Malaysia’s investment figures for the year 2023 unveiled a landmark achievement despite our share of global challenges, from disrupted supply chains, geopolitical risks and trade tensions among the economic superpowers, to high inflation that led to increased interest rates in developed markets.
Malaysia has for decades prospered due to its value proposition – a strategically located, safe and neutral haven for businesses and investors, amidst the complexities of global geopolitics.
The nation has consistently outshone regional neighbours on various metrics, including political stability, ease of doing business, competitiveness, physical and digital infrastructure and most importantly, rule of law.
Malaysia’s improved ranking from 32nd to 27th place in the 2023 IMD World Competitiveness Ranking is a clear affirmation of the global investment community’s confidence towards the nation.
The International Monetary Fund (IMF) has forecast a 3.1% global GDP growth this year, while World Bank’s forecast is at 2.4%. Malaysia has entered 2024 on the back of 3.7% GDP growth in 2023 despite the global uncertainties, and is in a resilient enough position from which to grow in 2024.
Minister of Investment, Trade And Industry (MITI) Tengku Zafrul Abdul Aziz said this at the Mida Annual Media Conference (AMC) 2024: Announcement of Malaysia’s Investment Performance In The Manufacturing, Services And Primary Sectors For 2023 event in Kuala Lumpur today (Feb 29).
Tengku Zafrul, in his speech, said in fact, Bank Negara Malaysia has forecast Malaysia’s growth in 2024 to be 4.0 – 5.0%, supported by, among others, stronger domestic demand, steady employment and income prospects and improved external demand, including in the technology and semiconductor sectors.
“Many of these prospects will be supported by the realisation of the RM329.5 billion investments that were approved in 2023.
Moving forward, ESG investing has emerged as a powerful, globally accepted concept for creating sustainable socioeconomic impact alongside investment returns, as more and more investors align their investment objectives with sustainable development goals.
“By adopting ESG standards, Malaysia enhances the appeal of its capital markets to international investors, leveraging its unique position to lead in sustainability. This ambition aligns perfectly with the theme of this year’s Annual Media Conference, “Advancing Responsible Investment,” which is our strong strategic response to the evolving landscape,” he said.
The New Industrial Master Plan 2030 (NIMP 2030) is a cornerstone for Malaysia’s journey towards sustainable development and economic resilience. It charts a course for the country’s industrial evolution, prioritising innovation, inclusivity, and sustainability.
These pillars are crucial for driving Malaysia’s economic agenda forward.
Key initiatives within the NIMP 2030, including the push towards tech-up for a digitally vibrant nation and achieving net-zero emissions, underscore the plan’s holistic approach.
It recognises that sustainable development requires the seamless integration of technological advancement with economic, societal, and environmental objectives, he said.
Overall Investment Performance For 2023
“In 2023, we are proud to repeat the PM’s announcement last week that our nation attracted a record-high RM329.5 billion in approved investments, for the manufacturing, services, and primary sectors.
This marked a record 23% increase year-on-year. Facilitated by 5,101 projects, these investments will generate more than 127,000 (127,332) new job opportunities for the rakyat.
The surge was represented by a significant 35.1% growth in domestic investments (DI), at RM141.1 billion, which reflects renewed confidence by domestic investors in the MADANI Government policies.
Foreign investments (FI), on the other hand, increased by 15.3%, or RM188.4 billion in value, Tengku Zafrul explained.
Of the total approved investments in 2023, FI contributed 57.2% while DI recorded the balance of 42.8%.
The top five sources of Foreign Investments were:
a. Singapore (RM43.7 billion),
b. …followed by The Netherlands (RM35.5 billion),
c. …the USA (RM21.5 billion),
d. …Cayman Islands (RM17.5 billion) and
e. The People’s Republic of China (RM14.5 billion).
Proportion of Approved Investments by States
In terms of beneficiaries of approved investments by state, the results show that:
a. Pulau Pinang (RM71.9 billion),
b. W.P. Kuala Lumpur (RM58.3 billion),
c. Selangor (RM55.3 billion),
d. Johor (RM43.1 billion) and
e. Kedah (RM28.7 billion),
Services Sector Dominates the Investment Landscape
Amidst the economic slowdown, the services sector emerged as a silver lining, attracting investments amounting to RM168.4 billion, or 51.1% of total approved investments.
More than 52,000 (52,732) job opportunities are expected to be created.
From the Services Sector:
a. The Information and Communications took the lead with RM63.7 billion of approved investments (37.8 %),
b. …followed by Real Estate (RM61.0 billion) (36.2%),
c. …Utilities (RM11.1 billion) (6.6%),
d. …Distributive Trade (RM11.1 billion) (6.6 %) and
e. …Support Services (RM10.5 billion) (6.2%).
Tengku Zafrul said the current megatrends in the global economy, characterised by a shift towards sustainability and a low-carbon future, are creating new investment opportunities worldwide.
Malaysia, with its strong digital infrastructure, is well-positioned to capitalise on these trends, and stands to benefit significantly.
Among notable projects within the services sector are:
First – GDS IDC Services (Malaysia) Sdn. Bhd.’s RM14.33 billion investment in Nusajaya Tech Park is redefining the data centre landscape in Southeast Asia, a testament to Malaysia’s commitment to sustainability and technological advancement.
Second – Worldwide Holdings Berhad (WHB) takes a pioneering step with the Jeram Waste-to-Energy project worth RM1.27 billion, transforming waste management into a source of clean energy and setting a benchmark with its commitment to reducing landfill use.
Third – Envico Enterprises Sdn. Bhd. with its investment of RM860 million is strategically positioning Malaysia as a central hub in its global operations, leveraging cutting-edge Big Data technologies and fostering a skilled workforce that is poised to navigate the evolving retail landscape.
Investment in Manufacturing Sector Driving Progress
The sector, Tengku Zafrul explained, saw a huge increase of 80.3% year-on-year, proving that despite the global circumstances and other challenges, investors remained confident in Malaysia’s manufacturing landscape and potential.
In terms of the Manufacturing sub-sectors, the Electrical and Electronics (E&E) Industry continues to attract the highest quantum of investment with RM85.4 billion, or 56.2% of total approved investments in the manufacturing sector.
“This is highly encouraging, as they reflect our highest aspirations in increasing our industry’s economic complexity, and our persistent efforts in attracting the right type of investment into the country.”
Malaysia’s E&E industry is expected to become a powerhouse due to increasing domestic and regional demand, driven by the growth of industries such as Electric Vehicles (EVs), Renewable Energy, aerospace and the digital economy.
Industry 4.0 and the rise of the digital economy are also contributing to the growing demand for chips and semiconductors as industries embrace technologies such as artificial intelligence (AI), automation, robotics and data analytics to optimise their processes, improve efficiency, and enhance productivity.
Sustainability is another major driver for E&E products as industries such as automotive continue to transform. The increased demand for the production of EVs, for example, has also increased the demand for electronics that support battery management systems (BMS).
Other industries that attracted sizeable investments include:
a. Machinery and Equipment or M&E (RM22.6 billion),
b. Chemicals and Chemical Products (RM8.9 billion),
c. Non-Metallic Mineral Products (RM8.8 billion), and
d. Transport Equipment (RM7.1 billion).
Over 30,000 (actual number: 30,407) jobs were created in the Managerial, Technical and Supervisory (MTS) category, of which 91.7% are Malaysians. The top five industries that created the highest numbers of MTS employment were E&E, M&E, Non-Metallic Mineral, Fabricated Metal and Chemicals, recording 71.0% or 21,583 jobs from the total. This is key because such jobs will revive Malaysia’s middle-class that was badly impacted during the pandemic
Investment in the Primary Sector
Driven by 75 projects, the Primary Sector is anticipated to create over 600 (661) new jobs, with a focus on mining (RM8.8 billion), and plantation and commodities (RM312.6 million).
To date, a commendable 74% of these projects have transitioned from approval to implementation, manifesting in various stages from production to the construction of facilities and installation of machinery.
The balance of 24.7% are in the planning phase, engaging in site selection and consultations, while 1.3%are pending initiation.
“Our analysis of annual project implementation reveals a consistent trend: over 85% of approved manufacturing projects in 2021 and 2022 have been implemented. For approved projects in 2023, 50.1% of these have reached the implementation stage; which is highly encouraging, considering that manufacturing projects will generally take 18 to 24 months to complete, depending on the level of complexity of each project. Quite a few projects have been completed in less than 18 months, he said.
Leads/ Pipeline Projects in 2024
To date, the nation has received interest from potential investors through lead projects amounting to RM88.82 billion.
Additionally, there are 1,710 projects in the pipeline, with proposed investments totalling RM87.8 billion.
MITI and MIDA are in serious discussions with an important Chinese institution to firm up collaborative agreement on a two-way foreign investment (FI) promotion. “We are in advanced negotiations stage, aiming to cement a cooperative agreement focused on FI promotion enhancement, to bolster investment flows, encouraging Chinese firms to explore opportunities in Malaysia while similarly facilitating Malaysian enterprises to expand into China, to which offers the nation alliance with a powerhouse, and a regional gateway to access the growing ASEAN and Asian population.
He said: “Bear in mind that Asia’s population is projected to grow to 5.25 billion or 54% of the world’s projected population by 2055. On the other hand, Southeast Asia’s population – which currently stands close to 691 million, is expected to surge by 50% by 2050. Malaysia will diligently reap these opportunities, and forge ahead on its mission to target and attract responsible and ESG-focused investments.
“Malaysia will continue to champion not just a fair and equitable transition towards greener industrial practices, but also market access for our products. Malaysia offers investors the potential for attractive returns alongside the nation’s clear positioning to achieve its vision to become a developed and inclusive economy,” Tengku Zafrul added.
