What are the most recent investment trends in Malaysia?

In 2022, Malaysia witnessed approved investments amounting to US$59.9 billion in the manufacturing, services, and primary sectors, marking the second-highest recorded investments after the exceptional performance of US$74.2 billion in 2021. This figure also surpassed the annual average of US$55.4 billion recorded between 2013 and 2022. Foreign direct investment (FDI) accounted for 61.7% of these investments. The services sector emerged as the major contributor with US$34.8 billion, followed by the manufacturing sector with US$19.1 billion, and the primary sector with US$6 billion. This rebound in investor confidence signals positive prospects for Malaysia.

How does Malaysia compare with other Southeast Asian countries as an investment destination?

Malaysia enjoys a competitive position among other countries in Southeast Asia as an investment destination. Its strategic location in the Asia Pacific region, coupled with its central position within ASEAN, offers businesses access to extensive market opportunities facilitated by 16 Free Trade Agreements (FTAs), including 7 bilateral FTAs and 9 regional FTAs. This translates into a potential market size of over 4 billion people, making Malaysia an attractive destination for investment.

What factors contribute to Malaysia’s appeal as a manufacturing hub?

Malaysia has successfully transformed its economic structure from a reliance on agriculture and primary commodities to a diverse and export-driven economy. This shift has been driven by high-tech, knowledge-based, and capital-intensive industries. The country’s success as a manufacturing hub stems from its mature manufacturing legacy and ecosystem, robust engineering support industry, a talented and multilingual workforce, ease of doing business, well-connected local supply chains, and enabling policies and institutional support.

How can Malaysia’s manufacturing industry transition to higher-value products, particularly in the chemical industry?

Malaysia already has a significant chemical industry, comprising over 100 companies producing a wide range of chemical products, primarily focused on base chemicals and intermediates. To transition into higher-value products within the chemical sector, it is essential to enhance the utilization of specialty chemicals and recognize their importance in completing Malaysia’s manufacturing ecosystem. This can be achieved by nurturing a pool of experts in advanced materials and nanotechnologies to enhance marketability and boost the research and development (R&D) industry. Collaboration between multinational corporations (MNCs) and local universities to conduct R&D activities and aligning syllabi with industry needs is crucial. Additionally, rapid adoption of Industry 4.0 and digital technologies will play a significant role in facilitating this transition.

What are MIDA’s priorities for 2023, and what is your final message to the audience?

As Malaysia enters the endemic phase amid evolving dynamics in the global industrial and trade landscape, the government recognizes the importance of revitalizing the nation’s investment climate to seize opportunities arising from trade diversions. The country is strategically positioned to attract investments by capitalizing on trade diversions resulting from geopolitical tensions, such as the United States-China trade conflict, the Russia-Ukraine crisis, and shifts in global supply chains. Malaysia aims to promote itself as an alternative manufacturing and distribution hub.

In terms of industry-focused strategies, the emphasis will be on investments in new development areas, including electric vehicles, 5G-powered smart factories, supply chain ecosystems, and green technology. These are the primary strategies for MIDA in 2023.

Malaysia is also reforming its industrial policies to address pressing socio-economic issues and sustainability concerns. MIDA has integrated the New Investment Policy (NIP) and Environmental, Social, and Governance (ESG) principles into its strategies. The objective is to attract sustainable, long-term investments and collaborate with partners who prioritize “impact investment.” The government will enhance its focus on green growth areas such as hydrogen technology, bioenergy, and electric mobility, which will act as catalysts for green adoption and future economic growth.

MIDA is committed to attracting high-quality, long-term investments and expanding into new high-value clusters. Strategic frameworks like MYDIGITAL, the National Fourth Industrial Revolution (4IR) Policy, and SME Stimulus Packages will ensure that Malaysia remains a top investment destination for years to come.

Through collaborative efforts among stakeholders and leveraging MIDA’s extensive local and global networks, we are dedicated to supporting prospective investors in building a better tomorrow for all.