UOB Malaysia has projected approved investments in Malaysia to increase by 13 per cent to RM185 billion in 2021, of which close to 40 per cent will be attributed to foreign direct investment, this translates to RM74 billion an increase of 15 percent compared to 2020. China, Europe and the United States are expected to remain among the top sources of FDI, while capital is likely to be channelled mainly into the high-value-added sectors, including electrical and electronics (E&E), chemical, manufacturing and industrial.
Despite the challenging economic environment in 2020 due to the COVID-19 pandemic, Malaysia recorded RM164 billion in total approved investments, of which RM64.2 billion were from FDI sources. China was Malaysia’s main source of FDI at RM18.1 billion, equivalent to a share of 28.2 per cent. Other contributors included Singapore which recorded RM10 billion in FDI, the Netherlands with RM7.0 billion, as well as the US at RM4.3 billion.
In 2020, UOB successfully facilitated an increase of close to 20 per cent in FDI inflows from China, compared with the year before. It also supported a steady flow of new investments from European companies, particularly from France, Germany and the United Kingdom, which grew close to 10 per cent annually.
Ms Ng Wei, Wei, Managing Director and Country Head of Wholesale Banking, UOB Malaysia, said, “We believe that Malaysia’s diversified economic potential, strong fundamentals, accommodative policies and favourable demographics will continue to appeal to foreign companies looking to expand into the region.” To ride on the encouraging FDI trend, the UOB is collaborating with the Malaysian Investment Development Authority to facilitate inbound investments from both China and Europe’s major companies of high-value added sectors in the E&E, chemical, manufacturing and industrial sectors
The reconfiguration of supply chains into ASEAN due to geopolitical uncertainties, including US-China trade tensions, continue to be a catalyst for growth in key sectors such as industrial, consumer goods and telecommunications, media and technology. The growth expectation is also supported by the global 5G network roll out-that will boost the E&E, electronics manufacturing sectors and enhance the country’s digital infrastructure. In addition, with the Malaysian government’s push to drive the country’s environmental, social and governance agenda, the bank sees a rise in interest for renewable energy-related projects, such as those in solar power.
As the country makes the transition to renewable energy and enhances its infrastructure with cleaner sources of energy, it will attract more investments from multinationals looking to expand their operations in a sustainable manner.