Minister of Finance Tengku Zafrul bin Tengku Abdul Aziz said that the country will likely receive a large amount of foreign investment in 2021. He added that the government is considering the use of incentives to make this outcome a reality.
In an interview on Monday, Tengku Zafrul noted that such incentives typically see use when they are connected to the size of investments. However, in this case, he expected these incentives to relate to the promotion and development of soft skills.
“If the investor is bringing R&D (research and development), (the benefits might) not really (be) tangible, but perhaps we should give the incentives to (those) as well,” he said. He also mentioned that the large decline in foreign investment last year would not repeat. The highly damaging economic effects of the Covid-19 pandemic combined with the political uncertainties which clouded the nation created an intersection of events which took a heavy toll on the economy.
Foreign Direct Investment into Malaysia
According to a report released in January, the United Nations Conference on Trade and Development noted that foreign direct investment into Malaysia declined by 68% last year. This decline was the largest among all countries in Southeast Asia.
Nevertheless, Tengku Zafrul remained upbeat about the potential foreign direct investment which could enter the country this year. “I think they’ve (foreign investors) seen that most of the policies are intact, we have not changed any tax policies, initiatives and incentives are not being pulled. That shows that (the) government is consistent,” he said.
Tengku Zafrul often makes it clear that the government fully understands the importance of foreign investment into Malaysia. During a speech he made in January, he stated that eight international venture capital fund managers would work with the government to invest more than RM1.5 billion into Malaysia-based startups. This initiative is to take place through Penjana Kapital.
In that same speech, Tengku Zafrul noted that a report which Bloomberg published showed that Malaysia ranked fifth among the world’s emerging economies as an investment and business destination. The country’s rapid economic recovery and stable financial position served as the primary reasons for its high ranking.
Statistics About Foreign Investment into Malaysia
According to the official statistics, 59.5% of all foreign direct investment into Malaysia during the first nine months of 2020 was for the manufacturing sector. The services sector received 39% of the total amount, while the remaining 1.5% went to the primary sector. These percentages will likely remain similar in 2021.
The five countries and territories which invest the most money into Malaysia are Singapore, Hong Kong, Japan, the Netherlands, and the United States. They combine for around 59.7% of all foreign direct investment into Malaysia.
6th April 2021 15:40
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