Kuala Lumpur: Enhancing domestic direct investment (DDI) is important for Malaysia’s sustainable growth given its huge contribution to the country’s economy, said the Malaysian Investment Development Authority (Mida).
Chief executive officer Datuk Arham Abdul Rahman
(pic) said DDIs play an important role in the local economy, especially against the backdrop of global uncertainties, and is essential to woo foreign direct investment (FDI).
He pointed out that FDI and DDI complement one another, arising from the same market conditions - a competitive, equitable, stable business and regulatory climate - and that both segments deserve equal attention.
“FDI is only one part of the equation in the economy, a strong domestic industry and ecosystem are also important.
“Strong domestic demand results in more DDI and a healthy DDI is essential for a successful FDI,” he said at a panel discussion titled “Shifting the Paradigm: Enhancing DDI for Sustainable Economic Growth” here Tuesday.
In 2012-2021, DDIs contributed 64.2 per cent, or RM1.364 trillion, of the total approved investment in Malaysia’s economy, while the remaining 35.8 per cent (RM761.7 billion) was FDIs.
In the services sector, 84.2 per cent or RM1.014 trillion of total approved investment in the country was dominated by DDI, while FDI amounted to RM190.4 billion.
As for manufacturing, 35.5 per cent, or RM290.8 billion, of approved investment was contributed by DDI while the bigger chunk was FDI, totalling RM527.6 billion.
Meanwhile, Mida expects the total approved investments in 2022 to recover to the pre-pandemic level of over RM200 billion annually.
Chief executive officer Datuk Arham Abdul Rahman said on average, domestic direct investment and foreign direct investment made up 60:40 of the country’s yearly approved investments, mainly for the services sector.
He said investments in semiconductors and electrical and electronics (E&E) would continue to make up the largest contribution to the total investment this year.
“The global disruptions in the E&E and semiconductor supply chains globally during the pandemic saw many chips and semiconductors being utilised in mobile phones and PC productions, (causing a shortage) for the automotive industry.
“Now the demand for chips and semiconductors in the automotive industry is on an uptrend,” he told a press conference after a panel discussion titled “Shifting the Paradigm: Enhancing DDI for Sustainable Economic Growth” here Tuesday.
In the first half of 2022, Mida approved RM123.3 billion in total investment, largely in the services sectors, including for the data centre projects in Johor.
He declined to reveal the latest figure of approved investments but signalled that the trend is increasing, in tandem with growing interest in Malaysia as a preferred destination for investment among domestic and foreign investors.
In 2021, Mida approved a record RM309.4 billion (US$74.2 billion) in investments in the manufacturing, services, and primary sectors despite the unique global calamities, thanks to several big ticket projects secured, especially in the E&E and semiconductor industry, including from Intel and Osram.
