THE Malaysian Industrial Development Authority (MIDA) has refuted a report by Singapore Straits Times on Feb 5 that painted the impression that foreign investors are fleeing Malaysia when in reality “lower net foreign direct investment (FDI) inflow is not an unfavourable signal given Malaysia continues to attract high levels of gross FDI”.
“The piece falsely indicates that the United Nations Commission on Trade and Development (UNCTAD) report confirmed what has been spoken of anecdotally,” MIDA pointed out in a media statement.
The UNCTAD report estimated the net FDI flow into Malaysia for the whole year of 2020 totalled US$2.5 bil (RM10.1 bil), a decrease of 68% from the previous year’s performance.
“The decline in 2020 mirrors the situation Malaysia experienced in 2009 after the subprime crisis in the US,” noted MIDA.
“Multinationals (MNCs) in Malaysia were repatriating higher amounts of their profits for loans repayments and retaining earnings to help their HQ (headquarters) and affiliates faced with financial difficulties. The same can be said for 2020 when the world was hit by the pandemic.”
With regard to the newspaper highlighting South Korean automaker Hyundai relocating its Asia-Pacific headquarters from Malaysia to Indonesia and the closure of Panasonic solar panel plants in Malaysia, MIDA said “taking a closer look at the reasons behind these business decisions will illustrate a different truth”.
“The ASEAN market has been targeted by Hyundai as an alternative market to China. As such, the roles of Hyundai’s Asia Pacific regional HQ in Malaysia have expanded and are classified as an incomplete form of HQ due to the absence of a production plant in Malaysia,” reasoned MIDA.
“However, with Hyundai’s new manufacturing plant in Indonesia, the new Hyundai HQ is expected to be a fully-formed space with increased production and sales. The lower demand for Hyundai cars in Malaysia also contributed strongly to their relocation decision.”
The investment agency, however, acknowledged that for the whole of 2020, nine existing foreign-owned manufacturing companies with total investments of RM394.3 mil in Malaysia had implemented business rationalisation measures.
“These companies have either closed their business operations in Malaysia or relocated to other countries due to technology disruption that transformed their business landscape and reduction in demand for their products,” revealed MIDA.
“This investment is a fraction of the total approved investment in the economy for the period January-September 2020.”
Pointing to the viewpoint of the EU-Malaysia Chamber of Commerce and Industry (EUROCHAM) on investor confidence as cited by Singapore Straits Times, MIDA said it is pertinent to note that the views expressed by the EUROCHAM’s CEO may not necessarily reflect the views of all its members.
“The Chamber also does not represent all foreign MNCs operating in Malaysia,” argued MIDA.
“As part of our ongoing engagements, MIDA has been working very closely with all the international chambers in Malaysia to assist and facilitate the concerns of their members.”
Looking ahead, MIDA said it has identified 240 high-profile foreign investment projects including Fortune 500 companies in the manufacturing and services sectors, with a combined potential investment value of RM81.9 bil.
Presently, MIDA has also received RM47.7 bil worth of potential investments into the country. These projects, once approved, are expected to be implemented within the year 2021 to 2022. – Feb 8, 2021