Malaysia records RM37.3b approved investments, nearly 40,000 jobs

Business News
Friday, 17 June 2016 | MYT 12:40 PM

Datuk Seri Mustapa Mohamed
Minister of International Trade and Industry, Datuk Seri Mustapa Mohamed

KUALA LUMPUR: Malaysia recorded RM37.3bil of approved investments in the services, manufacturing and primary sectors in the first quarter and if fully implemented, will create 39,990 jobs.

Minister of International Trade and Industry, Datuk Seri Mustapa Mohamed said on Friday the investments involved 1,271 projects but he expected this year to be another challenging year for the country.

“As a diversified economy, we believe we can withstand these challenges and overcome them, especially with the continued inflow of foreign investments into the country. We are definitely doubling our efforts in achieving the country’s investment target,” he said.

Elaborating on the Q1 2016 investments, he said despite a weaker global environment, Malaysia remains as a competitive investment location for foreign investors, with an increase of 28% in this quarter.
“Year-on-year, FDI increased to RM12.8bil in Q1 2016 from RM10bil in the corresponding period of 2015. Domestic investments led with RM24.5bil or 65.7% of total approved investments in Q1 2016,” Mustapa said.

He said taking into account the two lumpy projects approved in Q1, 2015 — China’s in Johor and LNG9’s project in Sarawak – Q1, 2016 showed a decrease from RM69.8bil. The two projects amounted to RM35.3bil.

“I would like to highlight that without the two big projects, Q1 2016 actually shows an overall increase of 8.1% from RM34.5bil last year,” he added.

Mustapa said the services sector attracted RM27.6bil of approved investments in Q1 2016. A total of 1,088 services projects were approved creating 20,200 employment opportunities, the largest potential employer in the economy.

“Foreign investment in the services sector surged by 112.1% from RM3.3bil in Q1, 2015 to RM7bil in the same period this year. We are seeing more foreign participation in distributive trade, education services, global establishments, financial services and real estate sub-sectors,” he said.

Distributive trade saw an increase of 992% of foreign participation from RM101.5mil in Q1 2015 to RM1,108.7mil in Q1 2016.

The increased investments from regional and international retailers have boosted Malaysia’s ranking to 3rd position in the 2016 Global Retail Development Index (GRDI) by A.T. Kearney.

For the education sub-sector, the increase of 672.7% of foreign investments from RM19.3mil in Q1 2015 to RM149.2mil in Q1 2016 reflects Malaysia’s success in accelerating the process in making the country a regional education hub of excellence. The private education sector will complement the Government’s efforts in providing access to quality education to the people.

As to date, there are 501 private higher institutions that offer a wide range of disciplines at every level of education including short-term and professional courses certificate, diploma, degree and post-graduate degree qualifications.

Global establishments and end-to-end global supply chain management services are fast becoming important components in the Malaysian economic backbone.

In Q1 2016, MIDA approved a total of 60 global establishments with investments of RM5.6bil. The lion share of these was from 6 Principal Hub projects with total investments worth RM5.5bil.

These investments were in the aerospace, electronic & electrical (E&E), food & beverage and resource-based industries. The principal hub initiative is among the high value added services that is currently promoted by Malaysia.

Investments in the manufacturing sector for Q1 2016 totalled RM8.9bil from 170 projects. The approved manufacturing projects are expected to generate about 19,650 employment opportunities.

“Despite the decrease in investments in this sector for the first quarter of this year, it is noteworthy that Malaysia has attracted significant investments in the transport equipment industry, with a spike of 1,584% from RM40.1bill in Q1 2015 to RM675.7bil in Q1 2016.

“Other industries which recorded high growth rates were paper, printing & publishing (944.0%), food (550.0%), leather & leather products (162.3%), chemical & chemical products (159.1%), scientific & measuring equipment (78.8%), and rubber products (57.1%).

Regardless of a lower investment value in Q1 2016, the E&E industry emerged as the main contributor to the total approved investments in the manufacturing sector compared to the corresponding period last year. Most of the high quality projects in E&E are concentrated in solar, fabricated wafers and semiconductor devices.

Malaysia continued to register a lower investment in the primary sector due to the challenges in global crude oil prices.

Investments in this sector recorded a total of RM874.9mil in Q1 2016. The mining subsector led with approved investments of RM692.2mil, mainly from oil and gas exploration activities.

Approved investments in the plantation and commodities subsector totalled RM129.0mil. In Q1 2016, a total of RM53.7mil investment was approved in the agriculture subsector.