KUALA LUMPUR: Foreign direct investments (FDIs) will likely exceed US$ 12 billion (RM37.2 billion) this year, spurred by improvements in the electrical and electronics (EandE) sector on the back of a recovery in the advanced economies said International Trade and Industry Minis-ter Datuk Seri Mustapa Mohamed.
EandE has traditionally been the main investment driver attracting foreign interest in the manufacturing sector. However, investments plunged from RM16 billion in 2011 to RM4 billion last year.
“It is partly due to the global (down) cycle of the sector plus Malaysia now no longer attracts the labour-intensive type of EandE investments …we are no longer competitive here as we are moving up the value chain,” he said at a briefing by the Malaysian Investment Development Authority (Mida) yesterday.
A total of 112 EandE projects with investments of RM3.9 billion were approved last year, most of which came from foreign investors (82.1 per cent).
The sharp rise in investment in high value-added sectors such as medical devices, biotechnology and services sector are offsetting the gradual decline of investments into labour-intensive industries.
“Expect more interest from China and Singapore this year,” he said, following the interest both countries showed in the growth corridors.
The impending general election, he said, does not have an impact on major investment decisions as reflected in the case of Medini, the waterfront project in JB and also the Malaysia-China Kuantan Industrial Park (MCKIP).
Mustapa, who will be attending an investment forum in Singapore, explained that the neighbouring country, faced with cost pressures, is keen to expand in the manufacturing and services sectors.
On the outflow of investments, the trade minister admitted there has been a wide gap with the inflow of investments in recent years but that reflects the accelerating interest of Malaysian companies to grow their businesses abroad.
“Direct Investment Abroad has exceeded net FDIs but that is not total-ly unwelcome. Investments abroad by Petronas, Khazanah Nasional and our banks have earned dividends.”