Mustapa: Total investments in 1H at RM113b (Update)

KUALA LUMPUR: Malaysia saw its new approved direct investments rising to  RM113.5bil in the January to June period of 2015 compared with RM112bil in the previous corresponding period.
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Minister of International Trade and Industry Datuk Seri Mustapa Mohamed said on Wednesday that investor confidence sustained Malaysia's growth as total investments realised to date under the 10th Malaysia Plan was RM813.5bil, exceeding the plan's target of RM740bil.

This was despite the slower growth of private investment in the second quarter of 2015 as announced by Bank Negara Malaysia recently, he said.

The total investments approved were in 2,487 projects and weree expected to generate about 101,780 job opportunities, many of which will be in high technology and high value-added industries. 

The services sector was the largest contributor of total investments at 54.4% or RM61.7bil, followed by manufacturing sector with investments of RM49.5bil or 43.6% and primary sector contributed RM2.3bil or 2%.

The services sector accounted for the largest share of total potential employment in the economy with 60,750 job opportunities or 59.7% of the total.

This was followed by the manufacturing sector with 39,990 job opportunities (39.3%) and primary sector with 1,040 employment opportunities (1%).
 
Investment in the services sector grew moderately by 4.9% in 1H 2015, compared with corresponding period in 2014. 

“The slower growth was mainly due to the lower investment in the real estate sector, which recorded RM15.9 billion in 1H2015 compared with RM29.1 billion in 1H2014. 

“Except for the real estate and distributive trade sectors, almost all other services sub-sectors registered growth in investments during this period,” Mustapa said.
 
In the transport sector, which comprises investments in air, maritime and land transport, the approval of three new highways led to the increase in total investment in the sector to RM12.8bil compared with RM6.3bil for the whole of 2014. 
  
“Malaysia’s strategic location, supported by the Government’s ongoing commitment in pursuing pro-business and pragmatic policies have continued to be the catalyst in making Malaysia an attractive destination for global businesses to set up their regional business hubs in the country,” he said.

Mustapa said that in 1H2015, a total of 101 regional establishments with investments of RM3bil were approved.  Another four global operations hub projects were approved with investments valued at RM2.6bil. 

These global and regional operations provide professional services that include supply chain management, financial & treasury management, and data & information services to their global network of companies.

“However, investments in the primary sector decreased from RM10.1bil in 1H2014 to RM2.3bil in 1H2015.  This is due to lower investments in the upstream oil and gas activities and the challenge of lower global crude oil prices,” he said.    

Commenting on the oil and non-oil segments in the manufacturing sector, he said   investments in the petroleum products industries totalled RM25.4bil (51.3%).

The non-oil sectors received RM24.1bil, mainly from the transport equipment, electrical and electronic (E&E), fabricated metal, non-metallic mineral products and chemical products.  

More than 25% of projects in these five sectors reported having value-added of 60% and above, reflecting the continued efforts by Malaysian manufacturers to move into higher value added activities.
 
He said Malaysian companies continued to invest in the manufacturing sector.  In 1H2015, a total of 255 Malaysian-owned manufacturing projects with investments totaling RM11.2bil were approved in the non-oil sector. 

For instance, Malaysian manufacturers were active in the machinery manufacturing, wood and furniture, fabricated metal products (including engineering support services), transport equipment and food manufacturing industries. 

“Notably, 42% or 107 of these projects proposed to export at least 50% of their outputs, denoting the strength of the Malaysian companies to compete in the global market,” he said.

In terms of employment opportunities, he pointed out Malaysian-owned manufacturing projects were also major employers. 

Job opportunities created by the 255 projects totalled 17,210 or 43% of total job opportunities from projects approved in 1H 2015. 

He said young Malaysians with technical and vocational qualification looking to a career in the manufacturing sector, would find many opportunities in the more than 6,000 jobs to be created in Selangor, Johor (3,580), Penang (2,960), Perak (1,170) and Kedah (1,140).
 
In terms of investments at the state level, Johor registered the highest level of investments of RM27.0 billion in the manufacturing sector from January to June 2015. This was a 72% increase in investments, compared with RM15.7billion over the corresponding period in 2014.
 
The other top ten leading states in terms of value of investments were Melaka (RM6.2bil), Penang (RM4.3bil), Selangor (RM4.2bil), Perak (RM3.0bil), Kedah (RM1.1bil), Pahang (RM1bil), Negeri Sembilan (RM940mil), Sarawak (RM640mil) and Sabah (RM340mil).
 
Japan, Hong Kong, China, South Korea and Taiwan were the main foreign sources of investment, totalling RM7.4 billion or 56.4.6%. In second spot were Americas (RM2.3bil) and Europe (RM1.9bil). 

Investments from East Asia were mainly in the fabricated metal products, non-metallic mineral products and E&E industries, while more than 80% of investments from the US were in E&E. 

Investments from European countries were in a wide range of industries, from E&E and machinery manufacturing to resource based industries of paper products, petroleum products and food manufacturing.
 
Mustapa highlighted that Malaysia continues to strengthen the investment ecosystems within the manufacturing sector to facilitate growth. 

“The country’s aim is to further attract more quality investments from both local and foreign sources to encourage new product innovation in the country. 

“These approved projects are also expected to generate strong multiplier effects which include the growth of domestic companies/engineering supporting industries, cluster development, local sourcing, strengthening of R&D activities and human capital development,” he said. 
 
As for implemented projects, he said that from 2010 to 2014, a total of 4,158 manufacturing projects were approved.

Of these projects, he said 3,206 (77%) of them had been implemented thus far, with 2,961 in production and 245 undergoing machinery installation or factory construction. 

“Total capital investment for these implemented projects amounted to RM172.9bil. A total of 454 manufacturing projects approved since January 2014 are already in operation,” he said.