According to the UNCTAD 2013 World Investment Report, Malaysia is the fifth largest recipient of FDI inflows in East and Southeast Asia. In 2013, FDI flows exceeded their previous record levels of 2011, reaching 38.8b RM. The benefits were felt by the manufacturing, services and energy sectors.
The authorities want to make Malaysia into a gate to the ASEAN market and the country offers various incentives to foreign companies, notably the status of pioneer company and tax reductions associated to the investment. The country benefits from a high-skilled and English speaking workforce. However, the government maintains a large discretionary power for authorizing investment projects and uses it to obtain the maximum profit from foreign participation and demands agreements that are advantageous in matters of transferring technologies or creating joint ventures.
|Malaysia||East Asia & Pacific||United States||Germany|
|Index of Transaction Transparency*||10.0||5.0||7.0||5.0|
|Index of Manager’s Responsibility**||9.0||5.0||9.0||5.0|
|Index of Shareholders’ Power***||6.0||9.0||5.0|
|Index of Investor Protection****||8.7||5.4||8.3||5.0|
Source: Doing Business - Last Available Data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
|Foreign Direct Investment||2011||2012||2013|
|FDI Inward Flow (million USD)||12,198||10,074||12,306|
|FDI Stock (million USD)||115,064||132,400||144,705|
|Performance Index*, Ranking on 181 Economies||36||-||-|
|Potential Index**, Ranking on 177 Economies||26||-||-|
|Number of Greenfield Investments***||190||181||144|
|FDI Inwards (in % of GFCF****)||18.9||12.9||15.3|
|FDI Stock (in % of GDP)||39.8||43.4||46.3|
Source: UNCTAD - Last Available Data.
Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.
In order to face the crisis, the government adopted different measures: supporting company balance-sheets, maintaining the redistribution of the oil annuities (subsidies for basic products and the education and hospital systems, and major construction policies), strengthening of the financial system and economic liberalization. At the same time, in order to favor the transfer of technology and facilitate the influx, into the country, of qualified staff, Malaysia is looking to liberalize the expatriate employment regime in the manufacturing sector.
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Last Updates: February 2015