Higher approved investment forecast for full-year 2020

Also giving the investments a boost was the Malaysian Industrial Development Authority’s (Mida) decision to set up the Project Acceleration and Coordination Unit to provide end-to-end facilitation for all projects approved to enable the timely implementation of investments in the country.

KUALA LUMPUR: UOB Malaysia is raising its full-year approved investment forecast for this year to RM138bil after the total investment approvals for January-September surpassed its initial target of RM100bil.

Global Economics & Markets Research senior economist Julia Goh said her new target was about 32% higher than the actual investments approved during the global financial crisis in 2009.

“This is a positive sign that Malaysia remains an attractive investment destination with ongoing efforts by the government to expedite the investment approval process and offer competitive incentives, ” she said in a statement.

Goh cited the slew of initiatives unveiled in the Budget 2021 to accelerate investments in Malaysia to spur economic growth and create higher multiplier effects in the economy.

Among them were the RM1bil special incentive package for high value-added technology projects and the income tax rate of 0% up to 10% for the first 10 years and 10% for the subsequent period of 10 years to manufacturers of pharmaceutical products including vaccines.

Also giving the investments a boost was the Malaysian Industrial Development Authority’s (Mida) decision to set up the Project Acceleration and Coordination Unit to provide end-to-end facilitation for all projects approved to enable the timely implementation of investments in the country.

“With these initiatives to lure investments amid emerging business opportunities in a post-pandemic new normal and global economic recovery, we expect overall investments to regain momentum in 2021-2022, albeit at a measured pace, ” she said.

Goh said the actualisation of those investment approved year-to-date could help jump-start private investments in 2021 and beyond.

The ratification of the recently signed Regional Comprehensive Economic Partnership (RCEP) by end-2021 should also reinforce Malaysia as a gateway to Asean and beyond, as well as strengthen Malaysia’s trade and investment outlook over the medium term.

Another key event, she said, was the tabling of 12th Malaysia Plan (12MP) 2021-2025 in Parliament early January which would outline a development roadmap for Malaysia to recover and be competitive over the next five years, particularly in a post-pandemic new normal.

Between January and September, she said Malaysia approved RM109.80bil worth of investments for the primary, manufacturing and services sectors, which was 27.3% lower than a year ago.

Of the total investments approved, domestic direct investments accounted for RM67.2bil or 61.2%, while the remaining RM42.6bil, or 38.8%, were foreign direct investments. These investments involved 2,935 projects and are expected to create 64,701 employment opportunities in Malaysia over the next few years.

Despite the global Covid-19 pandemic outbreak triggering a deep global downturn and delaying investment decisions worldwide, Goh said Malaysia’s manufacturing sector demonstrated its resilience with investment approvals continuing to rise by 16.6% year-on-year (y-o-y) to RM65.3bil during the nine months.

This partially cushioned the drag from services sector which fell 51.8% y-o-y to RM42.8bil, or 39% of overall investment approvals, and the primary sector, which fell by 73.5% y-o-y to RM1.7bil.

Of the RM42.8bil investments in the services sector, she said 94.9% was from domestic direct investments.

The top five drivers of approved investments in the services sector were real estate (RM23.7bil), utilities (RM7.2bil), support services (RM4bil), telecommunications (RM2.6bil), and financial services (RM2.1bil).

For the primary sector, the January-September investment approvals of RM1.7bil were in mining industry, plantation and commodities, and agriculture.