Inve$t | Market Sentiments | 22 September 2023
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The Ministry of Investment, Trade and Industry (Miti) expects approved investments to record stronger growth in 2H2023, on track to hit its target for the year, after achieving RM132.6 billion worth of approved investment in 1H2023.
Noting his pleasure with the achievement in 1H2023, having secured RM132.6 billion, representing 60.3% of the annual target he said that this achievement closely mirrors the 10-year average of RM222.6 billion, emphasising consistent efforts in attracting quality investments and driving economic growth.
Malaysia attracted a total of RM132.6 billion (US$28.4 billion) worth of approved investments in the services, manufacturing and primary sectors involving 2,651 projects from January to June and is expected to create 51,853 job opportunities in the country. The investments are a vote of confidence in Malaysia’s economy and its offerings to investors, including a government that supports and develops pro-business policies and continuously enhances the ease of doing business in Malaysia.
Malaysia is a trusted hub for the ecosystem, supply chain, capital and talent, flows of goods and data and growing innovation capabilities and managed to attract roughly a similar amount of approved investments in 1H2023 y-o-y, reflecting confidence in the nation’s economic growth prospects despite global demand slowdown and a higher interest rate environment in key markets.
Direct domestic investment increased by 58% and represented over 52% of approved investments which is a clear vote of confidence in the Madani Economy policies. As various global supply chains shift to Asia, the key aim is to position Malaysia as a regional hub for both international companies and entrepreneurs seeking to expand their footprint in Asia. To that end, the recently unveiled New Industrial Master Plan (NIMP) 2023 represents a pivotal step in Malaysia’s journey toward sustainable industrial transformation and enhanced global competitiveness.
Domestic direct investment (DDI) accounted for 52.2% of the total approved investment, or RM69.3 billion, driven by investments in the services sector, particularly real estate and primary sector. The government’s commitment to ensure quality housing for the people has been a major factor in this growth. Miti and the Malaysian Investment Development Authority (MIDA) remained steadfast in their commitment to achieve a balanced blend of foreign direct investment (FDI) and DDI. This balance is clearly demonstrated in the amount of FDI, which contributed 47.8%, or RM63.3 billion, to the approved investments.
The country’s source of FDI came from Singapore with approved investments totalling RM13.7 billion followed by Japan RM9.1 billion, the Netherlands RM9 billion, China RM8.4 billion and British Virgin Islands RM7.1 billion. Five states/zones recorded significant improvement in approved investments, namely Kuala Lumpur (RM31.7 billion), Selangor (RM29.7 billion), Kedah (RM14.6 billion), Johor (RM14.2 billion) and Sabah (RM9 billion). Together, they accounted for 74.9% of the total approved investments.
Putrajaya to unveil KL20 – a development blueprint for VCs & startup ecosystem in 1Q2024 – Rafizi
According to Minister of Economy Mohd Rafizi Ramli, the government is aiming to ascend Kuala Lumpur to be among the top 20 cities globally that offer the best ecosystem to incubate startup businesses, up from the current 42nd place. To achieve the aspiration, a blueprint called KL20 will be announced in the first quarter of next year. He was speaking after launching a RM500 million new fund for Kumpulan Wang Persaraan (Diperbadankan) (KWAP) that will focus on investments in VC funds and startups in Malaysia.
Putrajaya intends to achieve this goal by forming a marketplace that is conducive for startups to be incubated, through measures like attracting more foreign venture capitals (VCs) to invest in Malaysia, streamlining efforts to cut red tape that deters the establishment of new businesses, and organising tech conferences by early next year to encourage engagement within the startup community.
With the idea to place Kuala Lumpur in the top 20 of global startup ecosystems in the world, his ministry is putting everything in place. It’s going to be in the first quarter of 2024. The government hopes that the KL20 blueprint will congregate the world’s most renowned sovereign investors, VCs, incubators and founders.
During that conference (KL20), the government will also announce a series of policy changes to make Kuala Lumpur the best place to build a startup with the full commitment of the government. Technology is not just a concept or a status symbol but is also something that must affect the lives of people in a positive way. After the blueprints and roadmaps, now is the time to think about the use cases that could be developed: computing powers needed to run advanced models, location nodes for incubators, funding schemes, university tie-ups and a host of other initiatives.
He said that when unveiled, at the heart of KL20 will be that capital follows talents and ideas in startups. The like-mindedness of a group of people usually creates the scene. Once the scene is there, all the other things will fall in place. Based on the government’s recent engagement with foreign VCs, it appears that the latter are keener on investments in Malaysia than locally established VCs.
He ended by saying that they are more excited than local VCs to come here. And most of the time, VCs are quite agnostic. They follow value, and they follow scalability and talent more than anything else.