Insight - Domestic or foreign investment?

The Malaysian Investment Development Authority’s approved domestic direct investment (DDI) had declined 6.0% pa from RM175.1bil in 2014 to RM128.5bil in 2019 while approved foreign direct investment (FDI) increased 5.1% pa from RM64.6bil in 2014 to RM82.9bil in 2019.

MALAYSIA’S private investment growth rate and share of gross domestic product (GDP) has been decelerating in recent years.

Weighed down by external and domestic factors, private investment’s momentum had moderated from 12.1% per annum in 2011-2015 to 4.8% pa in 2016-2019.

Amongst these include the uneven state of global economic conditions post 2008-09 Global Financial Crisis; weakening domestic economic growth; a weak investment climate, including high regulatory and compliance costs; lingering uncertainty about policy transition as well as political instability.

In the first nine months of 2020, private investment declined by 13.2% year-on-year (y-o-y) as the Covid-19 pandemic-induced recession and extremely weak sentiments have caused businesses and companies to slash capital spending.