by AUFA MARDHIAH

MALAYSIA had set an overall investment target of 5% growth for 2024 compared to last year’s RM329 billion.

Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz (picture) said the target comes as a reminder of the 13% increase in investment achieved in the first three months of the previous year.

“For now, it is officially up 5% and we will review it in the pipeline. But at the moment, the 5% is based on the correlation with our GDP because its growth is around 4% to 5%.

“So, we assume that the growth will be in line with the GDP growth, although I think it is a very conservative target, which the Malaysian Investment Development Authority (MIDA) can achieve,” he said at MITI’s second quarter (2Q) report card press conference today.

Commenting on the impact of ringgit fluctuations on investment performance, he highlighted that the strengthening of the ringgit raises concerns for investors.

Regarding foreign direct investments (FDIs), he said for those looking to invest in Malaysia, typically, it takes about two to 2.5 years for investors to see the realisation of their investments, although data centres can be established faster, within about one year.

During this 2.5-year period, a weaker ringgit benefits investors by lowering construction and labour costs.

However, this advantage is partly offset by the need to import machinery priced in US dollars.

In the long term, significant currency fluctuations, such as a 10% drop in the value of ringgit, can be concerning because most factories incur costs in both ringgit and US dollars.

The extent of the impact depends on how much the industry relies on imported machinery.

Nevertheless, Tengku Zafrul said the situation is mitigated by the fact that exports are priced in US dollars, which benefits investors — noting that Malaysia’s trade surplus, resulting from exporting more than it imports, is advantageous.

“For FDIs and long-term investments, the strengthening of the ringgit does affect performance because exports are still conducted in dollars.

“This situation differs from the capital market, where investors prefer stability within a certain range rather than excessive volatility,” he added.

Malaysia’s trade increased by 8.7% year-on-year, reaching RM237.81 billion.

For the first half of 2024, trade saw an 8.4% increase, amounting to RM1.396 trillion compared to the same period in 2023.

Exports rose by 3.9% to RM731.11 billion, while imports increased by 13.8% to RM664.99 billion, resulting in a trade surplus of RM66.12 billion.

The period also recorded the highest trade values so far.