“Malaysia has become more selective in its investment agenda, attracting quality investments in targeted ecosystems that are projected to have significant knock-on effects throughout the domestic economy. For the first nine months of 2019, the country recorded RM149 billion worth of approved investments in the services, manufacturing and primary sectors. This was 4.4% higher than the RM142.6 billion approved in the same period last year. These investments involved 4,025 projects and will create an additional of 93,841 job opportunities,” announced YB Datuk Darell Leiking, Minister of International Trade and Industry (MITI).
The majority of the investments came from domestic sources, which contributed RM82.7 billion or 55.5% of the total investments. Foreign direct investments (FDI) represented 44.5% or RM66.3 billion. Total approved FDI in these three main sectors increased by 6.5% to RM66.3 billion in January-September 2019 from RM62.2 billion in the same period last year.
The services sector attracted RM85 billion in 3,299 approved projects compared with RM74.9 billion in 2,931 projects recorded in the corresponding period last year. These projects are poised to generate over 38,800 employment opportunities. Of the total, 72% or RM61.2 billion were from domestic sources and the balance 28% or RM23.8 billion were foreign investments. Foreign investments in the sector displayed a significant increase of 160.2% during this period.
The bulk of approved investments in the services sector were from the real estate subsector with RM29.7 billion, followed by utilities with RM19.2 billion, global establishments (RM11.7 billion) and distributive trade (RM11.7 billion).
The approved investments for global establishments saw an increase of 185.7% in the first nine months of 2019. MIDA approved 126 projects proposing to make Malaysia the Principal Hubs, regional offices or representative offices. These activities are expected to create job opportunities for 884 knowledge-based or highly technical skilled workers. These projects will also position Malaysia on course for greater integration into the global supply chain.
A notable FDI project that was approved during this period is an investment by Integrated Device Technology (Malaysia) Sdn. Bhd. that has evolved its presence in Pulau Pinang since 1988 through the expansion of their global operations hub to complement their supply chain management activities. “With a commitment to invest RM11.4 billion for five years, starting from YA2022, and another RM11.4 billion from YA2027, this Principal Hub will manage and support the company’s businesses globally. This includes intellectual property management, research, development and innovation, and the setting up of an advance ‘Automotive Technology Centre’ to produce automotive sensors on chips in Malaysia. These activities will provide business opportunities for the locals and strengthen Malaysia’s electrical and electronics (E&E) ecosystem,” said YB Minister Datuk Darell.
A total of 671 manufacturing projects worth RM57.7 billion were approved in the first nine months of 2019 compared with 467 projects with investments of RM57.5 billion in January-September 2018. Domestic investments recorded RM18.5 billion or 32.1%, a rise of 81.7% from RM10.2 billion in the same period last year.
One of the significant domestic investments approved was from a Malaysian majority-owned company, Perusahaan Automobil Nasional Berhad (PROTON) for an expansion project to manufacture and assemble energy efficient vehicle (EEV) and related equipment. The project, with investments of RM2.6 billion, will be undertaken in Tanjung Malim, Perak.
Foreign investments contributed RM39.2 billion or 67.9% of total approved investments in the manufacturing sector. The United States of America (USA) accounted for the RM12.2 billion or 31.1% of total foreign investments in the manufacturing sector, followed by China (17.3%), Taiwan (13.0%), Singapore (11.5%) and Japan (8.9%).
Notable foreign investments include a new manufacturing project from Smith+Nephew Incorporated, a United Kingdom based company, which will be setting up its facility in Batu Kawan Industrial Park, Pulau Pinang to produce implants for orthopaedic surgery for knees and hips. Mr. Mark Gladwell, President of Global Operations at Smith+Nephew Incorporated, in the recent announcement of the project said, “Investing in Malaysia gives us a new presence close to our highest growth markets and enables Smith+Nephew to be part of a growing medical device centre of excellence.” Currently, Malaysia is home to over 200 industry manufacturers, including multinational companies and world-class supporting companies; putting the country on track to become the next global medical device manufacturing hub.
The approved manufacturing projects in January-September 2019 will create over 54,000 employment opportunities for the country. The jobs created include 2,319 electrical and electronics engineers, 1,500 mechanical engineers and 431 chemical engineers. In addition, the projects will also require about 5,647 skilled craftsmen such as plant maintenance supervisors, tools and die makers, machinists, IT personnel, quality controllers, electricians and welders.
According to YB Datuk Darell, “MITI is intensifying its efforts to create more skilled jobs for Malaysians. One of the efforts undertaken is the Apprenticeship Programme introduced by MIDA to address the shortage of technical skills. The Programme is a trilateral partnership between MIDA, the Federation of Malaysian Manufacturers (FMM) and the Ministry of Education (MOE). This is a two-year initiative where 16-year-old students are placed at a vocational college for six months to undergo academic and vocational courses and another six months of practical training in participating companies for two consecutive years. Under the National Dual Apprentice System (NDAS), Human Resource Development Fund (HRDF) bears the course fees of up to RM10,000 per student. The participating companies are allowed to utilise its HRDF contribution to pay for the difference.”
Selangor registered the highest recipient of approved investments in the manufacturing sector amounting to RM16.4 billion, followed by Pulau Pinang (RM13.2 billion), Kedah (RM7.8 billion), Johor (RM7.7 billion) and Perak (RM4.8 billion). Collectively, these five states contributed 86.7% or RM50 billion from the total approved investment in the sector. These projects will provide more than 47,000 job opportunities to these states.
The primary sector contributed RM6.3 billion or 4.2% of the total approved investments in January- September 2019. The mining subsector continued to lead with approved investments of RM5.9 billion, followed by plantation and commodities with RM275.2 million and agriculture with RM135.1 million. Foreign investments dominated the approved investments for the sector, totalling RM3.3 billion while domestic sources contributed RM3 billion.
“Malaysia is true to its ambition to become a preferred investment destination for innovation-based, knowledge-intensive investments within high-growth, high-value sectors. Despite ongoing trade tensions pointing to slower growth, we will stick to the course and continue attracting strategic partners to invest in Malaysia. This will generate more spillover impact on the economy through the growth of the local supply chain ecosystems and improvement of the Malaysian workforce,” said YB Datuk Darell.
As of September 2019, the Malaysian Investment Development Authority (MIDA) is actively negotiating 682 projects with proposed investments of RM37.6 billion. These include 242 projects within the manufacturing sector (RM26.6 billion) and 440 projects in the services sector (RM11.0 billion).