KUALA LUMPUR: Malaysia is on track to see more than RM50 billion in foreign direct investments (FDI) by 2030, in the absence of any unexpected economic shocks.
UOB Global Economics and Markets Research in a note today said it anticipates FDI inflows, in ringgit terms, to sustain its average long-term 15-year growth trend of 3.6 per cent per annum in the medium term.
This will translate into absolute annual FDI inflows of around RM51.6 billion (or about US$13.5 billion) by 2030.
"Our projection is supported by the 2024 year-to-date performance of FDIs, whereby Malaysia has attracted a total of US$ 3.1 billion FDI inflows in the first half of 2024 (1H24), which was 17.9 per cent higher than US$2.6 billion recorded in 1H23," it added.
UOB Research said, despite a challenging and complex global environment, Malaysia's investment landscape remains robust, and prospects are encouraging with a positive FDI outlook in the short-to-medium term.
Between 2021 and Mar 2024, the Malaysia Investment Development Authority (Mida) has approved almost RM1 trillion worth of investments with committed manufacturing investments making up RM474.3 billion (47.9 per cent), services investments amounted to RM461.8 billion (46.6 per cent) and primary sector investments totaling RM54.2 billion (5.5 per cent).
About 77.2 per cent of approved manufacturing projects have been implemented, while about 21.1 per cent are in the planning phase and the balance of 1.6 per cent remain unimplemented.
This is in addition to projects in the pipeline that totalled RM128.4 billion as of May 31, this year.
UOB Reserach said various catalytic projects in the national masterplans, such as New Industrial Master Plan 2030 (NIMP 2030) and National Energy Transition Roadmap, will further enhance opportunities for investments in Malaysia's high-growth high-value (HGHV) sectors.
Johor-Singapore Special Economic Zone (JS-SEZ and the country's five regional economic corridors will also work to bring in investments. along with Malaysia's efforts to grow its trade ties.
To date, Malaysia has implemented 16 Free Trade Agreements (FTAs, seven bilateral and nine regional) and joined the Regional Comprehensive Economic Partnership (RCEP), Indo-Pacific Economic Framework (IPEF) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The report did however caution that the possibility of expanded universal US tariffs, export controls and secondary sanctions to countries that are part of China "Plus One" Strategy remains a key risk particularly for Malaysia and other Asean members who have benefited from diverted "China-US" flows.
The United Nations Trade and Development (UNCTAD) in its World Investment Report 2024 said the global environment for international investment "remains challenging" in 2024 due to economic fracturing trends, trade and geopolitical tensions, industrial policies and shifts in supply chains reshaping FDI patterns, prompting some multinational enterprises to stay cautious on overseas expansion.