Business

Monday October 16, 2006

Foreign direct investment into Malaysia down



KUALA LUMPUR: Foreign direct investment (FDI) into Malaysia dipped to US$3.97bil (RM14.69bil) last year, compared to 2004 when US$4.62 bil (RM17.09bil) in FDIs was recorded.

For the first time since 1990, Indonesia managed to overtake Malaysia in drawing in FDIs.

Inflows to Indonesia surged by 177% to US$5.26bil (RM19.46bil) last year.

As a whole, FDIs to South, East and South-East Asia reached a new high of US$165bil (RM610.5bil) last year, which was a 19% increase over 2004.

China, Hong Kong and Singapore were the largest recipients of FDIs in 2005.

The figures were released by the United Nations Conference on Trade and Development (Unctad) in its World Investment Report 2006 on Monday.

Economist Datuk Dr Zainal Aznam Yusof who was present told a press conference on Monday that Malaysia has been losing its competitiveness over the last eight to 10 years due to a whole gamut of factors – among them shortage of human capital, pressure on wages, and increased competition from China, India and elsewhere.

Dr Zainal, who is a member of the working group of the National Economic Action Council under the Prime Minister’s department, said there was a need to liberalise new growth areas such as the services sector which was currently heavily protected.

“There’s ample room to liberalise the economy to make Malaysia more attractive. In the light of increasing pressure and competition, we simply have to do it,” he added.

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