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Total FDI in M'sia rose to RM667.5b for 2Q2019 [22-08-2019]  
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The International Investment Position (IIP) document published by the Department of Statistics Malaysia (DOSM) shows that total stock of foreign direct investment (FDI) in Malaysia rose by 10.3% to RM667.5 billion in the second quarter of 2019, from RM605.1 billion a year ago. The steady rise in total FDI stock shows the continuing attractiveness of Malaysia as an international investment destination, amid rising trade tensions across the world.

Sustained growth prospect attracts FDI

Sustained economic growth is one of the reasons behind rising FDI stock. The Malaysian GDP during the same quarter expanded 4.9% year-on-year, an acceleration from 4.5% growth in the first quarter of 2019, at a time when various regional economies are experiencing synchronised growth slowdown. The 4.9% GDP quarterly growth is better than market expectations of 4.7% as compiled by Bloomberg.

The stronger than expected second quarter performance has convinced Fitch to revise its 2019 GDP growth projection for Malaysia upward to 4.6% from a lowly 4.2%. The Government expects the GDP to expand 4.5%-5.0% this year, based on the first half-year trend.

MIDA shows approved FDI is surging in the first half of 2019

The International Investment Position and the Balance of Payments define FDI as lasting investment made by foreign parties into domestic companies giving the former lasting controlling stake. This adheres to the definition provided by the International Monetary Fund (IMF).

It is not only definition available however, and the Malaysian Investment Development Authority (MIDA) defines FDI as investment into projects. Furthermore, approved FDI functions as a leading indicator to actual FDI as defined by MIDA.

Last week, MIDA announced that approved FDI across all sectors rose 97.2% to RM49.5 billion in the first half of 2019, from RM25.1 billion in the same period last year.

Specifically, approved manufacturing FDI rose by 74.2% to RM33.1 billion during the first half of 2019, from RM19.0 billion in the same period last year. Out of the RM33.1 billion investment, RM11.7 billion came from the United States, making the US as the biggest source of approved manufacturing FDI during the period. China is the second biggest source with RM4.8 billion. Meanwhile Singapore is third with RM3.1 billion and Japan is fourth with RM2.1 billion (Table 1).

Table 1: Approved manufacturing FDI according to source countries, 1H2019

Source countries Approved manufacturing FDI (RM billion)

United States

11.7

China

4.8

Singapore

3.1

Japan

2.1

Others

11.4

Total

33.1

MIDA states that the RM33.1 billion approved manufacturing FDI would create 30,449 jobs in the near future. The Government will maintain its business-friendly approach to attract investment into the country and create quality jobs for all Malaysians.

Source:BUSINESS TIMES
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