by AUFA MARDHIAH / pic MUHD AMIN NAHARUL

INVESTMENT, Trade and Industry (Miti) Minister Datuk Seri Tengku Zafrul Abdul Aziz (picture) said Ringgit performance in the investment sector is focusing more on longer-term horizons rather than immediate capital flows.

He said for instance, investments in building factories or initiating operations typically span 18 to 24 months, during which cost competitiveness may be influenced by the strength of the Ringgit.

“A stronger Ringgit can lead to lower costs, even for investments denominated in US dollars.

“However, investors assess their investment projections based on factors such as return on investment (ROI), which may be affected by fluctuations in the Ringgit,” he said to the media at the Malaysian Investment Development Authority (Mida) Annual Media Conference on Malaysia’s 2023 Investment Performance.

Nevertheless, he said in the longer term, Malaysia’s participation in multilateral agreements and free trade agreements influences investments, especially those geared towards exports.

This benefits exporters, as a weaker Ringgit enhances their competitiveness in foreign markets.

Additionally, local suppliers, particularly small and medium enterprises (SMEs), supplying goods to these exporting companies in Ringgit while operating in a dollar-denominated market, are shielded from currency fluctuations.

Overall, the sensitivity of investment currency to capital flows differs from that of currency used in investment activities.

When engaging with investors, he said discussions rarely revolve around currency regulation; instead, the focus is on productivity and the broader investment landscape.

“Currency for investment is not as sensitive as for currency when it comes to capital flows.

“In fact, when we talk to investors, regulating the currency is not discussed at all and that they will look at productivity,” he added.

Concurrently, he said Miti is targeting a growth of at least 8% to 10% in approved investment for 2024, compared to the RM329.5 billion achieved last year.

According to Tengku Zafrul, the target figure is based on the government’s Gross Domestic Product (GDP) growth target for this year, set at 4% to 5%.

He explained that discussions are still ongoing with government agencies regarding appropriate target figures, but it should be higher than the previous year’s, and it is related to the country’s GDP targets.

“For me, it needs to be at least twice the GDP growth target, so at least 8% to 10%,” he added.

He also said the growth needs to be looked at during the industrial cycle. For instance, electrical and electronics are on an upward trend, while other industries are oversupply.

For 2023, Malaysia’s approved investments increased by 23.0% compared to 2022, reaching RM329.5 billion.

The services sector led with RM168.4 billion (51.1%), showing a 7.2% increase from the previous year.

Manufacturing followed closely with RM152.0 billion (46.1%), marking an 80.3% growth.

Foreign investments accounted for 57.2% (RM188.4 billion), while domestic investments contributed 42.8% (RM141.1 billion) of the total approved investments.