Image credit: The Malaysian Reserve
KUALA LUMPUR: The Malaysian Investment Development Authority (Mida) is optimistic that the 15th general election (GE15) will not have any impact on foreign direct investments (FDI) due to the inflows being long term in nature and that no changes in investment policy have been made by the previous government, according to its investment promotion and facilitation deputy CEO Sivasuriyamoorthy Sundara Raja.
Following general elections in recent years, succeeding governments are known to postpone for review high-profile projects – such as the Kuala Lumpur-Singapore High Speed Rail (HSR), the East Coast Rail Link, Malaysia Vision Valley and MRT3. Last year, Malaysia and Singapore jointly decided to terminate the HSR project as both countries could not reach an agreement on several changes that the Malaysian government proposed.
However, Sivasuriyamoorthy pointed out that FDI are for the long term, unlike portfolio investments.
“(In) direct investments, they have to make very quick decisions, they cannot wait for the election results. What is more important is, have there been any policy changes? So far none and we are always there. Mida is always together with Miti (Ministry of International Trade and Industry) to advise the government on investment policy,” he told SunBiz in an interview recently.
Sivasuriyamoorthy said what is important for businesses is continuity in policies and predictability in investment decisions. A national election is a normal process even in advanced countries, but business goes on as usual.
“We are very optimistic that we will be able to secure high level of investments,” Sivasuriyamoorthy said, adding that it is currently talking to existing as well as new investors.
Last year, Malaysia recorded approved investments worth RM306.5 billion in the manufacturing, services and primary sectors. Some of the capital-intensive projects last year include AT&S (RM8.5 billion), Intel (over RM30 billion) and Risen Solar Technology Sdn Bhd (RM42.2 billion), which Sivasuriyamoorthy attributed to the global semiconductor shortage. In general, he said, investments of those kind do not happen every year.
“Moving forward, we are getting a lot of traction from data centres, digital investment, which is also capital intensive. For the first half of this year, we approved three major data centres. There are a few more that we are negotiating for, so all of these might be reflected by end of this year,” he said.
In the past few years, efforts to channel domestic direct investments-led (DDI-led) investments into the economy have yielded positive results.
Sivasuriyamoorthy said there is a widespread misconception that the government favours and incentivises foreign investors over local players. In reality, domestic players enjoy more investment incentives compared with foreign investors.
“Domestic investment has always been the major contributor in approved investments in the economy. Between 2012 and 2021, approved domestic investments in the manufacturing, services, and primary sectors totalled RM1.3 trillion, accounting for 64.2% of total approved investments (RM2.1 trillion), while FDI accounted for only 35.8%, or RM761.5 billion,” he shared.
Sivasuriyamoorthy said Mida is optimistic of seeing more DDI in the next few years, driven by the existing trend and collaborations with various domestic chambers.
To promote DDI, Mida believes there is still space for the expansion of existing companies to reinvest, particularly in new growth areas. New companies should leverage the growing opportunities in the country and establish their presence here.
“Mida has formulated programmes to continue facilitating the establishment and expansion of multinational corporations (MNC) and local large companies (LLC) as well as mid-tier companies in Malaysia. Equipped with a structured and completed ecosystem in various industries, (it) promotes collaboration between domestic companies with MNC and LLC to become part of local supply chains with technological capabilities,” he said.
Source: https://www.thesundaily.my/business/mida-ge15-will-not-have-impact-on-fdi-inflow-OC10032826