Bigger influx of foreign direct investment
Malaysia's foreign direct investment (FDI) for the first nine months this year jumped 42 per cent from a year ago and the fullyear number is set to be better than 2010.
FDI for the nine-month period was RM26.4 billion compared with RM18.6 billion for the same period in 2010, based on figures by the Department of Statistics Malaysia.
The country recorded RM29.3 billion in FDI for 2010 while in 2009, total FDI was RM5 billion.“Based on the FDI flows for the first nine months, it is likely that this year’s total will exceed last year’s,” International Trade and Industry Minister Datuk Seri Mustapa Mohamed said in a statement yesterday.
The pace of FDI, however, slowed in the third quarter. It almost halved to RM5.17 billion after strong growth in the first and second quarter This was mainly due to weaker external economic conditions, especially in the eurozone and the US, Mustapa said.
“In terms of private investments, the government is confident of achieving the targeted RM94 billion this year,” he said.
Economists said the better FDI reflected investor optimism in the earlier part of the year and the government’s efforts to reinvigorate private investments.
“Given the encouraging statistics, Malaysia’s private investment will likely perform favourably in 2011, making it possible for the economy to attain the government’s overall GDP growth target of 5 per cent,” Malaysian Rating Corp Bhd chief economist Nor Zahidi Alias told Business Times yesterday.
But the growth of FDI is likely to slow as problems in Europe has hurt sentiment.
“The overall investment sentiment will be influenced by investors’ perception of the ongoing European debt crisis,” said Nor Zahidi, adding that concerns will likely be on the extent of the country’s liability to European banks.
According to the Bank of International Settlements, total European banks’ claims in Asia Pacific countries amounted to US$2.1 trillion (RM6.7 trillion) as at end of June 2011. Claims by Portugal, Ireland, Italy, Greece and Spain totalled US$37 billion (RM118 billion).
As for Malaysia, he said claims by European banks "were fairly small", accounting for about 41 per cent of total foreign claims as at end of June 2011. This compares with Singapore at 55 per cent, Philippines at 47 per cent and Indonesia at 40 per cent.
Meanwhile, RAM Holdings group chief economist Dr Yeah Kim Leng said the improved FDI would help offset any possible global economic slowdown expected next year.
He said sectors with strong growth potential like the services, oil and gas, and energy and environment-related sectors would attract foreign investments.
The manufacturing sector would benefit from moving up the value chain and is likely to pull in foreign investors in areas, like solar power panel manufacturing, bio-medical and bio-technology.
By Rupinder Singh
FDI for the nine-month period was RM26.4 billion compared with RM18.6 billion for the same period in 2010, based on figures by the Department of Statistics Malaysia.
The pace of FDI, however, slowed in the third quarter. It almost halved to RM5.17 billion after strong growth in the first and second quarter This was mainly due to weaker external economic conditions, especially in the eurozone and the US, Mustapa said.
“In terms of private investments, the government is confident of achieving the targeted RM94 billion this year,” he said.
Economists said the better FDI reflected investor optimism in the earlier part of the year and the government’s efforts to reinvigorate private investments.
“Given the encouraging statistics, Malaysia’s private investment will likely perform favourably in 2011, making it possible for the economy to attain the government’s overall GDP growth target of 5 per cent,” Malaysian Rating Corp Bhd chief economist Nor Zahidi Alias told Business Times yesterday.
But the growth of FDI is likely to slow as problems in Europe has hurt sentiment.
“The overall investment sentiment will be influenced by investors’ perception of the ongoing European debt crisis,” said Nor Zahidi, adding that concerns will likely be on the extent of the country’s liability to European banks.
According to the Bank of International Settlements, total European banks’ claims in Asia Pacific countries amounted to US$2.1 trillion (RM6.7 trillion) as at end of June 2011. Claims by Portugal, Ireland, Italy, Greece and Spain totalled US$37 billion (RM118 billion).
As for Malaysia, he said claims by European banks "were fairly small", accounting for about 41 per cent of total foreign claims as at end of June 2011. This compares with Singapore at 55 per cent, Philippines at 47 per cent and Indonesia at 40 per cent.
Meanwhile, RAM Holdings group chief economist Dr Yeah Kim Leng said the improved FDI would help offset any possible global economic slowdown expected next year.
He said sectors with strong growth potential like the services, oil and gas, and energy and environment-related sectors would attract foreign investments.
The manufacturing sector would benefit from moving up the value chain and is likely to pull in foreign investors in areas, like solar power panel manufacturing, bio-medical and bio-technology.
By Rupinder Singh
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