Mida expects FDI inflow to be stable

Malaysia expects to maintain this year's foreign investment figures in 2009 despite the challenging global and domestic economic outlook.

Malaysian Industrial Development Authority (Mida) director-general Datuk Jalilah Baba said that approved foreign direct investment (FDI) of RM41.3 billion in the first 10 months had already surpassed last year's RM33.4 billion.

"So far, there are no withdrawals of projects or pulling out of negotiations," she told the media in Kuala Lumpur.

Mida had earlier targeted FDI this year to be the same as in 2007.

Jalilah said Malaysia was still attractive to foreign investors despite the global economic downturn and recession faced by major sources of FDI.

This was evident in the sustained inflow of foreign investment into the country, she said, adding that it reflected the conducive and cost-competitive business environment here.

To date, multinational corporations from more than 60 countries have invested in over 3,000 companies in the manufacturing sector.

Nevertheless, Jalilah anticipates a challenging year ahead given the global economic scenario and competition from new developing economies, European countries and some states in the US that are competing for high value-added industries.

However, she is optimistic that with concerted efforts, strategy and improved infrastructure to meet the changing nature of investment and business models, Malaysia will continue to draw foreign investors.

"We want to get more (FDI than in 2008), but we hope to maintain it," she said in response to a question.

Next year, Mida trade and investment missions will be more targeted and focused to include roundtable meetings with pre-identified high net worth companies and sectors.

It may also help foreign investors facing problems in securing financing from troubled foreign banks to obtain financing locally to ensure that the global credit crunch will not hobble FDI projects here, Jalilah said.

"We will introduce the companies to local financial institutions and see how the projects can be financed temporarily by these institutions. This way, the inflow of FDI into Malaysia will continue."

To date, Mida has matched three companies undertaking huge projects with domestic and Malaysia-based foreign financial institutions.

According to Jalilah, the failure rate of approved investment projects taking off is usually about five per cent.

"Last year the failure rate was five per cent, while 75 per cent of projects were already implemented; the balance are in various stages of implementation," she said.

Business Times- Hamisah Hamid