Malaysia in investment upcycle, says analyst
Published on: Monday, August 05, 2024
By: Bernama
At 11.32am today, the ringgit rallied to 4.4000/4.4150 against the US dollar, marking its 11th consecutive day of an uptrend.
PETALING JAYA: Maybank Investment Bank Bhd (Maybank IB) has stated that Malaysia is currently undergoing its third investment upcycle.
It said the combined private and public investments share of the Gross Domestic Product (GDP) increased from the recent post-pandemic low of 19.7% in 2022 to 21.3% in the first quarter of 2024 (Q1 2024).
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In a statement, Maybank IB said the previous two investment upcycles saw gross fixed capital formation’s share of the GDP surging from 22.1% in 1987 to 49.2% in 1997, and from 21.7% in 2009 to 26.6% in 2013.
“Investment is on the upswing as robust approved private sector investment since 2021 is being realised in line with the trend in actual private investment.
Rising momentum in investment realisation can also be seen from the surge in imports of capital goods, especially machinery and transport equipment, as well as the accelerating banking system’s loans growth for industrial buildings, factories, land, construction and working capital, it said.
The investment bank reckoned that the investment upcycle reflects the benefit or payoff from political stability post-15th general election, foreseeing five drivers or themes, namely green economy, technology, Johor-Singapore Special Economic Zones (JS-SEZ), infrastructure and government-linked in the current wave.
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It noted that green investment is driven by the National Energy Transition Roadmap (NETR), where the energy transition financing needs imply a projected total investment of RM1.2 trillion – RM1.3 trillion over 2023-2050.
Meanwhile, the technology industry investment is central to the New Industrial Master Plan (NIMP) 2030, with the National Semiconductor Strategy (NSS) aiming to attract RM500 billion worth of investment in the high-end semiconductor sector.
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Another significant investment area in technology is data centres, with an estimated RM130 billion in investments expected between 2024 and 2035
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