PUTRAJAYA, 18 JUN: – Foreign investment into Malaysia recorded a net inflow of RM14.6 billion in 2020 as compared to RM32.4 billion in the previous year, while investment abroad registered RM11.9 billion.
Chief Statistician Malaysia, Datuk Seri Dr. Mohd. Uzir Mahidin said, at the end of 2020, Foreign Direct Investment (FDI) position registered a higher value of RM698.8 billion.
“The economic activities were severely disrupted globally throughout the year 2020 in the wake of the COVID-19 pandemic that in turn affected the global investment performance. According to the UN Conference on Trade and Development (UNCTAD), global FDI flows fell 42 per cent in 2020 as compared to 2019.
“As such, the foreign investment into Malaysia in 2020 dropped by 54.8 per cent to register RM14.6 billion, the lowest since 2009 (RM5.1 billion). Although FDI flows dropped in 2020, the declining trend did not continue at the beginning of 2021,” Mohd. Uzir said in a statement here today.
Referring to the Statistics on FDI and DIA First Quarter 2021 which were released last May, the Chief Statistician highlighted, “FDI inflow in Malaysia showed a recovery by registering RM9.1 billion, the highest investment since the COVID-19 pandemic hit Malaysia. The improved investment was contributed by higher inflow in equity & investment fund shares, precisely in manufacturing and services sectors.”
Regarding the FDI performance in 2020 by sector, Mohd. Uzir said, services sector which contracted 60.5 per cent year-on-year to RM6.9 billion has led to the largest decline in FDI.
However, he emphasised that the downturn in services was not an unpropitious sign since this sector remained as the major contributor to FDI flows, attracting 47.0 per cent of total investment, particularly in financial activities.
Meanwhile, manufacturing was the second-highest contributor which received higher equity precisely in electrical & electronics products, followed by mining sector in the form of debt instruments.
Elaborating further on Malaysia’s investments with more than 190 countries, the Chief Statistician Malaysia added, Asia region continued to be the top source of FDI in Malaysia in 2020 with a net inflow of RM18.3 billion, mostly received from Singapore, Thailand and China which amounted to RM11.5 billion.
Nevertheless, he added, this was a downturn from a net inflow of RM26.9 billion in the preceding year, reflecting the downward trend of investment performance in the region.
Mohd. Uzir highlighted that despite Malaysia registering lower FDI flows in the year 2020; the accumulated FDI has increased by RM11.0 billion, amounting to RM698.8 billion. The services sector was the largest recipient at 51.6 per cent or RM360.4 billion, driven by financial and wholesale activities. This was followed by manufacturing sector which accounted for 39.2 per cent of total FDI, precisely in electrical & electronics products.
Similar to the FDI performance, the DIA flow also plummeted by 54.0 per cent to record RM11.9 billion owing to lower investment in mining and services sectors.
The Chief Statistician informed that services also remained as a vital sector for DIA, contributing 54.0 per cent of the total investment, particularly in financial and telecommunication activities. This was followed by the manufacturing sector, primarily in food & beverages; and petroleum, chemical, rubber & plastic products. These investments were mainly channelled to Canada, United Kingdom and Indonesia.
As for the DIA performance in Q1 2021, Malaysia’s DIA showed an increasing trend by recording a net outflow of RM7.8 billion in this quarter, significantly contributed by higher outflow in equity & investment fund shares.
Mohd. Uzir said, the accumulated investment overseas also improved to RM518.8 billion mostly into Singapore and Indonesia, while the United Kingdom overtook the Cayman Islands as the third top destination.
Further analysis into the income gained on investment in 2020, he said the aberrant disruption in the global economy has resulted in lower income for both FDI and DIA as compared to the previous year.
Mohd Uzir Mahidin concluded that despite the increasingly dynamic evolution of the pandemic, the risk of transmission and renewed containment actions that could continue to affect the investment activities, Malaysia’s economy is expected to improve in 2021 based on the better performance of key economic indicators in the first quarter.
Although the decline in foreign investment may seem worrisome, FDI in Malaysia recorded a higher inflow in Q1 2021 and the accumulated FDI remained prominently high, signalling an improved investment performance for the year.
He also stated the economic investment recovery in 2021 can be underpinned with the pursuit of quality investments to facilitate the inflow of investment in high-value, high-tech and high-impact sectors as well as capital-incentive projects for sustainable economic progress.-Malaysia World News
