Malaysia’s total investment approvals rose 51.5% y/y to RM177.8bn in Jan-Sep 2021 (vs. RM117.4bn in Jan-Sep 2020). The manufacturing sector accounted for the largest share of total investments which amounted to RM103.9bn (58.4% share), followed by the services sector with RM57.8bn (32.5%) and the primary sector with RM16.1bn (9.1%).
Foreign direct investment (FDI) approvals accounted for nearly 60% of overall approved investments (or at RM106.1bn) with major investments from Singapore, China, Austria, Japan, and the Netherlands. FDI led the approved investments in manufacturing while domestic investments drove services and primary sectors. The states that attracted the most approved investments in all three sectors were Kedah, Sarawak, W.P. Kuala Lumpur, Selangor and Pahang.
With year-to-date total investment approvals reaching 96% of our initial full-year target of RM185bn and incorporating the recent announcement of over RM30bn worth of investment by a US chip giant, we raise our 2021 full-year target to RM215bn (2020: RM167.4bn). However, expectations of tighter global monetary conditions and lingering uncertainties surrounding the pandemic would continue to pose challenges to FDI flows in emerging markets including Malaysia next year. “We project RM200bn worth of investment approvals for 2022,” shared Julia Goh, Senior Economist, UOB Malaysia.