Despite the competition from other ASEAN countries, Malaysia continues to be a major destination for global investors, with a strong ecosystem that has existed for the past five decades, especially in the electrical and electronics industry.
Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz (pictured) said Malaysia also benefits from investment spillovers to its neighbouring countries.
Speaking to Malaysian media covering Prime Minister Datuk Seri Anwar Ibrahim’s visit to Germany, he said Malaysia’s continued attraction, emphasizing its potential for sustainable growth in the green and digital economy, was supported by its abundant natural resources and stable investment environment.
He said during the working visit, Anwar will visit Siemens Energy, a major player in renewable energy.
In the meantime, he said ASEAN has benefited from changes in investment flows and the realignment of supply chains, even though global Gross Domestic Product (GDP) growth is sluggish and global foreign direct investment (FDI) flows decline.
“Following sluggish global GDP, global FDI fell by 12 percent but FDI to ASEAN increased by 5.0 percent,” he said.
Global FDI flows declined by 12 percent to US$1.3 trillion (US$1 = RM4.68) in 2022, after falling in 2020 due to the COVID-19 pandemic and rising again in 2021.
Overflow benefits
Although there is competition to attract trade and investment among ASEAN member countries, Tengku Zafrul said Malaysia will benefit from the spillover.
“We compete in ASEAN but for me, it is not a ‘zero-sum game’.
“Even if Vietnam or our neighbour, Singapore gets investment, it will overflow to Malaysia,” he said, taking the example of investment in neighbouring ASEAN countries also improving Malaysia’s economic ecosystem.
He said the establishment of a data centre that supports artificial intelligence (AI) in Singapore, its spillover can be felt in Malaysia as well as the acquisition of components from Malaysia by Vietnam as prime examples of beneficial cooperation.
Regarding the Prime Minister’s visit to Germany, Tengku Zafrul said it was important for Malaysia to continue to establish cooperation with the world’s third largest economy and during the six-day visit, Anwar would meet industry leaders and potential investors such as Schott AG, Infineon Technologies AG, Melexis and Airbus .
Currently, there are over 700 German companies operating in Malaysia, creating 65,000 jobs.
Germany has been Malaysia’s largest trading partner among European Union member countries since 2000 while Malaysia is Germany’s largest trading partner among ASEAN member countries.
In 2023, Malaysia’s total trade with Germany increased by 5.9 percent to RM63.45 billion (US$13.90 billion) from RM59.87 billion (US$13.62 billion) in 2022.
