Bad FDI news for Malaysia: Down by 81 percent in 2009

By Aidila Razak | Malaysiakini

A nosedive in foreign direct investments in Malaysia in 2009 follows a continued downward trend in FDI, increasingly overshadowed by regional players, noted a United Nations report.

FDI Malaysia 2009

According to the World Investment Report 2010 unveiled today, FDI plunged 81 percent from US$7.32 billion (RM23.47 billion*) in 2008 to just US$1.38 billion (RM4.43 billion) last year.
(*Calculated based on exchange rate of US$1 = RM3.20650)

The 2009 FDI is less than half of the annual average FDI inflow between 1995 to 2005, which encompasses the long recovery period following the 1997 economic crisis.

Malaysia’s performance also pales in comparison with neighbouring economies like Thailand and Indonesia whose FDI figures did not contract as severely, despite the global financial crisis.

Thailand suffered a decline of US$4.44 billion (RM14.24 billion) while Indonesia saw a more modest drop of US$2.60 billion (RM8.32 billion) in foreign investments in 2009.

FDI 2009

The severe dip also places Malaysia in the red for the first time in the last 15 years, with figures for cumulative FDI (see chart right) surpassing incoming investments by about US$1 billion (RM3.21 billion).

Doubts over high income target

Speaking at the UN Headquarters in Kuala Lumpur today, Universiti Malaya economist Rajah Rasiah (at podium in photo) said that Malaysia’s poor performance casts doubts over whether it can achieve the targets set to achieve high income status.

“Malaysia is fortunate to be in a good neighbourhood, located among growing countries. The three largest recipients of FDI are located in Asia (but) Malaysia does not even make the top 10 list of recipients,” he said.

He added that this is remarkable for a country with a specific FDI policy, unlike Taiwan which is placed 10th in the list.

Conversely, Malaysia is “doing well in FDI outflows”, ranking fifth in the list of South, East and Southeast Asian countries investing abroad.

“Speaking to fund managers, I get the impression that we have the resources to invest locally but not many viable options to do so. Even local investors find us less attractive,” he said.

Human capital a barrier

The main stumbling block, he said, remains our narrow human capital pool which leaves industries stagnating in low-end production.

He added that while foreign investor laud the ease of doing business in Malaysia, a lack of skilled labour, research and development and technological capabilities is placing the country on the losing end of the increasingly competitive FDI battle.

Malaysia has 300 to 400 science and technology workers for every 100,000 persons, as opposed to 3,000 in countries which made the transition from middle to high income status, he said.

Similarly, the country is under-investing in research and development at only 0.64 percent of GDP, while others like Taiwan and South Korea are investing about 3 percent of theirs.

It should also look at mirroring such nations in developing a “vetting mechanism” for FDI to ensure that the investments can be a catalyst for human capital and technology development.

This will include screening FDI by choosing those with technologies that could be upgraded along the value chain and monitoring to ensure a transfer of expertise takes place.

“We allow foreign firms in by giving grants and tax incentives, so we must ensure that spillovers (in terms of technology transfers) occur,” he said.

The bottom 40 percent of the population should also be assisted insofar as developing their skills to meet the shortage in industry.

“In assisting the lower income population, we should look at developing skills like precision engineering and die casting, which are sought after by foreign investors,” he said.

  1. #1 by monsterball on Saturday, 24 July 2010 - 12:29 am

    This is clear sign that foreign companies have no confidence in Malaysia.
    So much double standards.
    So much lies and low class acting to cover up corruptions with no proper arrests of the main culprits.
    PKFZ RM12.4 billion stolen….the Russian Submarines with RM500 million commission/kickbacks….murders…and most of all..killing off Anwar’s political career with the most ridiculous charges…second time around.
    Foreigners watch all these events…and lose faith in Malaysia.
    Furthermore…all experience Malaysians are working elsewhere and foreigners cannot find basic back up services…such as excellent tool makers..repairers.
    All smart Malaysian Chinese prefer to stand on their own two feet doing all sorts of small business related to human needs and wants.
    UMNO B do not know business nor manage a country at all.
    They do not know how business people think or do. They do not care to learn for the sake of the country and people.
    All they know is how to fool Muslims to support them in their race and religion politics and encourage corruptions.
    Foreigners can see Malaysia is going backward and not forward..which turns them off to depend on the government for high power back ups…. right qualified Malaysians….not available…while neighboring countries including Indonesia ..Philippines..and Thailand have progressed with much more smart human powers plus small industries like toolings….molds repairs.
    UMNO B keep wasting time fooling Malaysians to cover up their corrupted deeds…resulting we are now so backward….yet Najib feel no shame at keep continuing fooling Malaysians.

  2. #2 by monsterball on Saturday, 24 July 2010 - 12:58 am

    Do not forget…when you have a PM telling Malaysians…”Lets make a deal. Very help me… I help you”.
    That is clear sign the country is managed by the lowest form of government you can find in the whole developed world.
    Foreigners investing in Malaysia will feel like fools too…feeling uneasy our PM will make deal with them….once they make millions and the government want to cut in through their conies.
    It happened before and will happen again.
    Just look at the pharmaceutical product.
    Where have the factory pulled out and why.
    Dozens of mismanagement incidents and actions…chasing out RMbillions…UMNO B will never reveal or learn from their mistakes.

  3. #3 by HJ Angus on Saturday, 24 July 2010 - 1:34 am

    This is the most information on FDIs.
    The way things are going, we will see a reverse of the situation for maid and cheap labour supply to Indonesia.
    2008 was a major setback for investments.

  4. #4 by HJ Angus on Saturday, 24 July 2010 - 1:34 am

    sorry typo:

    most shocking info

  5. #5 by Cinapek on Saturday, 24 July 2010 - 1:37 am

    At this drastic drop in the rate of FDI, very soon we will be exporting maids to Indonesia and Thailand – if they want our maids because we cannot speak decent English even. Maybe that is why Indonesia is dragging their feet to sign the minimum wage for maids because they are expecting Malaysia to send maids to Indonesia soon and they do not want to commit to a rate.

    Our economic experts can cut out all the mumbo jumbo. The reason FDI is so low is simple. NEP. And the racist rhetoric of UMNO outsourced NGO’s such as Perkasa. As Najib himself pointed out, perception is important and right now foreign investors’ perception of Malaysia as an investment destination is zilch!!!

  6. #6 by Jeffrey on Saturday, 24 July 2010 - 7:10 am

    To those who believe in what Dr Mahathir and Perkasa say, bad FDI news is small matter. What matters foremost is political culture of Ketuanan; the sense of entitlement to protected privileges that is priority over everything else, whether a united Malaysian Identity or viable Malaysian Economy.

    World Investment Report 2010 unveiled FDI plunged 81 percent from US$7.32 billion (RM23.47 billion) in 2008 to just US$1.38 billion (RM4.43 billion) last year. This in spite of present PM Najib & entourage doing many road shows abroad to sell Malaysia with APCO’s promotion and PR’s blitz. But there’s no show when 1 Malaysia is given lip service – and in many instances rebuffed – by his own political cohorts taking the race first Malaysian second approach whilst his NEM is forced to ‘marry’ NEP, so Dr Chen Man Hin observed. Which is of course not surprising: it is something 2 generations of Malay Malaysians now comprising over 60% of population over 40 years have been taught to believe – that they would require crutches, if recent survey by the independent pollster Merdeka Centre were to be believed accurate that close to 70 per cent of Malay voters in (at least) Peninsular Malaysia agreed with Malay nationalist movement PERKASA’s position to uphold Malay centric NEP policies and to stop dismantling Bumiputera quotas. It is ironical that one ever wants to participate and engage in a competitive race with others when using crutches and pushing away one’s brightest and most industrious. Thats why Najib in Bumiputra Economic Congress said that craziness was doing the same thing over and over again and expecting different results…But if one does not take the crazy approach, one will be immediately out of power and that he figures is even more crazy!

  7. #7 by yhsiew on Saturday, 24 July 2010 - 7:24 am

    Looking at the set of dismal FDI figures, the argument that Malaysia is on the way to bankruptcy certainly is not far fetched (as Rajah Rasiah had plainly admitted that Malaysia’s poor performance casts doubts over whether it can achieve the targets set to achieve high income status.)

    What is the use for Perkasa to achieve 99.9% political control when the country’s economy is already crumbled?

    Who would want to invest in a race-based economy?

    Singapore, Thailand, Indonesia, Vietnam have the last laugh in the economic competition game.

  8. #8 by Thor on Saturday, 24 July 2010 - 8:18 am

    What to say, man!
    Even if we’re to go bankrupt for now, many idiots are still praising these BN goons.
    Have to wait for GE13.
    Only after that, can we predict our future here.
    If Pakatan were to take over, it’s relief for us.
    And if BN will to win, then way to go for my whole family out of this country as Malaysia will be “dead” for sure.
    Let it be god’s will!

  9. #9 by lopez on Saturday, 24 July 2010 - 8:46 am

    why now only show these reports , local reports not good meh…as so often bragged by you know who…and that foreigners dont know enough their adap
    these things already happening for since …..
    first things first, the model is not his , it is rational thinking to have a suitable balance of agri based and industrial based economy model for any nation and is adopted by many great nations during the infant stages of its economy…except bolihland…a good start but…
    what went wrong …
    because greed and power of the regime and their little napoleans
    ….the same group who vow for people and nation and lead us to holland.
    first they enriched themselves and their cronies at people’s expense. They blame the colonials for robbing the nations wealth, They advocate and put blame on other fellow malaysians and others of their economic inabilities and dilemma.

    then they modify the education system, and challenge the laws and nation’s constitution.
    and then …Every jabatan for themselves, many regulations , many new laws?? …no no they say it is in the law only thing they never use it only and when it had never been use,,,,kacang putih seller or bak kut teh man knows it or not and what about the nasi lemak guy.
    FDI …what is it…tak perlu lah, kita malaysia itu manyak jauh lah
    we are insulated until globalisation came it and some of us just cant take it….and you know why.
    lets make some real change for all malaysia one.
    How important is it to you?

  10. #10 by oct on Saturday, 24 July 2010 - 9:18 am

    Bolehland is a country full of contractors that depend on Govt project. Even UMNO divsion heads are mostly contractors. So Bolehland has no talented & skilled citizens. Those who are good have either migrated or chose to work elsewhere where their capabilities & skills are appreciated rather than through their skin color. One time our AP Queen have told investors that investors MUST comply to our local law which is to give 30% to the bumi which consists mostly UMNO cronies or else they don’t need to invest in Malaysia. With that type of condition who will come to invest when our neighboring countries have no such rules. Times & rules have changed so much that Bolehland is deemed to be arrogant with its ethnic based policies.
    Nowadays we have high profile corruption cases and yet we don’t see any big fish caught. What sort of image are we projecting to the investors? In the end this is the result we get. We reap what we sow!! If we don’t change the Govt, there is no hope for Malaysia

  11. #11 by monsterball on Saturday, 24 July 2010 - 9:34 am

    Many Malaysian Chinese parents have planned to have their children leave Malaysia.
    I spent time to explain why they should stay put and fight for their children’s rights to be equal to all and not to submit to the double standards applied.
    Above all..Malaysia is a God gifted rich country for all and everyone will vote for change of government to hope for real freedom.
    Why are other races planning to migrate if Najib’s “1Malaysia” means anything?
    Police and the unjust laws weakens them.
    Yes with the second largest Malaysians planning migrations….UMNO B will laugh all to the banks….day and night stealing.
    Making few companies looses money…by the billions…and using the profitable companies to save the loosing ones….is one the the standards ways of these corrupted worms steal our money.
    Not enough…take from EPF and Petronas with no fear.
    On and on doing that….foe decades…where got human resources development programs to become world standard to lure true investments.
    All they are famous is giving conditions to hope foreigners will not refuse and get some results and that also have been applied for decades with no permanent results.
    The foreign investment nosedive is nothing new…..but now under Najib is the worst.

  12. #12 by ktteokt on Saturday, 24 July 2010 - 9:37 am

    Malaysian government must think that outsiders are IDIOTS to bring in money for the joint enjoyment by UMNO guys! Who would want to invest in a country with such stupid policies? Carry on with this and see what Malaysia will become by 2020!

  13. #13 by HJ Angus on Saturday, 24 July 2010 - 9:48 am

    “Many Malaysian Chinese parents have planned to have their children leave Malaysia”
    It is a sign of desperation as no parent likes to have children living so far away.
    I am not Chinese but another minority and my wife and I decided long ago that our children should be global citizens; going where their talents take them.
    I left school in 1967 and many of my own classmates have migrated – about half a dozen or so went to Australia.
    Unless the government makes radical changes to its policies, the trend of migration and brains will only increase and each year the talent pool grows smaller.
    It is somewhat like the aging population problem but even worse as the FDI results show.
    With fast diminishing manpower talents, the ability to support the government services will shrink – soon we may have less than 10 working adults paying for 1 civil servant or some other figure.
    The following will happen:
    1.Taxes have to be raised.
    2.Number of civil servants have to be reduced.
    3.Salaries of civil servants have to be decreased.
    4.Combination of all the three.

  14. #14 by monsterball on Saturday, 24 July 2010 - 10:00 am

    Straits Times and Malay Mail are loosing millions every year…which do not bother UMNO B as long as they are tools for their propaganda work.
    Soon MAS and Berjaya Steel will need billions….and few banks need to be saved again.
    These are the real signs why Malaysia will go bankrupt soon….and foreigners can calculate the possibilities based on second opinions not found in papers.
    Yes…part of the reasons is due to our high wages than other countries…..but if the workers are intelligent and productive…the extra high wages means nothing.
    UMNO B love to see Muslims stay happy and contented with the government wasting billions every year for slow work.
    Now these workers are parents of few and make up the new few millions Malaysian Malays.
    They will all grow up and by one year before Vision 2020….all will be happy saying….
    “It’s God’s will we are poor. Lets live and let live”
    And therefore…the plan for UMNO B to govern forever comes true…painting…making handy crafts on the streets…young girls become prostitutes….and all the famous multi billion buildings for tourists and the Datuks…Tan Sri and Tuns children.
    How long does it take for UMNO B member to wake up to the truths?

    “AVATAR” maybe a science fiction movie…but it shows good will conquer evil as always.
    Is UMNO B and Najib all good?
    You need to get your head examine if you think so.
    Foreigners knows all and keeping an arms length away from Malaysia as long as Najib is PM.

  15. #15 by limkamput on Saturday, 24 July 2010 - 10:17 am

    Ever wonder why increasingly Malays are feeling that their sense of entitlement is beyond reproach. It is simple; they have continued to enjoy it without any adverse repercussion thus far. The government is able to collect taxes, raise loans and levy on our natural resources without difficulties. We have suckers (i.e us) continue to work hard, accumulate savings and pay taxes for the government to squander. Did any one of you ever ask for what purposes those taxes you paid are used for? We even have to employ our own security to guard our homes while we are at work.

    Coming back to LGE and Nik. It is not just about these two individuals. It is about the federal government’s refusal to recognise the existence of state governments once those governments are under different political parties. How can they channel federal monies only through federal establishments ignoring completely state governments, state machinery and state jurisdiction? State governments are provided for in our three tiers system of government under the Federal Constitution. May be some constitutional experts should challenge the behaviour of federal government in court. May be we will lose, but so what; it is awareness that we have to constantly instil in the mind of the people. They can’t continue collect taxes from all the states but when come to dispensing money for development and projects, they pick and choose.

  16. #16 by Godfather on Saturday, 24 July 2010 - 10:43 am

    What has FDI got to do with the welfare of UMNO’s rambutan tree ?

  17. #17 by dagen on Saturday, 24 July 2010 - 11:44 am

    That sounds more or less right to me. See we have to head towards bankruptcy first in 2019. AND THEN we will rebound in the very next following year (ie 2020) to become a high-income developed nation. The 80% contraction is inline with umno’s grand plan. Trust umno. Trust jib. Trust mamak. They know wot they are doing.

    … another justification by dagen for and on behalf of cintanegara. Pls direct all replies to cintanegara.

    Note to cintanegara. Hey bro, while you were sleeping, err away, I kept up your good work here in irritating and annoying kit’s supporters. The credit must go to you. So I always ask for all responses to be directed to you. I have done well havent I, partner?

  18. #18 by BoycottLocalPapers on Saturday, 24 July 2010 - 12:40 pm

    Other than the Arabs, why would any foreigner want to invest in Malaysia?

    Have anyone here noticed the campaigns to buy only products produced by Muslims or Malays?

    With that kind of attitude, how can non-Muslims/non-Malays do business in Malaysia?

  19. #19 by k1980 on Saturday, 24 July 2010 - 1:06 pm

    Why worry about FDI? Just increase the price of petrol by another RM0.70 a liter and billions of ringgit can enter BN’s coffers. That was what Duffy Dollah did in 2008

  20. #20 by kpt99 on Saturday, 24 July 2010 - 1:13 pm

    In a country where kulitocracy is more important than meritocracy,it not surprise at all that the country is moving backward

  21. #21 by k1980 on Saturday, 24 July 2010 - 2:07 pm

  22. #22 by Captain on Saturday, 24 July 2010 - 2:18 pm

    this is very sad. In the hands of najib, the country is going down to the dogs. Malaysians must raise to the occasion and save our beloved country which does not belong to UMNO who are plundering and plundering and plundering. We must have two party system for national politics. Race based politics must be condemned.

  23. #23 by frankyapp on Saturday, 24 July 2010 - 2:57 pm

    To those who believe in what Dr Mahathir and Perkasa say, bad FDI news is small matter. What matters foremost is political culture of Ketuanan; the sense of entitlement to protected privileges that is priority over everything else, whether a united Malaysian Identity or viable Malaysian Economy/// Jeffrey
    Frankly what’s political culture of Ketuanan when you have nothing. I think educated malays would not agree to such hollow description. I think the problem with Umno top political leaders is either they don’t have the ability to listen to the malays and other people especially from the opposition or they are plain arrogance and greedy. Hence I think the educated malays must come all out to voice their disagreement that malaysia and malay in particular would not benefit from being ketuanan to other races if they have nothing,meaning when the country goes bankrupt . It’s like having a huge unviversity complex but one could not build or establish a single good or world class faculty.

  24. #24 by Bigjoe on Saturday, 24 July 2010 - 3:25 pm

    While FDI is critical, to understand the severity, look at domestic private investment – its horrendous. Firstly, the foreign outflow is huge proving there is no shortage of capital. Secondly, what little investment there is the trends are not encouraging – declining in manufacturing, in services concentrated in finance and non-tech, AND property takes a big part. Its sign increasing nervous domestic investors that will BOLT anytime.

  25. #25 by dagen on Saturday, 24 July 2010 - 5:05 pm

    Still in denial. Still in denial.

    Remember that pic of an iraqi kid who lost all his four limbs to bush junior’s war on terror? But bush junior liberated him. Didnt he, huh? Didnt he? That was the purpose of the war. To counter terrorism and to liberate iraqis. So bush was in fact telling that poor fellow, “but you are now free.” WTF!

    Negative FDI? So What? “But you have your ketuanan.” Perhaps mamak got the idea from bush jr. One cruel and heartless man learning from another cruel and hearless man. Great. Just great.

    Anyone here who is not making preparation to jump ship? Hands up pls.

  26. #26 by gofortruth on Saturday, 24 July 2010 - 5:53 pm

    You can use ISA & MACC to threaten & instil fear to keep people tight lip about the Mongolian murder but foreigners are not stupid, they know and they know they should have no business dealing with a most probable murderer. Our Prime minister Najib should not dodge the issue anymore, he should come out in the open to clear his name in order to gain back the confidence of foreign investors.

  27. #27 by steven chan on Saturday, 24 July 2010 - 7:12 pm

    4 billion a year to maintain PM dept is like 200 persons doing 1 man’s job. Stop the wastage and plundering of the country’s money!

  28. #28 by dagen on Saturday, 24 July 2010 - 9:27 pm

    Anuar Shaari no show in press conference called by PI Bala’s 3 lawyers today, specifically for him anuar to spill any beans he may have.

    Maybe perkasa has the beans. Maybe cintanegara has them. Maybe … heck cant some one just go out and buy some beans? Is dead easy. Look no penetration can still give rise to a credible charge of sodomy. So how difficult is it to buy beans. Oh boy.

  29. #29 by undertaker888 on Sunday, 25 July 2010 - 1:11 am

    who wants to invest in this racist country? evrything is going backwards. with these clowns like mamak and perkosa ali, i wouldnt want to put a cent here. it will be gone in a minute and these plunderers.

    who is sitting on top of the cash cow petronas heap as advisor? stealing, plunder. who can trust them?

  30. #30 by boh-liao on Sunday, 25 July 2010 - 2:58 am

    What me worry? What’s d F abt FDI? So think our Finance Minister cum PM cum what hv U n his UmnoB/BN kaki, n so says too MMK
    Each of them is rich, filthy rich beyond several generations
    M’sia is floating on petroleum, palm oil – no worries, beh si eh
    Those losers who encourage their children 2 work overseas n earn foreign currencies, no problem with UmnoB/BN, in fact, good 4 d nation, go ahead

  31. #31 by boh-liao on Sunday, 25 July 2010 - 3:09 am

    As P Gunasegaram wrote in the Star on 24 July 2010 (page SBW3): M’sia had spent over RM100 billion building white-elephant infrastructures (eg, KLIA, double-tracking project, Bakun dam, Pahang-Selangor water transfer project)
    D greatest useless n sinful culprit of all: MMK
    M’sia boleh spend, spend, spend – Y worry abt FDI?

  32. #32 by boh-liao on Sunday, 25 July 2010 - 3:22 am

    Now LohSiMah charmed Robert De Niro n invited him 2 visit M’sia
    Who paid 4 RDN’s visit n stay here? LohSiMah’s personal $$$ or taxpayers’ $$$?
    Is dis her version of FDI?

  33. #33 by lopez on Sunday, 25 July 2010 - 7:42 am

    you can go to putrajaya and be as usual josted around and then come tea break time at any of the cafe -class canteen , full of them , well housed , well fed, at the expense of the village and estate folks.
    it makes you ponder…why do we have to work more harder and face ever tougher conditions every 24 hr day annually….so that these people who supposed to service the nation dream in awan awan and pretend as developed nation.
    But we know, why the regime treat them so well and have to maintain a base electorate..the CS….. regardless of race…else no egg no chicken or vice versa
    Sit down and chat a bit , their grapevine says if you masuk recently with spm sorry lah you stay there forever and must get another off hours job….maybe taxi driver or nasi lemak or goreng goreng cannot stay in butajaya cost of living too high…good for lain division…nasib ada bn gomen sokong.

  34. #34 by RoseBella on Sunday, 25 July 2010 - 2:42 pm

    Just wondering, how much is, if ever, among the kabinet members is NOT JUtawan…. and how could this posibly happened….. gajah putih projects… malaysian signature, to be at the top of the world, without any real purpose to Malaysian… Just god damned wasted of our money…

  35. #35 by c730427 on Sunday, 25 July 2010 - 2:58 pm

    Very simple, people with plenty of cash or assets would only put their monies in a place that has integrity, secured, stable, knowledgeable & matured society. Any foreigner who has the money would tell you that Malaysian leaders are great dreamers, we have the good vision but our implementation and execution of policies do not support great visions.

  36. #36 by chew888 on Tuesday, 27 July 2010 - 6:18 pm

    Is Malaysia that Stupid? We shall see next General Election

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