Sustained economic growth results in rise of FDI stock, says Lim

The govt expects the GDP for this year to expand at 4.5% to 5%

by NG MIN SHEN/ pic by TMR

FINANCE Minister Lim Guan Eng (picture) said sustained economic growth amid rising global trade tensions has led to the rise of foreign direct investment (FDI) stock in the country.

The International Investment Position (IIP) document published by the Department of Statistics Malaysia shows Malaysia’s total FDI stock rose by 10.3% to RM667.5 billion in the second quarter of 2019 (2Q19) from RM605.1 billion a year ago, Lim said in a statement yesterday.

“Sustained economic growth is one of the reasons behind the rising FDI stock,” he said, noting that Malaysia’s GDP expanded 4.9% year-on-year in 2Q19 after growing 4.5% in 1Q19, at a time when various regional economies are experiencing synchronised growth slowdown.

The 4.9% growth in national GDP was above the consensus 4.7% growth estimated by economists surveyed by Bloomberg.

“The stronger-than-expected 2Q19 performance has convinced Fitch Ratings to revise its 2019 GDP growth projection for Malaysia upward to 4.6% from a lowly 4.2%. The government expects the GDP to expand at 4.5% to 5% this year, based on the first half-year trend,” Lim said.

According to the IIP and the Balance of Payments, FDI is defined as a lasting investment made by foreign parties into domestic companies, giving the former a lasting controlling stake.

“This adheres to the definition provided by the International Monetary Fund. It is not the only definition available, however, and the Malaysian Investment Development Authority (Mida) defines FDI as an investment into projects. Furthermore, approved FDI functions as a leading indicator to actual FDI as defined by Mida,” Lim said.

Mida last week said approved FDI across all sectors rose 97.2% to RM49.5 billion in the first half of 2019 (1H19), from RM25.1 billion recorded in the same period last year.

Approved manufacturing FDI climbed 74.2% to RM33.1 billion during 1H19 from RM19 billion a year prior, of which RM11.7 billion originated from the US, making the country the biggest source of approved manufacturing FDI during the period. China was the second-largest source with RM4.8 billion of approved manufacturing FDI, followed by Singapore with RM3.1 billion and Japan with RM2.1 billion.

“Mida states that the RM33.1 billion approved manufacturing FDI would create 30,449 jobs in the near future. The government will maintain its business-friendly approach to attract investment into the country and create quality jobs for all Malaysians,” Lim said.