"There are clear ambitions to expand beyond the current focus on commodity products as industry players develop more complex, specialty downstream chemicals."

Datuk Wira Arham Abdul Rahman

CEO, MIDA (MALAYSIAN INVESTMENT DEVELOPMENT AUTHORITY)

April 28, 2023

What have been the most recent investment trends in Malaysia?

In 2022, Malaysia registered US$59.9 billion in approved investments in the manufacturing, services and primary sectors; the second highest approved investments ever recorded after 2021’s stellar performance of US$74.2billion, and exceeding the annual average of US$55.4 billion from 2013 to 2022. Of this, FDI accounted for 61.7%. The services sector is the major contributor to total investments, with US$34.8 billion, followed by US$19.1 billion in the manufacturing sector and US$6 billion in the primary sector. This demonstrates a rebound in investor confidence.

Guided by the New Investment Policy (NIP) for the period 2022-2027, MIDA is focused on attracting investments in high-technology, knowledge-intensive and innovation-driven projects that complement and further strengthen Malaysia’s industrial ecosystem.

How does Malaysia compete with other countries in Southeast Asia as an investment destination?

Located in the Asia Pacific rim and the center of ASEAN, businesses see Malaysia as a well-positioned destination with vast market opportunities through the 16 Free Trade Agreements (FTAs) (7 bilateral FTAs and 9 regional). This creates a potential market size of more than 4 billion people.

What makes Malaysia an attractive manufacturing hub?

Malaysia has successfully transformed its economic structure from one that was formerly reliant on agriculture and primary commodities to a diverse economy that is export-driven and spurred by high-tech, knowledge-based and capital-intensive businesses. The success of this industry stems from a mature manufacturing legacy and ecosystem, strong engineering supporting industry, multilingual and strong talent pool, ease of doing business and well-connected local supply chains, complemented by enabling policies and institutional support.

How can the Malaysian manufacturing industry transition into higher-value products particularly in the Chemical industry?

Malaysia has a sizeable chemical industry, with over 100 companies producing a wide range of chemical products, which is primarily driven by base chemicals and intermediates. There are clear ambitions to expand beyond the current focus on commodity products as industry players develop more complex, specialty downstream chemicals.

Pursuant to transitioning into higher-value products within the chemical sector, the industry is advised to enhance the utilization of specialty chemicals and promote their importance in completing the manufacturing ecosystem in Malaysia. We must create a pool of experts in advanced materials and nanotechnologies for higher marketability and boost the R&D industry, and encourage collaboration between MNCs and local universities to conduct R&D activities and align syllabus to industry needs. Furthermore, we must rapidly accelerate Industry 4.0 and digital technologies.

What are MIDA’s priorities for 2023 and do you have a final message for our audience?

As Malaysia transitions into endemicity in a climate dotted with evolving dynamics of the global industrial and trade landscape, the Government recognizes the importance of reinvigorating the nation’s investment climate to seize opportunities arising from ongoing trade diversions. As part of a country-focused strategy, Malaysia is taking advantage of trade diversions due to uncertain geopolitical tensions, including the United States-China trade conflict, the crisis between Russia and Ukraine, and the shift in the global supply chain. We are promoting Malaysia as a competitive manufacturing and distribution hub. As for the industry-focused strategy, the emphasis will be on investments in new development area sectors, including electric vehicles, smart factories using 5G technology, supply chain ecosystems, and green technology. These are MIDA’s primary strategies for 2023.

As with many countries in the world, Malaysia is reforming its industrial policies to address pressing socio-economic issues such as sustainability. MIDA has integrated NIP and ESG principles into its strategies. The goal is to produce sustainable, long-term investments, and collaborate with partners who prioritize "impact investment." The Government will enhance its investment focus in green growth areas – such as hydrogen technology, bioenergy, and electric mobility – which will act as both enablers of green adoption and as future economic engines.

Apart from attaining commercial growth, MIDA is working hard to attract more high-quality, long-term investments. Hence, Malaysia is expanding its presence into new high-value clusters. As such, the implementation of strategic frameworks such as MYDIGITAL, National Fourth Industrial Revolution (4IR) Policy, and SME Stimulus Packages will ensure that Malaysia remains a top investment destination for years to come.

Through the combined efforts of all stakeholders with MIDA’s wide local and global networks, we will give our full support to handhold prospective investor aspiring to build a better tomorrow for all.

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