Thursday February 28, 2013
Private investments in Malaysia up a record RM140bil in 2012
By CECILIA KOK
KUALA LUMPUR: Total private investments realised by Malaysia surged to a record RM139.5bil in 2012, representing an increase of 24.8% from the RM111.8bil realised in the preceding year.
“As a result of Malaysia's solid investment performance last year, the country exceeded the private investments target of RM127.9bil for 2012 by 9.1%,” International Trade and Industry Minister Datuk Seri Mustapa Mohamed said at the Investment Performance 2012 conference yesterday.
According to Mustapa, Malaysia can expect to see private investment growth maintained at the present momentum for 2013, as major projects get implemented.
He pointed out, in particular, that investments in Johor were expected “to do extremely well” this year, with projects in Iskandar Malaysia and Pengerang accelerating.
He said there had not been any slowdown in investment flow despite the political uncertainties in the country.
Malaysia had last year recorded the highest-ever total approved investments at RM162.4bil, driven by the services sector, and in spite of the still-uncertain global economic conditions. This is higher compared with the total approved investments of RM154.6bil in 2011 and RM105.6bil in 2010.
Last year, the services sector accounted for 72.4% of total approved investments, followed by the manufacturing sector at 25.3% and primary sectors at 2.3%. The total investments approved in 2012 were in more than 6,000 projects that could generate about 183,000 job opportunities.
And in line with the objective of the Economic Transformation Programme (ETP), Mustapa said domestic investments were the main driver of private investments last year, accounting for 78% (RM127.6bil) of the total investments approved in 2012, while the remainder 22% (RM34.8bil) came from foreign investments.
“This trend (of domestic sources driving private investments) will continue. In the longer term, as we said in our ETP, the kind of balance that we hope to achieve is 72% domestic investments and 28% foreign investments,” Mustapa explained.
When asked about his expectations for foreign direct investments (FDI) this year, Mustapa said Malaysia could expect FDI to increase to about US$12bil (RM37bil) from around US$10bil in 2011, as the global economy was expected to pick up.
“This year, we believe there will be some recovery in the world economy, and that could help push FDI somewhat higher,” he pointed out.
The International Monetary Fund (IMF) has projected the global economy to grow 3.5% this year, compared with 3.2% in 2012. Malaysia's economy, on the other hand, was expected to grow between 4.5% and 5.5% in 2013, after expanding 5.6% last year.
Foreign investments were the driver of private investments in the manufacturing sector, accounting for 50.7%, or RM20.8bil, of the total inflows into the sector last year. Of the total approved FDI in the manufacturing sector last year, 64% came from Asian countries, led by Japan, Singapore, China and South Korea.
Mustapa noted that within the manufacturing sector, there was a significant decline in investments in the electrical and electronics (E&E) sub-sector due to the weak global economic environment.
“E&E did not do well at all last year. But this year, E&E will certainly contribute towards growth in approved investments in the manufacturing sector,” he said.
Mustapa pointed out that Malaysia was no longer appealing as a competitive investment destination for multinational corporations that focused on labour-intensive industries, as the country was going through a transformation process, and moving up the value chain to become a high-income, knowledge-based economy.
“The country's manufacturing sector is going through a period of transformation and restructuring. As low value-added assembly becomes less important, industry players are expected to reduce their investments in low-value sectors and increase their activities in new high value-added activities that will open up new opportunities for growth,” he said.
According to Mustapa, the Government would undertake an “eco-system approach” to promote private investments in both the manufacturing and services sectors.
He pointed out that the Government would focus on mega-trends and the development of technologically advanced target products and applications such as artificial intelligence, robotics, 3D printing and smarter and flexible production technology.
Mustapa conceded that there remained a “gap” in Malaysia between investment inflows and outflows, as Malaysian companies continued to invest abroad.
But he noted that the phenomenon, which had been going on for the past four to five years, was not a totally unwelcome trend, as it only reflected the country's growing economy.