KUALA LUMPUR: Malaysia has emerged as a promising investment destination, economists said, after the country approves 10.7 per cent more investments to a total of RM254.7 billion in the first nine months of 2024 from RM230.2 billion a year ago.
This is driven by the government's commitment to economic reforms and a stable political climate, according Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said.
While some of these reforms have been unpopular, including tax hikes, subsidies rationalisation and a shift towards market-based economics, these measures have been met with positive reactions from both domestic and international investors, he added.
Beyond these reforms, Afzanizam said the country's peaceful environment, significant number of English-speaking citizens and respectable physical infrastructure allows the foreign companies to operate in a seamless manner.
Socio Economic Research Centre executive director Lee Heng Gui said as 2025 approaches, the downside risks to the investments are largely from the Trump 2.0 tariffs policy and domestic ultra conducive tax incentives induced impact on the redirection of investment flows and also investment by the US companies.
"The intensified trade and technology war between the US and China as well as an ongoing geopolitical conflicts in Middle East could dampen investors' sentiment and foreign direct investment flows," he added.
IDEAS Malaysia economist and assistant research manager Doris Liew said Malaysia's strategic initiatives at various levels provide a robust foundation to counterbalance the downside risks and sustain growth.
"As Malaysia assumes the Asean chairmanship next year, she said the spotlight on the country is expected to boost its investment profile and underscore its economic potential," she added.
Meanwhile, Malaysian Investment Development Authority (MIDA) said the strong investment performance reflects Malaysia's sustained economic momentum, propelled by the services, manufacturing and primary sectors.
The services sector led with RM160.7 billion, followed by manufacturing (RM88.8 billion), and primary sectors (RM5.2 billion).
"A total of 4,753 new projects have been approved during this period, set to create 159,347 new jobs for Malaysians. This strong performance underscores Malaysia's enduring appeal to investors, despite the threat of global uncertainties," it said in a statement today.
According to MIDA, the growth in job creation surged 75.9 per cent while project approvals rose 20.7 per cent year-on-year.
Domestic investments (DI) accounted for 58.1 per cent (RM148 billion) of total approvals, while foreign investments (FI) contributed 41.9 per cent (RM106.7 billion).
The top-performing states by investment value are Selangor (RM66.8 billion), Kuala Lumpur (RM63.9 billion), Kedah (RM34 billion), Pulau Pinang (RM22.6 billion), and Johor (RM18.1 billion).
The top five foreign investments came from Germany (RM30.9 billion), China (RM10.8 billion), United States (RM8.4 billion), Netherlands (RM4.9 billion) and Singapore (RM4.4 billion).
The National Investment Aspirations (NIA) sector contributed RM119.9 billion, representing 47.1 per cent of total approved investments across various economic sectors.
Investment, Trade and Industry Minister (MITI), Tengku Datuk Seri Zafrul Abdul Aziz said the total approved investment reflects the unwavering confidence investors have in the nation's economic policies and direction.
He added thaty the surge in investments and jobs creation speak volumes domestic strategic frameworks and the concerted efforts to attract high-impact investments for sustainable growth.
"Clearly, Malaysia's policy consistency and adaptability have encouraged investors to implement longer-term commitments, while equipping us with the capacity to navigate evolving global challenges effectively."
"As we progress towards our goal of becoming one of the top 30 global economies by 2033, the Madani Government is steadfast in its commitment to fostering an environment where both domestic and international investors can thrive."
"Our focus extends beyond achieving investment targets; we are laying the foundation for a sustainable and inclusive economy that will empower all Malaysians," Tengku Zafrul said.