Thailand
Malaysia’s approved investments for 2019 to fall behind target
PETALING JAYA: Malaysia’s approved investment figures for 2019 may fall slightly behind the government’s target of RM200bil, even as the country seems to benefit from investment diversions caused by the US-China trade war.
UOB Global Economics and Market Research expects the country to record a total approved investment of RM195bil for 2019, which marks a decline from last year’s RM204.4bil.
“We think some of these investments may take a longer period to materialise against the backdrop of slower global growth, lingering policy uncertainties and a downturn in the global tech cycle.
“As such, we revise our total gross foreign direct investments (FDI) projection lower to about RM130bil for 2019 (from RM130bil-RM140bil previously and RM144.2bil in 2018), after taking into consideration year-to-date gross FDI of RM101.1bil in January-September 2019.
“This is based on a conservative assumption that approved investments will be realised over the next one to three years, which is longer compared to a typical period of 12-18 months by past standards, ” the research house said in a note yesterday.
On the outlook of Malaysia’s real private investments, UOB forecasts a growth of 2% in 2020, as compared to an estimated 1% in 2019.
Key re-rating catalysts for investments in 2020 include an improvement in global landscape, policy clarity, effective and accelerated government spending, alongside Malaysia’s stable underlying fundamentals.
In the first nine months of 2019, the country recorded an overall approved investment figure RM149bil, which represents 74.5% of the government’s RM200bil full-year target this year.
On a year-on-year basis, the approved investments for the nine-month period rose by 4.4%, largely driven by the services sector.
International Trade and Industry Minister Datuk Darell Leiking has said in an earlier statement that the services sector contributed RM85bil worth of investments between January and September 2019 or an equivalent to 57.1% of overall approved investments.
This was 13.5% higher than the RM74.9bil achieved in the same period last year.
Foreign investments in the sector posted a substantial growth of 160.2% y-o-y to RM23.8bil or 28% of total services investments.
The second biggest contributor was the manufacturing sector, with an investment approval of RM57.7bil that inched up marginally by 0.3% y-o-y. Approved investments in the sector for the nine-month period represent 38.7% of the RM149bil total approved investments.
The manufacturing sector saw higher foreign approvals at RM39.2bil or 68% of total sector investments of RM57.7bil between Jan-Sept 2019.
Meanwhile, the primary sector posted a total approved investment of RM6.3bil or 4.2% of overall investment approvals during Jan-Sept 2019.
Foreign investments in the primary sector represent 52.4% or RM3.3bil.
Commenting on the approved FDIs, particularly the higher approved foreign manufacturing investments, UOB Kay Hian Malaysia Research said it signals potential trade and investment diversion to Malaysia as a result of the ongoing US-China trade disputes.
“Approved foreign investments from American companies rose four-fold (RM12.2bil in January-September 2019 versus RM3.2bil in 2018). Other key foreign sources include China, Taiwan, Singapore, and Japan.
“Key foreign manufacturing projects approved in the third quarter of 2019 include a global medical device hub by a British company to produce implants for orthopaedic surgery for knees and hips in Penang, ” it said.
Source: https://www.thestar.com.my/business/business-news/2019/12/12/malaysias-approved-investments-for-2019-to-fall-behind-target#tvH2Cleds7fKl7wi.99