Government taking proactive measures to increase FDI

KUALA LUMPUR -- The government will continue to take proactive measures to increase foreign direct investments (FDI) by giving more attention to high-quality investments which can stimulate the economy.

Deputy International Trade and Industry Minister Dr Ong Kian Ming said as a country moving towards developed nation status, focus would be given to high-quality and high-technology investments, as well as reducing the dependency on foreign labour.

Meanwhile, he said only a low level of FDI outflows were recorded since May.

“From May-June, three FDI projects amounting to RM16.4 million from the manufacturing sector were closed, stopped or relocated.

“Based on the value of investments, there were from small-scale companies,” he said, in response to a written question from Datuk Seri Hamzah Zainuddin (BN-Larut) on the amount of FDI outflow since May in the Dewan Rakyat here today.

Ong said among the factors influencing FDI outflows were market uncertainties and contraction in the global economy, which caused investors to restructure their operations and investment strategy.

The technology shift towards Industry 4.0, he said, has caused labour-intensive industries difficulties in optimising their operations and maintaining long-term profit in Malaysia.

“The increase in labour cost had contributed to the outflow from labour intensive sectors.

“With the emphasis on high technology, lower-technology projects are finding it harder to operate and compete in Malaysia,” Ong said.

In a related development, the deputy minister said no specific focus would be given to labour costs when it came to attracting FDI as the government was more interested in attracting quality and high-technology investments from China and the US to turn Malaysia into an intermediate country for exports.

Ong said this in response to a supplementary question from Hamzah on the steps taken to balance the increase in labour cost versus attracting investments to take advantage on the possibility of investment overflows resulting from the US-China trade war

Foreign equity outflow remained low, he said, while foreign shareholdings remained stable.
“From May-July 14, foreign equity outflow was minimal at RM14.8 billion or 0.7 per cent of Bursa Malaysia’s RM1.8 trillion market capitalisation.

“The value of shares held by foreign investors was stable at 23.65 per cent or RM418 billion of market value,” he added

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