CIMB Securities said Malaysia has registered a significant increase in foreign direct investment interest in recent years.
PETALING JAYA: Malaysia continues to attract strong investment interest, thanks to trade diversion and the China+1 strategy, supported by the Madani government’s efforts, including master plans, policy incentives and special economic zones.
In a report, CIMB Securities said Malaysia has registered a significant increase in foreign direct investment (FDI) interest in recent years, reflecting a combination of global supply chain shifts and proactive government measures.
“Factors such as trade diversion due to geopolitical tensions, the China+1 strategy and Malaysia’s improved political landscape alongside (its) policy direction have positioned the country as an attractive investment destination,” the research house told clients.
It added that trade tensions between the United States and China, coupled with global supply chain disruptions, have accelerated trade and investment diversification.
“ The China+1 strategy has played a pivotal role, encouraging multinational corporations to diversify their manufacturing bases beyond China.”
To capitalise on this momentum, Malaysia has introduced key investment facilitation policies, including fast-tracking approvals for high-impact investments, reducing bureaucratic delays, introducing a new investment incentive framework, focusing on high-value activities such as digitalisation and establishing special economic zones such as the Johor-Singapore Special Economic Zone (JS-SEZ) and the Special Financial Zone in Forest City, Johor, said CIMB Securities.
It noted that Malaysia recorded RM378.5bil in approved investments in 2024, a 14.9% increase from a year earlier, driven mainly by the services sector, which secured RM252.7bil.
The manufacturing sector attracted RM120.5bil, marking a decline of 20.7%, largely owing to lower electronics and machinery investments.
In 2024, Malaysia’s FDI inflows rebounded 17.4% to RM47.4bil, despite an 8% drop in global FDI.
CIMB Securities noted that this underscores the country’s growing appeal to global investors, reflecting a positive shift in its economic trajectory.
Sectors that benefitted from increased FDI over the past five years (2020–24) included the services sector, which accounted for 49.2% of total FDI inflows during this period, it said.
Within services, the financial and insurance (20.3%) and information and communications (17.2%) subsectors were the primary beneficiaries, CIMB Securities added.
Despite global uncertainties, the research house said Malaysia’s investment outlook remains resilient, underpinned by strong policy support, infrastructure development, and expansion in key industries.
Sectors expected to benefit from sustained investment momentum in 2025 include the digital economy and data centre sector, where continued investments are expected in digital infrastructure and cloud computing.
This is driven by Malaysia’s competitive cost structure and increasing demand for artificial intelligence-driven solutions.
The renewable energy and green technologies sector is also poised to see strong FDI inflows, particularly in solar, hydrogen and carbon capture, in line with the National Energy Transition Roadmap.
The rising adoption of environmental, social and governance standards further enhances Malaysia’s attractiveness as a regional renewable energy hub, CIMB Securities said.
The research house noted that other key beneficiaries include the high-value manufacturing and electronics and electrical sector, where investments in semiconductors and chip packaging continue to be a key driver, particularly as Malaysia strengthens its role in the global supply chain amid shifting trade patterns.
The transport and logistics infrastructure sector also stands to benefit from new projects such as the JS-SEZ, Penang Light Rail Transit and port expansions, boosting investor confidence.
Additionally, Malaysia remains a leader in Islamic finance, with growth in syariah-compliant products and sustainable financing.
CIMB Securities also noted that the digital banking sector is set to expand, with new entrants enhancing financial inclusion and financial technology solutions.
