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UNCTAD report affirms Malaysia’s attractiveness as FDI destination

UNCTAD report affirms Malaysia’s attractiveness as FDI destination

Malaysia’s efforts to position itself as an attractive investment destination has once again been reaffirmed, with the United Nations Conference on Trade and Development (UNCTAD) raising the country’s rank to 16th from 13th as a Top Prospective Host Economy for 2013-2015 in its World Investment Report 2013.

The country was also among the top five host economies for FDI inflows in 2012, receiving around US$10 billion worth of FDI inflows during the year.

This is despite a decrease in foreign direct investment (FDI) inflows into the country and other developing economies, which has been in tandem with an 18% slide in global FDI inflows to US$1.35 trillion in 2012.

Nonetheless, UNCTAD noted in the report: “The global rankings of the largest recipients in foreign direct investment (FDI) reflect that developing countries took the lead in FDI last year, accounting for 52% of global FDI inflows, notwithstanding FDI inflows to developing countries fell by 4% compared to 2011.”

Furthermore, Malaysia maintained top marks as the third-largest recipient of FDI in Asean, with the bulk of its FDI receipts contributed by the manufacturing sector.

UNCTAD also noted that Malaysia’s manufacturing sector is undergoing a period of transformation and restructuring. At this stage, industry players are expected to reduce their investments in low-value sectors and increase activities in research and development, high-knowledge, high value-added and high-technology industries.

Additionally, the report highlighted the Malaysian Investment Development Authority (MIDA)’s efforts to establish the country as a global outsourcing hub for high-tech manufacturing value chains.

“MIDA has developed a sophisticated strategy that aims to leverage its existing locational strengths, in particular in contract manufacturing, to target similar segments in a more diverse range of value chains and segments,” said UNCTAD in the report.

It also noted the Malaysian Government has recognised a number of areas which need to be strengthened to attract FDI.

“Through this strategy, Malaysia aims to build further on its existing competitive position as an outsourcing destination for transnational companies in the electronics, automotive, machinery manufacturing, and oil and gas industries, as well as leverage these strengths to also become a key player in the aerospace, medical, defence and photovoltaic industries,” it said.

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