The current global economic crisis has not dampened Malaysia’s efforts in promoting investments into the manufacturing and services sectors. Malaysia’s pull factors which include business-friendly policies, developed infrastructure and a host of other amenities, continue to be a magnet for foreign investors. Investment approvals are a testimony to this fact.

Approvals in the manufacturing sector amounted to RM62.8 billion in 2008, compared with RM59.9 billion in 2007. Investments in 2008 were the highest recorded to-date and were more than double the target of RM27.5 billion per annum, set in the Third Industrial Master Plan (IMP3).

In 2008, a total of 2,755 projects in the services sector were approved, with investments amounting to RM47.8 billion and this figure surpassed the IMP3 target of RM45.9 billion per annum.

The significant increase in investments in 2008 indicated that foreign and domestic investors continue to respond positively to the government’s initiatives to invest in capital intensive, skills and knowledge-based, high value-added and high technology industries and service-related operations.

The setting up of the Cabinet Committee on Investments has assisted Malaysia in attracting investments into targeted areas. Several major manufacturers have already established or committed to invest in Malaysia including First Solar, Q-Cells and SunPower Corporation.

In addition to the establishment of the Cabinet Committee, the government through MIDA continues with its efforts to facilitate and provide assistance to investors. These measures have led to a higher rate of implementation of approved projects.

As a measure to further attract FDI, the Malaysian Industrial Development Authority (MIDA) will intensify its promotional activities through investment missions to attract investments from targeted countries. In 2009, a total of ten such missions will be organised to Asia, Europe, the USA and Australia.

In addition, MIDA will also be organising 25 specialised project missions to target specific industries and services sectors. The private sector is invited to participate in these missions to explore business collaborations.

Equally important to attracting FDI is the government’s continued drive to actively promote domestic investments. MIDA will continue with its efforts to increase domestic investments through domestic investment seminars. A total of 5 domestic investment seminars will be organised throughout the country aimed at updating domestic investors on business opportunities in the manufacturing and services sectors. In this challenging time, domestic investors must now look at all avenues to increase their capabilities to further expand output. The government will also continue to encourage and facilitate Malaysian companies to venture abroad to expand or capture new markets, tap new investment opportunities, gain access to supplies and acquire new technology. In the long-run, cross border investments will enable Malaysian companies to become part of the global production network and meet the challenges of a fast changing global economic environment.

Malaysian companies also need to sustain their competitiveness by taking advantage of the opportunities arising from regional agreements and the various bilateral agreements and Free Trade Agreements (FTAs), as well as the current global trends in outsourcing.

Recent trends show that Malaysian companies are increasingly undertaking investments overseas. Based on the latest figures provided by Bank Negara Malaysia (BNM), Malaysia’s overseas investment (excluding Labuan IOFC) jumped from RM22.2 billion in 2006 to RM42.5 billion in 2007 and to RM48.7 in 2008, reflecting increased interest and capability by Malaysian companies to expand and diversify their operations abroad. Cumulative investment overseas for the period 2004 – 2008 totaled RM141.75 billion.

Malaysia overseas investment destinations were mainly in ASEAN, East Asia, South Asia, North Africa and Middle East countries as well as certain developed western countries. Many Malaysian companies overseas are engaged in the oil& gas industry, services sector (hotel, telecommunications), construction industry, property & real estate, banking & finance and in the manufacturing sector (food & beverages, etc).

The Malaysian government provides the following incentives to promote and assist eligible Malaysian companies venturing overseas:

1. Tax exemption on income earned overseas and remitted back to Malaysia.
2. Tax deduction for pre-operating business expenditure in connection with proposals to undertake investments in business ventures overseas.
3. Malaysia-Singapore Third Country Business Development Fund. It allows Malaysian and Singaporean enterprises to cooperate and jointly identify investment and business opportunities in “third countries”. This fund is a matching grant that can be used for joint missions, feasibility studies and pro-active search in third countries before making an investment.
4. To further promote cross border investment, the existing Cross Border Investment Promotion Unit in MIDA has been expanded to become a full-fledged Division in 2008. MIDA provides assistance to facilitate Malaysian companies venturing/looking for investment opportunities overseas by undertaking the following initiatives:
   1. Update and disseminate information & data/figures on matters related to cross border investment which include information of particular interest like investment policies & procedures, incentives, facilities and opportunities available in targeted countries.
   2. Organise seminars on business opportunities in targeted country. Representative(s) from the targeted country will brief on the investment policies, incentives opportunities available, etc. Individual business meetings are also organised with delegation members of the visiting country.
   3. Organise cross border investment missions to targeted countries. Malaysian companies seeking collaboration/looking for opportunities overseas can participate in this mission.
   4. Conduct regular dialogues and meetings with chambers of commerce and industry associations to obtain feedback and comments from Malaysian companies with regards to their interest/business venture overseas, thus providing better understanding on issues which need to be addressed and solved.
   5. Established 3 new MIDA overseas offices in Guangzhou, Mumbai and Dubai to cater to the needs/facilitate Malaysian companies investing overseas. More offices will be opened in several other cities around the world for similar purpose i.e Jakarta, Bangkok, Ho Chi Minh City, Beijing and Johannesburg.
   6. Established strong network with investment promotion agencies/board of investment of targeted countries. This includes exchange of information on business and investment opportunities including proposals from interested companies seeking joint-venture or collaboration.

Companies are invited to participate in the seminars and missions listed above.
For more details, please contact MIDA.