KUALA LUMPUR: Malaysia’s foreign direct investment is anticipated to rise more strongly, augmented by "friend-shoring” policies promoted by the US government and Prime Minister Datuk Seri Anwar Ibrahim’s moves to enhance the country’s investment facilitation, said an economist.
Sunway University economics professor Yeah Kim Leng said the prime minister’s recent working trip to the 78th United Nations General Assembly (UNGA) and his meeting with top corporate leaders has given Malaysia greater prospects on the investment radars of top US companies.
"Besides improving governance, investor confidence, political stability and policy certainty, the prospects of larger private and foreign direct investment (FDI) inflows is among the rationale for the upward revision of the 12th Malaysia Plan growth targets.
"While the current elevated global uncertainties may derail the projected higher growth trajectory due to the country’s high exposure to external demand, the economy will nevertheless be in a better position to withstand the potential headwinds, especially if the various measures and schemes to strengthen fiscal position and social protection are instituted in the coming year,” he told Bernama.
Yeah said Anwar’s presence at the UNGA has raised the country’s international profile and reiterated more forcefully Malaysia’s foreign policies, especially with regard to the Palestinian issue.
Besides asserting Malaysia’s foreign policy stance, his meetings with top American corporate leaders and investors are helpful in bolstering their confidence in Malaysia as a favorable investment destination as well as rebuilding its international reputation tarnished by the 1MDB scandal.
Likewise, his meetings with Malaysians working and studying in the United States were helpful in the government’s efforts to promote Malaysia and assist in the country’s development.
"On these counts, the mission can be deemed to have succeeded,” Yeah reckoned.
During his press conference with the Malaysian media after the end of his working trip, Anwar said that he had successfully highlighted Malaysia's stance on global issues and raised the country's profile on the international stage. He also said the visit provided an opportunity for him to share the country's policies and aspirations related to international relations.
"Indeed, the results are good, our international profile has increased. Following meetings with my counterparts, I have the opportunity to share experiences and exchange opinions on global issues and common interests," Anwar told Malaysian media recently.
Ease of doing business
Nevertheless, Anwar, who made his first appearance as prime minister at the annual gathering in New York, noted that as more global companies expand into Malaysia or increase their existing investments, authorities must cut down on red tape and strive to improve the ease of doing business.
Commenting on this, Yeah said the continuing efforts to reduce red tape and regulatory burden will certainly boost the attractiveness of Malaysia as a country of choice for iconic investors such as Tesla, Amazon, and Boeing while inducing existing investors such as Intel to expand production capacity and reinvest in the country.
"The large investments not only enable the domestic expansion of supply chains that benefit large enterprises and small and medium enterprises but also have ‘signalling’ and ‘pulling’ effects on investments in other sectors of the economy,” he added.
Malaysia University of Science and Technology (MUST) professor Geoffrey Williams said cutting red tape and improving the ease of doing business is the key to attracting FDI while clear policies and less government interference are what investors want, and this pragmatic approach has attracted companies such as Tesla, for example.
"However, if Malaysia pushes too hard on the environmental, social and governance (ESG) issues, especially on the environment, this may turn investors off.
"Chinese and Middle East investors do not prioritise these issues. The emphasis of sustainability under the Madani framework focuses on social development first and this requires economic growth over environmental issues,” he added.
Williams also highlighted that the government still needs to settle the foreign workers' recruitment and corporate governance issues.
Foreign workers' recruitment issues can be solved with homegrown technologies produced here by Malaysian companies, he said, adding that these technologies can protect Malaysian employees too and make it easier for foreign investors to deal with recruitment and worker protection.
"This will cut red tape and protect workers while reducing agency costs and improving the ease of doing business. So technologies produced here can help cut red tape and increase investor confidence,” he stressed.
Economist Manokaran Mottain said after a long time, Malaysia has its prime minister putting back the country on the global map, saying the right things in a very strong manner.
"I think Anwar has highlighted pertinent issues including calling world leaders to resolve the conflicts and humanitarian crises in the world, and he also stressed the Islamophobic acts and mentioned Malaysia’s Madani Economy for the first time in the United States. I feel like although we are a small economy, that day, (we stood) big”.
Manokaran, who is also the director of Malaysia Venture Capital Management, said that he is bullish that sooner or later the rating agencies will revise the country’s rating (to a more positive outlook) given the stabilising political situation.
Yeah said by raising Malaysia’s standing among global leaders, the PM’s trip also sent the message that the country is no longer distracted by internal political woes and leadership changes but open to all in the world who want to participate in its restructuring and journey to be a dynamic and soon-to-be a high-income nation. - Bernama