems by sharing best practices.

Another area of collaboration discussed was the halal industry, with Malaysia, a global leader in halal certification, expressing its readiness to work closely with Vietnam.

“Malaysia is prepared to offer expertise in halal certification and compliance, which could open new opportunities for Vietnam in the global halal market,“ he said.

Hanoi is Malaysia’s 12th-largest trading partner globally and its fourth-largest trading partner in ASEAN, after Singapore, Indonesia and Thailand.

In July, it was reported that the two countries agreed to strive for a bilateral trade turnover target of US$18 billion as soon as possible, by creating favourable conditions for products and services, including halal goods, to enter the consumer markets of both nations.

Source: Bernama

Malaysia eyes stronger economic ties with Vietnam in emerging industries – PM Anwar

Malaysia is on track to achieve the status of a developed and high-income country, said Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi.

His remarks followed the World Bank’s revision of Malaysia’s economic growth forecast for this year, reflecting stronger-than-expected household consumption, improved investment and trade performance.

“After nearly two years since the establishment of the Unity Government, we have witnessed substantial progress, particularly in economic growth.

“This success is driven by effective government policies, strengthened investment and trade, and the political stability we have fostered,” he said.

He noted the encouraging performance of the ringgit, which appreciated by 2.5% against the US dollar in July 2024, significantly outperforming the Singapore dollar, Thai baht and Indonesian rupiah, which recorded average increases of only 1%.

Ahmad Zahid made these comments during the Rural and Regional Development Ministry’s monthly assembly here on Wednesday.

He highlighted that approved investments surged to RM160 billion in the first half of this year, marking an 18% increase compared to the same period in 2023.

Additionally, trade value rose by 18.6% in August, the highest growth in 22 months.

The inflation rate decreased to 1.9%, and the unemployment rate stabilised at 3.3%, with 190,000 job opportunities created in the second quarter of this year.

“There are still many achievements [that] we can be proud of, as Malaysians.

“Bursa Malaysia has seen gains, trading values have soared, Bank Negara Malaysia’s reserves have increased, and diesel smuggling has been curbed, among other successes,” he added.

The World Bank Group announced on Tuesday (Oct 8) that it had raised Malaysia’s economic growth forecast to 4.9% for 2024, up from the 4.3% projected last April.

Its chief economist for Malaysia, Dr Apurva Sanghi, attributed the upward revision to both domestic and external factors, noting that the global economy performed better than expected in the past six months.

Source: Bernama

Malaysia poised for high-income status following World Bank revision of nation’s economic growth forecast

MALAYSIA’S economy, reliant as it is on exports, is heavily dependent on Foreign Direct Investments (FDIs).

Little wonder that the government is working very hard on making the country an attractive destination for such investments.

And it shows. In March, the Global Opportunity Index 2024 (GOI) report by the Milken Institute, an American think tank, ranked the country at number 27, even way ahead of China, which is perched at 39.

It is not easy for Malaysia to be among the leading FDI destinations in Asia, especially with economic giants like China and India in the continent.

According to a PwC report, there are more than 5,000 foreign companies from over 50 countries doing business in the country, an evidence that lends support to Milken Institute’s ranking.

But this doesn’t mean Malaysia can rest on its laurels.

Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz acknowledged as much, though not in those words, to news agency Bernama when commenting on the GOI report.

The recognition by the Milken Institute, he said, would spur the government to deliver better service to investors to make Malaysia a gateway to Asia.

On Monday in Vientiane, where he is attending the 44th and 45th Asean summits, Zafrul outlined three selling points for attracting FDIs into Asean: inclusivity, openness and sustainability.

By this he means trade with all and be friends with all, too. Asean must maintain its neutrality to boost regional investment, he told his peers gathered in the Laotian capital, in the face of geopolitical tensions that are tearing the world apart.

What works for Asean must work for Malaysia.

Geography has blessed us by placing Malaysia in a strategic location, with all 10 Asean member countries within reach by air, sea or road.

Nature has favoured us in more ways than one. Highly skilled workforce is a plus here, too.

But attracting FDI are all of these and more.

The more is about reducing “key pain points along the investors’ journey”, as Zafrul put it to Bernama in March.

This has become more crucial now that more and more countries are competing for the same investment dollars.

Malaysia has aggressive competitors and they are doing very well.

The World Competitiveness Ranking (WCR) by the International Institute for Management Development released in June ranks our neighbours better.

Malaysia ranked 34 out of 67 countries, earning itself a spot behind Thailand and Indonesia for the first time since the ranking began in 1997.

Interestingly, Singapore topped the table, beating Switzerland and Denmark in that order.

Analysts may take issue with the ranking giving much weight to the size of population and gross domestic product, but still the WCR is a good benchmark for identifying areas for improvement.

What is more, it is partly based on what business executives — investors in the final analysis — perceive Malaysia’s competitiveness to be.

This shows that there is still some work to be done in relieving investors’ pain points.

Improving FDI processes to assist investors must be given precedence for Malaysia to remain an attractive investment destination.

Source: Bernama

Boosting Malaysia’s FDI appeal

The World Bank says the Malaysian economy is in a “good place” with sustainable growth and believes that if the current per capita output can be sustained for the next three to four years, the country could achieve high-income status by 2028.

The World Bank’s lead economist for Malaysia, Dr Apurva Sanghi, said the local economy’s strong first half (1H24) growth beat expectations, leading the international multilateral lender to revise its real gross domestic product (GDP) growth projection up by 14% or 0.6 percentage point to 4.9% for the year from 3.7% in 2023.

“The Malaysian economy is in a rather good place. Growth is back. The second quarter (2Q) growth of 5.9% exceeded expectations. Inflation is less than 2%. It’s higher than in recent quarters, but still moderate.

“Investments are on an uptick. Year-on-year investment grew in 1H24, both in terms of approved foreign direct investment (FDI) and domestic direct investment (DDI). There’s been a turnaround in exports in both the electrical and electronics (E&E) and non-E&E sectors due to the global economic upcycle.

“The ringgit has become the best-performing currency in Asia and real median wage growth is strong,” he said at a media briefing yesterday.

The World Bank expects GDP to grow 4.5% in 2025 and 4.3% in 2026.

When looking at growth per capita in real terms, per capita output in Malaysia was outperforming many of its regional peers and was 12% higher than Covid-19 pandemic levels.

“This means that high-income status is within reach. Based on our assumption with the US dollar-ringgit rate of 4.54 and average growth rate of 4.3%, we expect Malaysia to reach high-income status by 2028.

“If the exchange rate stays at the current level of about 4.2, then the high-income goal reached would be a year earlier in 2027,” Apurva said, adding that high income is not the same as high development.

Apurva warned there’s always a risk of reversal in the income fortunes as witnessed in countries without the right policy support, such as Argentina and Russia.

Increasing political stability and a conducive policy environment, in particular, had been boosting confidence and mobilising investments, Apurva said.

However, he said that the bulk of FDI had been in manufacturing and the government may want to consider undertaking reforms to attract FDI into the upstream sectors such as services.

“In Malaysia, the holy grail is to improve productivity growth. Relaxing the restrictiveness in the upstream sectors can bring about even more FDI and quality investments and lead to productivity growth in downstream sectors,” he said.

DDIs’ were also crucial and would be supported by an initiative that will see six government-linked investment companies investing RM120bil over the next five years, which equalled some 6.6% of GDP.

Although quality DDI would be helpful, the World Bank warned that policy makers should remain vigilant against potential market distortions and inefficiency.

Apurva said the government’s plan to set up the Johor-Singapore Special Economic Zone (SEZ) should take into consideration global experiences and have harmonised customs, trade and labour regulations.

“Engaging the private sector early, supporting workforce training and building sustainable practices are really important success factors, which SEZ’s like the Panama SEZ and the Suzhou Industrial Park did well.

“It is also important to establish robust monitoring and evaluation systems right from the beginning,” he said.

The multilateral institution said a comprehensive fiscal strategy that enhanced the efficiency of government spending and increased revenue without adversely impacting the poor would be crucial for restoring fiscal space to sustainably finance the country’s longer-term spending needs.

Fiscal reform efforts must be complemented by effective policy communication to secure broad-based public support for reform.

Malaysia at present was not collecting enough revenue to meet its steady needs amid prospects of an ageing population, slowing productivity growth and climate challenges.

Age-related public expenditures are expected to increase by 0.8% of GDP to almost 1% of GDP yearly between now and 2030, and then an additional 0.5% of GDP every year.

“That’s a lot of money. Talking about climate challenges, for flood resilience alone, building adaptation measures would cost about 0.2% of GDP annually. To basically future-proof Malaysia’s public finances requires a proper assessment of the cost of these structural tensions,” Apurva said.

“Hence, the country needs to future-proof its public finances. Ultimately, it’s about raising revenues and subsidy rationalisation is a very good measure to support,” he added.

Another option is to improve governance and service delivery, Apurva said. “The goods and services tax would be an option to revisit, but will require engagement with the public as taxes are never popular with anyone.”

He advised subsidy rationalisation of RON95 petrol be done gradually with middle class buy-in, as this group will be impacted the most.

Source: The Star

Malaysia on track to hit high-income status

Asean must maintain its neutrality in the face of global geopolitical tensions to stimulate foreign investments in the region, said Minister of Investment, Trade, and Industry Tengku Datuk Seri Zafrul Abdul Aziz.

He emphasised that the bloc’s inclusivity and openness should serve as key selling points to attract investments, while also stressing the importance of sustainability.

“We trade and maintain friendships with all European countries, the West, and BRICS nations such as China and Russia.

“At the same time, the global economy is facing challenges, with global gross domestic product growth appearing to be slower than expected,” he said during a meeting with the Malaysian media here yesterday.

Tengku Zafrul and his delegation arrived in Laos on Oct 6 to attend the 44th and 45th ASEAN Summits, as well as related meetings, which run from today until Oct 11.

He also participated in the 24th ASEAN Economic Community (AEC) Council Meeting yesterday.

Despite global economic and geopolitical uncertainties, Tengku Zafrul noted that ASEAN continues to attract significant investments, even as global foreign direct investments decline.

“We are bucking the trend, which is a positive sign. However, another issue is the possibility of tariffs being imposed to protect certain markets.

“This is why ASEAN must continue dialogues with other blocs, particularly through multilateral platforms like the World Trade Organisation,” he added.

Meanwhile, Tengku Zafrul said the AEC’s Strategic Plan for 2026-2030, currently being developed, is expected to be presented in May 2025 when Malaysia assumes the ASEAN Chairmanship.

He highlighted the plan’s significance in ensuring ASEAN’s economy continues to grow by 4.0-5.0 per cent by 2030, positioning it as the world’s fourth-largest economic bloc.

“Right now, we are the fifth-largest economic bloc, with a population of 680 million, nearly half of whom are under 30 years old.

“Therefore, we need to focus on the post-2025 agenda, strengthening ASEAN and showcasing our unique proposition as a bloc,” he said.

During the AEC Council Meeting, Tengku Zafrul also stressed the importance of increasing intra-ASEAN trade, which currently stands at just 23-24 per cent.

He urged ASEAN to prioritise micro, small, and medium enterprises, which make up around 89 -99 per cent of the region’s total companies.

Prime Minister Datuk Seri Anwar Ibrahim is expected to arrive later tonight to attend the summit.

Laos, the current ASEAN Chair, will officially hand over the chairmanship to Malaysia on Oct 11. 

Source: Bernama

Asean must remain neutral to boost regional investment – Tengku Zafrul

The East Coast Economic Region Development Council (ECERDC) has realised investments totalling RM10.2 billion in Pahang year-to-date, far exceeding its initial target of RM5.7 billion.

In a statement today, ECERDC said that 80 per cent of these investments came from the manufacturing sector, followed by oil and gas and the property sector, generating 3,342 job opportunities and fostering 158 entrepreneurial ventures.

Pahang Menteri Besar Datuk Seri Wan Rosdy Wan Ismail expressed the state’s commitment to enhancing its attractiveness to investors, acknowledging that ECERDC’s efforts have been instrumental in this progress.

“We are implementing proactive measures to streamline investment processes, enabling quicker approvals, and driving the growth of industries that benefit the people,” he said.

He also noted that the completion of the 29km interstate water supply project from Kemaman, Terengganu, to Gebeng, Pahang, will ensure a reliable water source for industrial growth, attracting more investments and enhancing business operations in Gebeng’s industrial parks.

“Looking ahead, the East Coast Rail Link, set to begin operations in 2027, will further enhance connectivity, positioning Gebeng as a beacon of economic development on the East Coast and establishing it as a major hub for future industrial growth,” he said.

Meanwhile, ECERDC chief executive officer Datuk Baidzawi Che Mat emphasised ECERDC’s commitment to intensifying its reskilling and upskilling programmes to ensure the local workforce is equipped with the technical skills required by industries.

These initiatives are crucial to enhancing employability, aligning with the needs of investors seeking skilled and adaptable talents, he noted.

“We believe that by empowering the local workforce with the right skills and knowledge, Pahang will become an even more attractive destination for investors, particularly in high-tech and advanced manufacturing sectors.

“The focus on upskilling and reskilling will contribute to the region’s long-term economic resilience and ensure that Pahang remains competitive on a global scale,” he added.

According to ECERDC, several key infrastructure and industrial projects are currently underway.

These include Phase 3 of the Malaysia-China Kuantan Industrial Park, scheduled for completion by July 10, 2025, which is expected to attract RM1.5 billion in investments by 2027.

The ECERDC is also currently overseeing the revitalisation of Pekan, the historic royal town, which includes restoring old buildings and their surroundings.

This project is set for completion by Nov 14, 2024, with tourism to Pekan expected to reach 400,000 visitors by 2025.

Meanwhile, the upgrading of Cherating’s Turtle Conservation Centre, expected to be completed by April 2025, aims to raise awareness about turtle conservation and attract 120,000 visitors to the complex by 2025, it added.

Source: Bernama

ECERDC Exceeds 2024 Investment Target With RM10.2 Bln Realised Investments In Pahang

Malaysia will explore cooperation opportunities on smart city and technology investment with China, said Minister in the Prime Minister’s Department (Federal Territories) Dr Zaliha Mustafa.

She said the cooperation areas would be stated in her six-day official working visit to China starting today.

She said she and a team from the Federal Territories Department will be visiting three main cities in China, namely Hangzhou, Shanghai and Shenzhen.

“The visit to Hangzhou follows a series of collaborations through the Letter of Intent between Kuala Lumpur City Hall (DBKL) and the Hangzhou Municipal Government that was signed in April regarding the KL20 project.

“God willing, I am scheduled to meet with Mayor Yao Gaoyuan, the Mayor of Hangzhou in a lunch which will be hosted by him to discuss more in depth the areas of collaboration,“ she said in a post on her official Facebook page today.

In Shanghai, Zaliha said the visit would focus on the potential of ‘twin city’ cooperation between Putrajaya and Shanghai which had been presented to the Cabinet previously.

The delegation which also involved Putrajaya Corporation president Datuk Fadhlun Mak Ujud will exchange expertise related to the smart city concept since Shanghai is ahead in that aspect.

“Lastly in Shengzhen, our focus is more focused on cooperation with ‘prominent industry players’ in the field of technology such as Huawei,“ she said.

She said recently, Huawei has expressed its intention to invest in Labuan in smart city technology.

“Apart from Huawei, we will also discuss with other technology conglomerates such as Tencent, BYD and Baidu to find a collaboration space with them.

“It is hoped this visit will bear fruits and attract more potential companies to invest either in Kuala Lumpur, Putrajaya or Labuan,“ she said.

Source: Bernama

Malaysia to explore cooperation on smart city, technology investment with China – Zaliha

Malaysia will focus on strengthening economic cooperation in ASEAN and enhancing regional trade and investment at the 44th and 45th ASEAN Summit and Related Summits that will begin tomorrow in Laos.

Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz, who arrived in Vientiane late last night, said Malaysia will also prioritise finding solutions to regional challenges.

In a post on X, he said that both he and his team from the ministry’s team had held a pre-council meeting to ensure all key agendas were smoothly aligned.

The summit will be held at the National Convention Centre (NCC) in the Laotian capital from Oct 8-11.

More than 2,000 delegates are expected to attend the summit, including heads of state and government from ASEAN member countries, dialogue partners, and external partners, as well as representatives from regional and international organisations.

The ASEAN Foreign Ministers’ Meeting will officially kick off the summit on Oct 8, followed by the opening ceremony of the 44th and 45th ASEAN Summits and Related Summits on Oct 9.

Prime Minister Datuk Seri Anwar Ibrahim is expected to deliver Malaysia’s statement during the summit.

On Oct 11, Laos will officially hand over the ASEAN Chairmanship to Malaysia.

Source: Bernama

Malaysia to focus on strengthening economic cooperation, attracting investments in ASEAN Summit