Malaysia Records RM164 Billion of
Total Approved Investments In 2020 Amid Global Pandemic
Manufacturing Sector Takes the Lead with an Increase of 10.3 per cent in
Approved Investments
Kuala Lumpur, 2 March 2021 – The global economic
environment in 2020 was very challenging, as a result of the COVID-19 pandemic,
which had its contagion effects on major economies throughout the world. Despite
the challenges, the Ministry of International Trade and Industry (MITI) through
the Malaysian Investment Development Authority (MIDA) is committed to ensuring
that Malaysia continues to be positioned as an investor-friendly location for
long term growth of both foreign and domestic businesses.
“Malaysia recorded a total of RM164 billion in approved investments
through 4,599 projects in the manufacturing, services and primary sectors in
2020. These investments are expected to create 114,673 new jobs in various
sectors of the economy once implemented,” announced YB Dato’ Seri
Mohamed Azmin Ali, Senior Minister and Minister of MITI.
In contrast, a total of 5,287 projects with investments of RM211.4 billion
were approved in 2019. This decline was weighed by the services and primary
sectors which were directly impacted by declines in global demands due to the
pandemic and the Movement Control Order (MCO) implementation.
In 2020, domestic direct investments (DDI) accounted for the bulk of the
total approved investments with a contribution of 60.9 per cent (RM99.8
billion), while foreign direct investments (FDI) made up the remaining RM64.2
billion (39.1%).
The manufacturing sector led the way for total investments approved in 2020,
recording RM91.3 billion, followed by the services sector RM66.7 billion and the
primary sector with RM6.0 billion.
The People’s Republic of China (RM18.1 billion), Singapore (RM10.0
billion) and the Netherlands (RM7.0 billion) were the top three (3) FDI sources
from overall economic sectors in Malaysia, accounting for more than half (54.8%)
of the total approved FDI for the year. Selangor (RM38.7 billion) recorded the
highest investments approved last year, followed by Sabah (RM21.0 billion),
Sarawak (RM19.6 billion), Wilayah Persekutuan Kuala Lumpur (RM17.1 billion) and
Pulau Pinang (RM16.0 billion). These five states alone contributed more than 60
per cent of the total approved investments for 2020.
Manufacturing Takes the Lead
The manufacturing sector has the most significant multiplier effect on the
nation’s activities and growth; it will continue to be the mainstay of the
economy. This includes forward and backward linkages, the development of cluster
industries, the transfer of new technologies, and skills development, to name a
few.
Malaysia’s manufacturing sector recorded approved investments of RM91.3
billion for 2020, an increase of 10.3 per cent from 2019. The number of
manufacturing projects approved also increased by 6.2 per cent from 988 projects
in 2019 to 1,049 projects in 2020.
When implemented, these approved manufacturing projects will create new jobs
for more than 80,000 people. Of these, 35.8 per cent are in the managerial,
technical and supervisory (MTS) positions, including engineers, plant
maintenance supervisors, tools and die makers, machinists, IT personnel, quality
controllers, electricians and welders.
FDI accounted for 62 per cent (RM56.6 billion) of total approved investments
in the manufacturing sector, while domestic investments constituted the
remaining 38 per cent (RM34.7 billion). It is important to note that despite the
challenging times, DDI surged by 22.6 per cent while FDI increased by 3.9 per
cent compared to 2019.
The People’s Republic of China was the top investor in the
manufacturing sector in Malaysia, contributing RM17.8 billion of the total
foreign investments approved in the sector. The People’s Republic of China
was also the largest source of foreign investments in the manufacturing sector
for five consecutive years. Other major sources of FDI include Singapore (RM8.8
billion), the Netherlands (RM6.5 billion), USA (RM3.7 billion), Hong Kong SAR
(RM2.9 billion), Switzerland (RM2.8 billion), Thailand (RM1.9 billion), Japan
(RM1.7 billion) and Republic of Korea (RM1.4 billion).
Selangor (RM18.4 billion) was the largest recipient of investments in the
manufacturing sector for 2020, followed by Sarawak (RM15.7 billion), Pulau
Pinang (RM14.1 billion), Sabah (RM12.0 billion) and Johor (RM6.8 billion). These
five states constituted 73.4 per cent of total approved investments in the
sector last year.
“Against the backdrop of the challenges due to the pandemic, new
project investments, accounting for 66.9 per cent of the total manufacturing
projects approved, were successfully secured in 2020. This is a testament to
MITI and MIDA’s efforts to ensure business continuity and investors’
friendly policies are in place to enable investors to have the confidence to
establish new operations in the country,” said YB Dato’ Seri Azmin.
“Our team has also tenaciously worked to ensure projects approved are
implemented smoothly. This can be seen through the commendable rate of
implementation in approved projects. For the period 2016-2020, a total of 4,178
projects were approved, of which 70.0 per cent with investments worth RM197.2
billion have been implemented in the country,” he added.
Moreover, in line with Malaysia’s move towards sophisticated technology
industries, capital intensive projects which involve advanced technology and
skilled workforce dominated the manufacturing landscape. This is reflected in
the increase of capital investment per employee (CIPE) ratio to RM1,138,055 in
2020 from RM1,052,497 in 2019. Furthermore, a total of 101 projects were
approved with investments of RM100 million and above.
In terms of top-performing industries in 2020, the electrical and electronics
(RM15.6 billion), petroleum products including petrochemicals (RM15.5 billion),
basic metal products (RM14.4 billion), paper, printing and publishing (RM7.8
billion), machinery and equipment (RM7.1 billion), chemicals and chemical
products (RM6.3 billion), rubber products (RM4.3 billion) as well as transport
technology (RM3.9 billion) contributed nearly 90 per cent of the total approved
investments in the manufacturing sector last year.
“It is noteworthy that investments in the three catalytic sub-sectors
namely, electrical and electronics, machinery and equipment and chemical, and
two high growth areas – aerospace and medical devices outlined within the
Eleventh Malaysia Plan (RMK-11) constituted more than one third (38.6%) of the
total approved investments on the manufacturing sector with investments valued
at RM35.2 billion in 2020. As the year 2020 marked the end of the Eleventh
Malaysia Plan, the Government is currently finalising the Twelfth Malaysian
Plan. This post-2020 blueprint will set the way forward for Malaysia’s
development agenda over the next decade. We are optimistic that it will chart
the way to further enhance Malaysia’s industrial competitiveness
strategies in essential and key industries for sustainable economic
transformation to elevate our manufacturing and the services sectors to the next
level of sophistication and complexity in the new normal post COVID-19 and
beyond,” remarked YB Dato’ Seri Azmin.
Notable projects that were approved last year consist of multinational
corporations in the high-end and high-technology industries that are newly
establishing their operations in Malaysia. This includes Dexcom, a US company
and leader in continuous glucose monitoring system will be producing their niche
offerings in Pulau Pinang; where else Switzerland-based electrical measurement
company, LEM will set up its new production plant in Malaysia to meet the
growing demand of its customers in the industrial and automotive sectors.
Chinese-owned LSChem Industry will produce a variety of speciality oleochemicals
in Tanjung Langsat Industrial Park, Johor Bahru. LSChem Industry’s project
is expected to be catalytic to roll out the biodiesel initiatives in Malaysia,
which is in line with the Government’s goal to increase the usage of
biodiesel. Singapore-owned CytoMed Therapeutics (Malaysia) will also invest in
the country to undertake stem cell research and therapy.
Existing MNCs also continue to undertake major reinvestments into high-end
products and activities in Malaysia, illustrating Malaysia’s on-going
value proposition to investors. Nippon Electric Glass (NEG), a leading Japanese
manufacturer of speciality glass that had established their Malaysian operations
since 1992 looks to expand their production capacity of glass tubing for
pharmaceutical use in the country given the demand for its products following
the COVID-19 vaccine roll-out. Additionally, US-based Bruker will be expanding
its investments in Pulau Pinang to manufacture high-tech analytical scientific
instruments such as optical and stylus profilometers, tribometers, X-ray
diffraction tools, X-ray fluorescence instrumentation, optical emissions
spectrometers and combustion gas analysers. Local players such as Amerix
Metal Machining Technology have also seized the opportunity to expand and
diversify their operation last year, further enhancing Malaysia’s
supporting industry network capabilities. The Company’s expansion project
looks to adopt a sophisticated high precision manufacturing concept in Computer
Integrated Manufacturing (CIM) and process tracking model in customised Enhanced
Resource Planning (ERP) system to produce automation electro-mechanical servo
reel to reel moulding systems for the back-end semiconductor industry.
Continuous Investments for Services