Manufacturing sector attracts largest portion of approved investments for 1H2020

Malaysia recorded a total of RM64.8 billion worth of investments in the manufacturing, services and primary sectors for the first six months of 2020 despite multiple headwinds on the global front.

These investments involved 1,725 projects and will create 37,110 employment opportunities in Malaysia. Of the total investments approved, domestic direct investments (DDI) accounted for 69.8
per cent, or RM45.3 billion, while foreign direct investments (FDI) made up the rest of RM19.5 billion.
Singapore (RM4.9 billion), Switzerland (RM2.8 billion), China (RM2.2 billion), the United States of America (RM2.2 billion) and Thailand (RM1.8 billion) were the top five sources of FDI for the manufacturing, services and primary sectors during the period.

For approved projects by state, the five major states namely Sabah, Selangor, Pulau Pinang, W.P. Kuala Lumpur and Johor contributed RM47.1 billion (72.6 per cent) to the total approved investments for January to June 2020.

The manufacturing sector attracted the largest portion of approved investments for the first half of 2020, contributing more than half (55.1 per cent) or RM35.7 billion, followed by the services sector with investments of 44.2 per cent or RM28.6 billion, and the primary sector with approved investments of 0.7 per cent or RM0.5 billion.

For the first six months of 2020, the manufacturing sector attracted the largest portion of approved investments, contributing RM35.7 billion; only a 3.0 percent decrease from the corresponding period last year.

The total investments approved in the manufacturing sector were mainly in petroleum products including petrochemicals (RM13.6 billion), machinery and equipment (M&E) (RM5.2 billion), electrical and electronics (E&E) products (RM5.0 billion), food manufacturing (RM2.1 billion), scientific and measuring equipment (RM2.0 billion), transport equipment (RM1.8 billion), chemicals and chemical products (RM1.6 billion) and non-metallic minerals (RM1.0 billion). These make up 90.2 per cent of total approved investments for this sector.

With a total of 398 projects, these newly approved investments are expected to create 26,940 jobs for the country. The jobs created include managerial roles (1,925), technical and supervisory roles (4,887), craft skill professionals (3,226), machinery operators and installers (11,117) as well as sales and clerical personnel (1,881). Malaysia continues to attract a healthy level of investments in the E&E, M&E, chemical, aerospace and medical devices.

For January – June 2020, a total of 147 manufacturing projects with investments of RM13.8 billion in these five industries have been approved by MIDA. These industries, which have strong inter-linkages to other sub-sectors, are instrumental in supporting the development of the overall manufacturing sector in Malaysia.

Compared to the corresponding period last year, DDI in the manufacturing sector registered an increase of 79.8 per cent to RM17.9 billion during this period while the value of approved FDI dropped by 33.7 per cent to RM17.8 billion.

The states that recorded the highest total approved investments in the manufacturing sector for the period are Sabah, Pulau Pinang, Johor, Selangor and Terengganu. These states collectively contributed RM29.7 billion.

Meanwhile, the leading sources of FDI for the first six months of 2020 were Singapore,
Switzerland, USA, China, Thailand, Republic of Korea, Japan, Hong Kong, the Netherlands
and Germany.

These ten countries jointly accounted for 97.7 percent of total FDI approved in the manufacturing sector for this period.

Interestingly, 69.3 per cent of the approved investments in the manufacturing sector were new greenfield projects, amounting to RM24.7 billion. This represents a 53.5 percent increase in investments for new projects, compared to the corresponding period last year.

An example of notable new projects approved during the first half of 2020 is Ultra Clean Holdings. The leader in developing and supplying of critical subsystems, ultra-high purity cleaning and analytical services primarily for the semiconductor industry, will be setting up its manufacturing facility Malaysia, creating more than 650 jobs over the next five years, including roles in manufacturing, engineering, research and development as well as quality management.

The Project Acceleration and Coordination Unit (PACU) has been established in MIDA to facilitate the approval of businesses particularly manufacturing and related services and to ensure that the
implementation of approved projects are successful within 24 months.

As of July 2020, MIDA has a total of 732 projects with proposed investments of RM35.9 billion in the pipeline for the manufacturing, services and primary sectors.

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