Malaysia’s FDI drops 54.8% in 2020 

MALAYSIA’S foreign direct investment (FDI) recorded a net inflow of RM14.6 billion, a decrease by 54.8% in 2020 as compared to RM32.4 billion in the previous year, while investment abroad registered RM11.9 billion.  
According to the Department of Statistics Malaysia (DoSM), FDI registered a higher value of RM698.8 billion at the end of 2020.
Chief statistician Datuk Seri Dr Mohd Uzir Mahidin said the country’s FDI in 2020 is the lowest since 2009 (RM5.1 billion).  
“Although FDI flows dropped in 2020, the declining trend did not continue at the beginning of 2021,” he said in a statement today. 
Referring to the statistics on FDI and direct investment abroad (DIA) for the first quarter 2021 (1Q21) released last May, he highlighted that FDI inflow in Malaysia showed a recovery by registering RM9.1 billion, the highest investment since the Covid-19 pandemic hit Malaysia.  
“The improved investment was contributed by higher inflow in equity and investment fund shares, precisely in manufacturing and services sectors,” he said. 
The services sector which contracted 60.5% year-on-year (YoY) to RM6.9 billion has led to the largest decline in FDI. However, Mohd Uzir emphasised that the downturn in services was not an unpropitious sign since this sector remained as the major contributor to FDI flows, attracting 47.0% of total investment, particularly in financial activities.  
Meanwhile, manufacturing was the second-highest contributor which received higher equity precisely in electrical and electronics (E&E) products, followed by the mining sector in the form of debt instruments. 
The Asia region continued to be the top source of FDI in Malaysia last year with a net inflow of RM18.3 billion, mostly received from Singapore, Thailand and China which amounted to RM11.5 billion. 
Similar to the FDI performance, the DIA flow also plummeted by 54.0% to record RM11.9 billion owing to lower investment in mining and services sectors, the latter contributed 54.0% of the total investment, particularly in financial and telecommunication activities. 
Malaysia’s DIA in 1Q21 showed an increasing trend by recording a net outflow of RM7.8 billion, significantly contributed by higher outflow in equity and investment fund shares. 
The accumulated investment overseas also improved to RM518.8 billion mostly into Singapore and Indonesia, while the United Kingdom overtook the Cayman Islands as the third top destination. 
Mohd Uzir concluded that despite the increasingly dynamic evolution of the pandemic, the risk of transmission and renewed containment actions that could continue to affect the investment activities, Malaysia’s economy is expected to improve in 2021 based on the better performance of key economic indicators in 1Q. 
“Although the decline in foreign investment may seem worrisome, FDI in Malaysia recorded a higher inflow in 1Q21 and the accumulated FDI remained prominently high, signalling an improved investment performance for the year,” he added.