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Malaysia’s Tech-Powered Economy Attracting Investment

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In the first half of 2023, Malaysia attracted investments totalling RM132.6 billion (US$28.4 billion) across various sectors, setting a confident tone for its economic growth. These investments are projected to create approximately 51,853 job opportunities, a testament to Malaysia’s appeal to investors worldwide.

Malaysia’s investment climate is boosted by several factors:

  • Pro-Business Policies: The Malaysian government is dedicated to fostering pro-business policies and continually improving the ease of doing business in the country.
  • Strategic Location: Situated in Asia, Malaysia boasts robust growth potential, making it an attractive location for investors.
  • Hub for Ecosystem and Supply Chain: Malaysia serves as a trusted hub for supply chains, capital, talent, goods, and data.
  • Innovation Capabilities: The nation’s innovation capabilities are on the rise, further enhancing its attractiveness to investors.

The Minister of Investment, Trade, and Industry (MITI) expressed his satisfaction with the performance, noting that Malaysia secured 60.3% of its annual investment target in the first half of the year. He emphasised the nation’s consistent efforts to attract quality investments and drive economic growth.

A substantial portion of these investments, 52.2%, came from Domestic Direct Investment (DDI), amounting to RM69.3 billion (US$14.8 billion), marking an impressive 58.2% increase compared to the previous year. DDI’s growth was driven by investments in services and the primary sector, particularly real estate.

Foreign Direct Investment (FDI) played a significant role, contributing 47.8% of total approved investments, equivalent to RM63.3 billion (US$13.6 billion). Singapore emerged as the leading source of FDI with RM13.7 billion (US$2.9 billion), followed by countries like Japan, the Netherlands, China, and the British Virgin Islands.

Five Malaysian states recorded substantial approved investments: Kuala Lumpur (RM31.7 billion), Selangor (RM29.7 billion), Kedah (RM14.6 billion), Johor (RM14.2 billion), and Sabah (RM9.0 billion). Together, these states accounted for an impressive 74.9% of total approved investments.

The services sector led the way with RM82.4 billion (US$17.6 billion) in approved investments, making up 62.1% of the total. Investments in this sector are expected to generate 24,747 new jobs. Several factors contributed to the surge in the services sector, including Malaysia’s diversification efforts beyond manufacturing, the growth of the digital economy, and increased demand for logistics, healthcare, and education services.

Of the total approved investments in services, RM54.5 billion (US$11.6 billion) came from DDI, while RM27.9 billion (US$6.0 billion) came from FDI. The real estate sub-sector attracted the most investment, followed by information and communications, distributive trade, financial services, and utilities.

The CEO of the Malaysian Investment Development Authority (MIDA) highlighted Malaysia’s stability, reliability, and neutrality as key factors in capturing diverse investments. He emphasised the growing opportunities in the digital economy, particularly in fintech, cloud services, cybersecurity, and gaming.

Green technology also saw a significant uptick, with RM1.3 billion (USD268.0 million) in approved investments, reflecting a 21.9% year-on-year growth. These investments span renewable energy, energy conservation, waste management, green buildings, and services, aligning with Malaysia’s National Energy Transition Roadmap (NETR).

The manufacturing sector attracted RM44.9 billion (USD9.6 billion) in approved investments in the first half of 2023, accounting for 33.9% of total investments. Notably, this represents a 2.5% increase from the same period in the previous year. These investments are spread across 421 projects, expected to create around 26,759 jobs.

Of the total investments, RM33.9 billion (USD7.3 billion) came from FDI, with RM11.0 billion (USD2.3 billion) from domestic investments. The electrical and electronic industry (E&E) played a significant role, contributing RM10.9 billion to these projects, aligning with the projected 2024 demand recovery in the semiconductor industry.

The primary sector secured RM5.3 billion (USD1.2 billion) in approved investments, making up 4.0% of the total. This sector, comprising 42 projects, is set to create 347 new jobs, particularly in mining, agriculture, and commodities. The primary sector experienced a remarkable 22.5% surge in investments, driven by both domestic and foreign sources, with notable growth in the mining subsector.

Looking ahead, Malaysia has a robust pipeline of investments, with proposed projects totalling RM89.9 billion (USD19.8 billion). A sizeable portion of these projects, 812 out of 860, falls within the services sector, driven by Malaysia’s thriving digital economy and innovation ecosystem. Malaysia’s competitiveness is also evident, ranking 27th in the 2023 IMD World Competitiveness Ranking and securing the second spot within ASEAN, showcasing its enduring appeal for businesses and investors.

Malaysia’s sustained efforts in attracting diverse investments, fostering innovation, and embracing green technology are driving its economic growth, positioning the nation as an attractive destination for investors from around the world.


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