Kelang Container Terminal at Klang
PETALING JAYA: UOB Kay Hian (UOBKH) Research is keeping a cautious outlook amid tariff risks, lowering its committed investments projections for this year.
“Challenges still lie ahead with most business capital expansion plans halted by tariff risks.
“Taken together, we stick to our cautious outlook for committed investments this year, projecting it to be RM380bil versus an upwardly revised RM384.4bil in 2024 from RM378.5bil previously,” it said.
This compares with the Malaysian Investment Development Authority’s (Mida) targeted 5% growth to RM397.4bil for this year.
As of 10 Jun 2025, Mida is actively managing a robust pipeline of proposed projects, collectively valued at RM48.5bil.
Complementing this pipeline, an additional RM59.3bil in high potential investment leads are currently under negotiation.
On the other hand, UOBKH Research said Malaysia appears to continuously benefit from global trade diversion amid rising tariff tensions, which is partly due to lower reciprocal tariffs levied by the United States on Malaysian products relative to neighbouring countries.
“The country’s relative advantages are further supported by initiatives outlined under various national master plans, regional economic enhancements including the joint development of Johor-Singapore Special Economic Zone (JS-SEZ) and political stability.
“The government is also scheduled to unveil new incentives to boost the Malaysia’s semiconductor industry in July to mark the first anniversary of the launch of the National Semiconductor Strategy on May 28 last year.
“The 13th Malaysia Plan, which serves as Malaysia’s socioeconomic development plan for the period 2026 to 2030 and is formulated based on the Madani Economy goals, will also be tabled in Parliament on July 31.
“These announcements are expected to further boost investors’ interest in Malaysia in the near term,” the research house noted.
Meanwhile, foreign direct investments (FDIs), which made up two-thirds of Malaysia’s total investment approvals in the first quarter of financial year 2025 (1Q25), surged 31.2% to RM60.4bil, with Singapore, the Netherlands and China the top three immediate sources of committed FDIs.
UOBKH Research said total committed investments for 1Q25 stood at RM89.8bil, which was 3.7% higher than the RM86.6bil recorded in 1Q24.
Domestic direct investments, which made up the remaining third of total investment approvals, contracted 27.4% to RM29.4bil while the FDIs reflected sustained foreign investors’ confidence in Malaysia.
The services sector attracted RM57.8bil pledged investments, especially in the information and communication and real estate subsectors.
The manufacturing sector attracted drew in RM30.5bil largely driven by basic metal and electrical and electronics products, and primary industry saw RM1.5bil in investments.
The research house said nearly two-thirds of the total approved investments flowed to Johor, Kuala Lumpur and Sabah.
It added that FDIs made up more than 89% or RM26.9bil of investments pledged into Johor, driven largely by the positive impact of the JS-SEZ.
It said while the immediate sources of FDIs were from Singapore, the Netherlands and China in 1Q25, Singapore, the United States, China, British Virgin Islands and Taiwan were the top five ultimate sources of committed FDIs in the quarter.
It noted that the 39.5% jump in committed investments into the services sector compared to 1Q24 was driven purely by a 326.6% upswing in FDI approvals, reflecting strong interest in the country’s digital infrastructure, tourism, and logistics capabilities, while domestic direct investments approvals declined 30.1%. In terms of percentage share, FDIs accounted for 59.7%.
UOBKH Research said manufacturing sector investment approvals shrunk 28.7% compared to 1Q24 but was still higher than the past three years’ average level of RM28.8bil.
“Again, FDIs remained key sources of overall manufacturing investment pledged for 1Q25, at RM25.5bil or 83.8% share,” it said.
