Malaysia Sustains Investment Growth Momentum, Worth RM208 Billion In 2016

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KUALA LUMPUR – “The global economic landscape is undoubtedly more challenging.
Headlines continue to highlight on the slowdown in world economies which led
to weak aggregate demand, volatile international financial markets, subdued
commodity prices, uncertain economic policies and more intense regional
competition, among others. Despite these challenges, Malaysia continued
to sustain its investment growth momentum in 2016,” said Dato’ Sri Mustapa
Mohamed, YB Minister of the International Trade & Industry (MITI).

Malaysia has been more selective in its investment agenda, preferring quality
projects in targeted ecosystems that will have significant knock-on effects
throughout the domestic economy. In 2016, the country attracted RM207.9 billion
in total approved investments that will fund 4,972 projects in the
manufacturing, services and primary sectors. These are expected to create
153,060 job opportunities for the country.

The ratio of foreign and domestic investments is also in line with the
Government’s aspiration for domestic investments to assume the pivotal role of
driving Malaysia’s investment agenda, with 71.6% (RM148.9 billion) being
contributed by domestic sources and 28.4% (RM59.0 billion) coming from foreign
sources. Foreign investors continue to capitalise on uniquely Malaysian
ecosystems and its regional synergies as foreign direct investments (FDI)
increased by 63.4% from RM36.1 billion in 2015.

Developed economies continued to be an important source of investments into
Malaysia. The leading sources of foreign investments in 2016 were the USA, the
Netherlands, China, Japan, Singapore, Republic of Korea and the UK. These seven
countries jointly accounted for 55.8% of total foreign investments approved in
the manufacturing, services and primary sectors.

Manufacturing Sector

Malaysia continued to attract healthy levels of investments in the manufacturing
sector amid the uncertainties of the global economic environment. A total of 733
manufacturing projects with investments of RM58.5 billion were approved by MIDA
in 2016, compared with 680 projects with investments of RM74.7 billion in 2015.

Despite the decline, it must be noted that the higher amount of investments
recorded last year was primarily attributed to two major projects approved then
namely the PETRONAS Refinery and Petrochemical Corporation (PRPC)’s project in
Johor and LNG9’s project in Sarawak which totalled RM35.3 billion.

In terms of value of investments approved, Johor received the largest amount,
followed by Selangor, Sarawak, Penang and Perak. MIDA’s efforts since the early
years, in collaboration with the relevant agencies, contributed to the increased
investments in these states. Each state has its own unique comparative and
competitive advantages. In deciding a specific location of a project, investors
will choose a location that best fit the needs and suitability of their overall
business strategies. This includes the availability of a comprehensive
investment ecosystem and strong supporting industries in the area.

A significant portion of approved investments by MIDA was in capital intensive
projects. In 2016, there were 85 projects which recorded investments of RM100
million or more, bringing in a combined total of RM47.6 billion or 81.4% of the
total investments approved in the manufacturing sector. Of these, 10 projects
were investments of at least RM1 billion and above. These projects were mainly
in petroleum products including petrochemicals, basic metal products, natural
gas, electronic and electrical (E&E) products, food manufacturing and transport
equipment.

“All these projects will have substantial multiplier effects on the
manufacturing sector and the economy, including forward-and-backward linkages,
the development of supporting industries, the transfer of new technologies and
R&D, the creation of employment opportunities, local sourcing, skills
development, and the generation of foreign exchange earnings,” said YB Dato’ Sri
Mustapa.

The manufacturing projects approved in 2016 are expected to create employment
opportunities for 64,120 people. Major industries which require the most skilled
manpower are transport equipment, E&E products, fabricated metals products,
machinery & equipment, plastic products and non-metallic mineral products. This
includes job opportunities for plant maintenance supervisors, tools and die
makers, machinists, IT personnel, quality controllers, electricians and welders.

“In progressing towards an advanced nation, highly skilled manpower is a vital
asset. Efforts are being undertaken to enhance the quality of human capital.
Under the 11th Malaysia Plan, more students will be pursuing technical and
vocational education and training (TVET). MITI through MIDA collaborates and
forms smart partnerships with relevant stakeholders and leverages on existing
talent development programmes to assist based on their needs,” said YB Dato’ Sri
Mustapa.

While the value of approved domestic investments in the manufacturing sector
dropped by 41.1% to RM31.1 billion, foreign investments in the manufacturing
sector registered an increase of 25.1% to RM27.4 billion in 2016. China was the
manufacturing sector’s biggest investor last year, followed by the Netherlands,
Germany, UK and the Republic of Korea. These five economies jointly accounted
for 56.1% of the total foreign investments approved within the sector.
Significant projects from China include those within the steel, non-metallic
mineral and solar industries. The investments from the Netherlands, Germany, UK
and the Republic of Korea include several high value chemical and petrochemical
projects as well as projects to manufacture advanced electronic products.

With the addition of the projects approved in 2016, the total number of
manufacturing projects approved during the five-year period of 2012 to 2016 now
stands at 3,815, of which 3,132 have been implemented. These implemented
projects have created 292,745 job opportunities for the country.

As at 31 December 2016, 3,010 of the total implemented projects are in
production with the rest still under construction or final machinery
installation. Total capital investment in these implemented projects amounted to
RM207.7 billion. A further 41 projects with investments of RM7.9 billion have
acquired sites for factories, while 430 projects (RM44.9 billion) are in the
active planning stage. When these 471 projects are realised, total investments
in these manufacturing projects will amount to RM52.8 billion.

Services Sector

Malaysia’s services sector continues to expand in 2016 and attracted 4,199
projects with approved investments of RM141.2 billion. These approved projects
are expected to create 88,110 job opportunities. On a year-on-year basis,
approved investments in the services sector last year increased by 23.3%.
Domestic investments led with RM112.9 billion, while foreign investments
totalled RM28.3 billion.

The major sources of foreign investments in the services sector in 2016 were the
USA (RM6.8 billion), Hong Kong (RM1.9 billion), Japan (RM1.8 billion), Singapore
(RM1.2 billion) and the Netherlands (RM0.9 billion).

Although the real-estate subsector continued to lead with RM64.1 billion worth
of investments approved, key sub-sectors with relatively high value added
activities such as the global establishments, financial services, information
technology and telecommunications, and support services also recorded good
growth.

As one of the well-connected economies, Malaysia is well positioned to become
the regional or global operations base for multinational companies (MNCs).
Recognising this, more MNCs have adopted Malaysia’s Principal Hub (PH) model
which allows faster decision making and supports evolving supply chain trends.
In 2016, MIDA approved 13 new PH projects with investments of RM13.8 billion
which will involve the creation of 1,980 high value jobs. The approvals include
Ansell Global Trading Centre, IMI Engineering, Nestrade, IOI Corporate Service
and McDermott Asia Pacific.

The banking segment remained the largest contributor to the financial services
sub-sector, led by conventional banking activities. In relation to investments
in the information technology and telecommunications sub-sector, 756 projects
with investments of RM12.4 million were approved last year. These projects,
particularly in 336 approved MSC status companies, will require 18,170 highly
skilled and knowledge based workers.

In 2016, support services projects with tax incentives approved rose by 156.3%
to RM9.4 billion. The significant increase was due to the many large investments
that were approved for green technology activities and integrated logistics
services (ILS). One of the notable green technology projects that was approved
is Hong Kong-based Xinyi Energy Smart that will undertake a solar energy project
in Melaka. The company targets to generate energy capacity of 12.0MW for its
glass manufacturing operations.

For ILS approved projects, most companies are moving towards integrated
operations, ICT-driven innovation (e-commerce), and providing specialised
logistics services to support various industrial sectors such as oil & gas and
the petrochemical industry. A total of 6 ILS projects was approved in 2016.
These projects will incur RM672.6 million in investment and create 765 job
opportunities. ILS projects approved last year include Steinweg Malaysia,
Infinity Logistics & Transport and YCH Logistics Malaysia.

“The services sector helps optimise the efficiency of other sectors in the
country. Global establishments and end-to-end supply chain management services,
for example, are fast becoming important components in the nation’s economy.
These services will increase trade efficiency and the competitive advantage for
Malaysian industries,” said Dato’ Sri Mustapa.

Primary Sector

The approved investments in the primary sector increased by 116.7% from RM3.8
billion in 2015 to RM8.2 billion in 2016. The mining sub-sector led with
approved investments of RM7.6 billion in 19 projects, mainly from the oil and
gas exploration activities. This is followed by the plantation and commodities
sub-sector with investments of RM542.7 million, and the agriculture sub-sector
making up the rest of approved investments. Investments from domestic sources
totalled RM4.9 billion or 59.7% while foreign investments contributed RM3.3
billion or 40.3%.

Going Forward

“This year will continue to be a challenging year for Malaysia. Despite the
rising protectionist sentiments from several countries, Malaysia still remain
positively open for high quality FDI that meet our aspirations of becoming a
developed economy. FDI has been critical in creating jobs, developing a skilled
workforce, and nurturing the growth of local companies. The diffusion of
knowledge across the value chain from foreign MNCs creates spillover benefits
and synergies for additional new products and services for local companies,”
said YB MITI Minister.

Dato’ Sri Mustapa also highlighted that Malaysia is enhancing the investment
ecosystem within the manufacturing and services sectors to facilitate future
growth. This means that local companies must either move up the value chain or
diversify into other lines of businesses. Therefore, companies especially local
players are urged to invest in automation technologies or R&D to avoid the
consequences of shrinking margins and labour issues.

“As small and medium enterprises (SMEs) make up about 97% of the total
establishments in Malaysia, the Government will continue to support domestic
companies including SMEs by providing platforms to encourage business
collaborations with foreign companies and MNCs operating in the country. This is
one of MITI’s major focus areas for this year,” concluded the Minister.

Investment Performance Report 2016:
http://www.mida.gov.my/home/administrator/system_files/modules/photo/uploads/2017

0302120008_Malaysia%20Investment%20Performance%20Report%202016.pdf

Presentation Slides:
http://www.mida.gov.my/home/administrator/system_files/modules/photo/uploads/2017

0302155931_Slides%20Presentation%20Malaysia%20Investment%20Performance%202016.pdf

Facts & Figures:
http://www.mida.gov.my/home/facts-and-figures/posts/

Click here for Approved Private Investments in Various Economic Sectors
2016/2015 report
http://mrem.bernama.com/pdf/StatisticsInputs2016AMC2017(1).pdf

Click here for Domestic and Foreign Investments Report 2016/2015
http://mrem.bernama.com/pdf/StatisticsInputs2016AMC2017(2).pdf

Click here for Approved Manufacturing Projects Report
http://mrem.bernama.com/pdf/StatisticsInputs2016AMC2017(3).pdf

Click here for Approved Private Investments Report
http://mrem.bernama.com/pdf/StatisticsInputs2016AMC2017(4).pdf

SOURCE : Malaysian Investment Development Authority (MIDA)

FOR MORE INFORMATION, PLEASE CONTACT:
Name : Aziawati Ismail
Information and Communications Division
Malaysian Investment Development Authority (MIDA)
Tel: 03- 2267 6652 / 012-217 6537
Email: [email protected]

–BERNAMA