Selangor cuts investment target to RM8.5b

Only RM3.3b investments approved in 1H20 as Covid-19 wreaks havoc on sentiments worldwide

by AFIQ AZIZ

SELANGOR is expected to rake in only RM8.5 billion of foreign direct investment (FDIs) this year for its manufacturing sector, half of the RM17 billion achieved last year, in the wake of the weak global sentiment caused by the Covid-19 outbreak.

The main contributor to the country’s GDP on an annual basis at 24%, Selangor had set to achieve RM12 billion of investments for 2020.

However, according to Selangor executive councillor Datuk Teng Chang Khim, only RM3.3 billion of investments were approved as of the first half of this year (1H20) based on the latest data from Malaysian Investment Development Authority (Mida).

“We have about RM5 billion pending investments that will be approved by Mida towards the end of the year.

“As such, the state government would be satisfied with the investment of RM8.5 billion this year, despite the ongoing pandemic and a series of Movement Control Orders (MCOs) that may be ongoing for the next few months,” Teng said at a virtual press conference after the virtual launch of the Selangor International Business Summit (SIBS) 2020.

Teng, who is also the chairman of standing committees for investment, industry and commerce and small and medium enterprise, said the revised target was in line with global sentiments due to the Covid-19 pandemic.

In June, the United Nations Conference on Trade and Development forecasted that FDI flows are expected to plunge about 40% this year from the US$1.54 trillion (RM6.55 trillion) registered in 2019. In Asia, FDIs are forecasted to fall between 30% and 45% year-on-year.

Previously, Selangor set a target of RM12 billion FDI in five main sectors including electrical and electronics (E&E), food and beverages (F&B), and machinery.

“With the previous three months’ MCO in place, and now the Conditional MCO (CMCO) for the whole state of Selangor, we do not know what lies beyond.

“We have not set our investment target for next year due to economic uncertainties,” Teng added.

In 2018, Selangor recorded its highest FDI of RM18.9 billion.

Teng said due to the reinforcement of the CMCO in the Klang Valley — comprising Kuala Lumpur, Selangor and Putrajaya — from Oct 14 to 27, Malaysia’s GDP might shrink by another 4.4% this year.

“Fortunately, this CMCO focuses on restrictions for activities rather than movement, where all business and economic activities can still be carried out.

“I hope this will minimise the impact on economic development.”

Moving forward, Selangor will continue to focus on E&E, transport equipment, F&B, life sciences and machinery and equipment segments.

Next year, Teng said the government is expected to organise an international aviation show to promote the state’s aerospace industry — which falls under the state transport equipment investment cluster.

The move, he said, is pertinent to ensure that Selangor is prepared to be part of the multibillion industry, which is now heavily affected by the pandemic.

“(About) 80% of aircraft are still grounded and this adversely affects the aerospace sector, but we believe it will pick up again when all international borders are open.

“Selangor is focused on the industry and hopefully, it will improve our results in enticing foreign investors,” Teng said.

Selangor is home to about 65% of the total 230 aerospace players in Malaysia, from manufacturing to aircraft services.

The four-day SIBS 2020 has been shifted to a fully virtual platform in response to public health and travel safety concerns relating to the Covid-19 pandemic.

Last year, SIBS raked in RM447 million in business transaction value, including the RM200 million garnered from the Malaysia-China Entrepreneur Conference.