South-East Asia set to enter new investment cycle


SOUTH-EAST ASIAN countries including Malaysia are expected to enter a new investment cycle with signs of a recovery in foreign direct investment (FDI) flow into the region. 

Said Centennial Group Inc partner and Institute of Policy Studies Singapore adjunct senior fellow Manu Bhaskaran: “I believe South-East Asian nations will be able to attract more FDI if they set their trading policies right going forward.” 

Many have attributed the fall in FDI in countries of the region to China, the world’s cheapest manufacturing location, which has attracted FDI in the billions of dollars to its shores over the past few years. 

Manu said in a panel discussion at the National Economic Action Council (NEAC) Regional Economic Forum chaired by Minister in the Prime Minister's Department Datuk Mustapa Mohamed in Kuala Lumpur yesterday that the competition for foreign capital, particularly by developing countries such as China, Vietnam and other low-cost destinations, was intense.  

Minister in the Prime Minister Department Datuk Mustapha Mohamed (centre) with (from left) Dr Lee Boon Keng, Manu Bhaskaran, Mustapha Nor and Citigroup Global Markets Asia managing director Dr Donald Hanna at the conference in Kuala Lumpur yesterday.

As a result of such stiff competition, Malaysia, for example, had had to formulate very focused and specific investment policies based on comparative advantages to attract FDI.  

According to a recent survey, Malaysia is now ranked the third most attractive offshore investment location in the world, just behind India and China. 

DBS Group vice-president for market research Dr Lee Boon Keng was of the view that China would continue to attract strong inflows of FDI.  

“There is no better place to invest in, especially with the upside potential that China offers in terms of tremendous growth and the possible appreciation of the Chinese currency, which would mean a double bonus for foreign investors,” he said.  

Arab Malaysia Securities Sdn Bhd managing director Mustafa Mohd Nor said external factors like the anticipated slower global growth next year would have an impact on economic growth in South-East Asia.  

He said global economic growth next year would be weighed down largely by rising commodity prices and higher interest rates. 

Mustafa said the Malaysian economy was not expected to buck the regional trend going forward. He pointed out that the country's gross domestic product, which was expected to expand at least 7% this year, was likely to see the rate moderate to around 6% next year. 

Datuk Mustapa Mohamed commented: “To ensure steady growth of the economy, Malaysia will need to manage all the impending risk factors well.”  

Related Stories:Asian currencies to rise in tandem with China’s yuan Asean to feel less impact of China slowdown: EconomistIndia a rising force in manufacturingFuel prices not expected to go up Malaysia poised to ink more free trade agreements 

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