KUALA LUMPUR (March 21): Foreign investments in the manufacturing sector may moderate as foreign firms are expected to turn more cautious following the heightened uncertainty in the global economy, Bank Negara Malaysia (BNM) said.
However, the central bank said this could be offset by foreign direct investments (FDIs) in new growth areas including renewable energy, and advanced electrical and electronic (E&E) products, the oil and gas sectors and in the services sector.
In its annual report released on Wednesday, it said foreign direct investment (FDI) inflows, which began to soften in the second half of 2011, were expected to moderate further in 2012.
BNM said the decline in the FDIs were due to weak external demand and greater uncertainty in the global economic environment.
While there has been higher levels of foreign manufacturing projects approved by the Malaysian Investment Development Authority (MIDA) in 2010 and 2011 (RM29.1 billion and RM34.1 billion respectively), the central bank said investments in the manufacturing sector might moderate as foreign firms were expected to turn more cautious following the heightened uncertainty in the global economy.
It noted that FDI into new growth areas such as renewable energy, and advanced E&E products such as light-emitting diodes and test equipment was expected to continue given the growing global interest in green TECHNOLOGY [].
Foreign investments in the O&G sector were projected to remain firm, supported by increased government incentives to the sector.
The liberalisation of several services sub-sectors under the Economic Transformation Programme would also contribute to further inflows of FDI into the services sector.
The trend in direct investment abroad (DIA) by Malaysian companies is likely to mirror that of the FDI, although by a lesser degree.
BNM said this was mainly due to the diversified profile of overseas investment in terms of economic activity as well as the investment destination.
DIA was expected to be channeled mainly into the services and O&G sectors, with a continued focus on high-growth markets in the region.
The central bank said despite the highly challenging global economic conditions, Malaysian companies are anticipated to continue venturing abroad to seek access to new and larger markets.
“Over the medium term, this regional and global expansion will contribute in creating more competitive and globalised Malaysian companies,” it said.
However, the central bank said this could be offset by foreign direct investments (FDIs) in new growth areas including renewable energy, and advanced electrical and electronic (E&E) products, the oil and gas sectors and in the services sector.
In its annual report released on Wednesday, it said foreign direct investment (FDI) inflows, which began to soften in the second half of 2011, were expected to moderate further in 2012.
BNM said the decline in the FDIs were due to weak external demand and greater uncertainty in the global economic environment.
While there has been higher levels of foreign manufacturing projects approved by the Malaysian Investment Development Authority (MIDA) in 2010 and 2011 (RM29.1 billion and RM34.1 billion respectively), the central bank said investments in the manufacturing sector might moderate as foreign firms were expected to turn more cautious following the heightened uncertainty in the global economy.
It noted that FDI into new growth areas such as renewable energy, and advanced E&E products such as light-emitting diodes and test equipment was expected to continue given the growing global interest in green TECHNOLOGY [].
Foreign investments in the O&G sector were projected to remain firm, supported by increased government incentives to the sector.
The liberalisation of several services sub-sectors under the Economic Transformation Programme would also contribute to further inflows of FDI into the services sector.
The trend in direct investment abroad (DIA) by Malaysian companies is likely to mirror that of the FDI, although by a lesser degree.
BNM said this was mainly due to the diversified profile of overseas investment in terms of economic activity as well as the investment destination.
DIA was expected to be channeled mainly into the services and O&G sectors, with a continued focus on high-growth markets in the region.
The central bank said despite the highly challenging global economic conditions, Malaysian companies are anticipated to continue venturing abroad to seek access to new and larger markets.
“Over the medium term, this regional and global expansion will contribute in creating more competitive and globalised Malaysian companies,” it said.
