Malaysian Economic 101-A Snapshot

MALAYSIA saw US$14.06 billion (US$1 = RM3.47) of investments flow out of the country last year, up 26 per cent from a year ago, according to a United Nations annual investment review.

At the same time, foreign direct investments (FDIs) into Malaysia fell 4 per cent to US$8.053 billion in 2008, said the United Nations Conference on Trade and Development (Unctad)'s World Investment Report (WIR).

It said the investment outflow from Malaysia is in line with the trend in South, East and Southeast Asia to developed countries, which has been growing as part of efforts by Asian firms to acquire strategic assets abroad. But it expects the outflows to slow this year.

"The sizeable increase in Malaysia's outward investment in 2008, as in previous years, is a reflection of Malaysia's more globalised and integrated position in the world economy," said Datuk Dr Zainal Aznam Yusof, council member of the National Economic Advisory Council, at the launch of WIR 2009 in Kuala Lumpur yesterday.
The investment outflows for Malaysia were noticeably less than the 81.9 per cent Unctad recorded last year (US$10.98 billion versus US$6.04 billion in 2007).

The report estimated that FDIs inflows will fall to below US$1.2 trillion this year, from US$1.7 trillion in 2008.

"Recovery is expected to be slow in 2010, reaching no more than US$1.4 trillion, but gathering momentum in 2011 to approach US$1.8 trillion," he said.

Malaysia's FDI inflow and outflow in 2008 have seen relatively little impact from the global economic crisis, despite a significant effect on FDIs worldwide, including certain countries in South, East and Southeast Asia.

Countries sharply affected included Singapore, which saw a massive decline of 61 per cent in FDI inflow from a year ago, with FDI outflow shrinking by 44 per cent in the first quarter of this year versus the same period in 2008.

Despite the slowdown worldwide, regional and global FDI flows are being reshaped by China and India, who account for 50 per cent of regional FDI inflows and for about one tenth of global inflows.

Both countries reported historic FDI inflows in 2008, bringing in US$108 billion and US$42 billion respectively.

With its inflows surging to a historic high (US$108 billion) in 2008, China became the world's third largest FDI recipient country after the US and France.

WIR 2009 also featured a special focus on the impact of the crisis on the world's top 100 non-financial transnational corporations (TNCs), based on foreign assets held in 2007. Developing countries filled a record seven positions on the global list, one of which is Petroliam Nasional Bhd (Petronas), at 84th place.

The ranking of top 100 non-financial TNC's in the developing countries category featured six Malaysian conglomerates, namely Petronas at fifth place, YTL Corp Bhd at number 31, Genting Bhd at 38th placing, Sime Darby Bhd (No. 46), Telekom Malaysia Bhd (No.57), and Tanjong PLC (No. 73).