Malaysia approved a total of RM109.8 billion worth of investments in the manufacturing, services and primary sectors for the first nine months of 2020. These investments involved 2,935 projects and will create 64,701 jobs opportunities in Malaysia.
Out of the total investments approved, domestic direct investments (DDI) accounted for 61.2% (RM67.2 billion).
Foreign direct investments (FDI) made up of RM42.6 billion. China (RM17.0 billion), Singapore (RM8.0 billion), the USA (RM2.8 billion), Switzerland (RM2.8 billion), and the Netherlands (RM2.4 billion) were the top five sources of approved FDI for the manufacturing, services and primary sectors during the period.
For approved projects by state, the five major states namely Selangor, Sarawak, Sabah, W.P. Kuala Lumpur and Pulau Pinang contributed RM76.8 billion (69.9%) to the total approved investments for January to September 2020.
The manufacturing sector attracted the largest portion of approved investments for this period, contributing 59.5% (RM65.3 billion), followed by the services sector with investments of 39% (RM42.8 billion), and the primary sector with approved investments of 1.5% (RM1.7 billion).
For the manufacturing sector, in the first nine months, a total of 740 projects worth RM65.3 billion were approved compared 669 projects worth RM56.0 billion in the corresponding period of 2019, representing an increase of 16.6% in capital investments. Hence, these projects will create 51,172 jobs opportunities in the economy.
The total investments approved in the manufacturing sector were mainly in the petroleum products including petrochemicals (RM15.0 billion), basic metal products (RM14.5 billion), electrical and electronics (RM7.7 billion), machinery and equipment (RM5.8 billion), chemicals and chemical products (RM4.5 billion), food manufacturing (RM3.0 billion), transport equipment (RM3.0 billion) and scientific and measuring equipment (RM2.1 billion). These industries make up 85% of total approved investments for the sector.
Whereas, the domestic direct investment (DDI) in the manufacturing sector saw a leap of 45.5% to RM25.9 billion while the value of approved foreign direct investments (FDI) increased by 3.2% to RM39.4 billion.
The states with the highest total approved investments in the manufacturing sector for the period are Sarawak, Sabah, Pulau Pinang, Selangor and Johor. These states have collectively contributed RM51.3 billion (78.6%).
Meanwhile, the leading sources of FDI for the period of January to September 2020 were China, Singapore, Switzerland, the USA, the Netherlands, Thailand, Japan and Republic of Korea. These eight countries jointly accounted for 91.4% or RM36.0 billion of the total FDI approved in the manufacturing sector.
As for the services sectors, they recorded 2,180 approved projects with investments of RM42.8 billion. These approved services projects are expected to create 13,390 jobs to the economy.
DDI led the total approved investments in the services sector, contributing RM40.6 billion (94.9%) where else FDI represented the remaining RM2.2 billion.
Majority of the main services sub-sectors showed a significant decline in approved investments except for support services, MSC status projects and other services such as BioNexus status and software developments.
The top five (5) contributors of approved investments in the services sector were real estate (RM23.7 billion), utilities (RM7.2 billion), support services (RM4.0 billion), telecommunications (RM2.6 billion) and financial services (RM2.1 billion).
The support services industry under the purview of MIDA covered sub-sectors such as integrated logistics, research and development, green technology, integrated circuit design, oil and gas services and licensed warehouse.
In the first nine months of 2020, approved investments in the support services industry saw an increase of 17.9% compared to the corresponding period in 2019. This is contributed by projects in green building, waste management, integrated logistics services and energy saving that recorded increases of more than 100%.
The primary sector attracted investments worth RM1.7 billion which comprises three main sub-sectors namely mining; agriculture; and plantation and commodities will create 139 jobs in the economy.
FDI dominated the total approved investments in the sector, recording RM1.0 billion (58.8%) while DDI accounted for RM653.2 million (41.2%).
According to Mohamed Azmin Ali, Senior Minister and Minister of International Trade and Industry (MITI), though the Covid-19 is still a battle they are fighting to overcome with the rest of the world, the Government has never wavered in prioritising the needs of the people.
“We are striving to ensure the livelihood of our citizens and the sustainability of businesses, not only through this pandemic but for years ahead. Thus, the Budget 2021 cements the groundwork to accelerate investments in Malaysia to spur further economic recovery and create a multiplier effect on the economy,” Azmin said.
Among the initiatives within Budget 2021 directed to the business community include:
- A competitive RM1 billion special incentive package for high value-added technology projects including R&D investments in aerospace and electronic clusters;
- Income tax rate of 0% up to 10% for the first 10 years and 10% for the subsequent period of 10 years to manufacturers of pharmaceutical products including vaccines;
- A 10% income tax rate for a period of 5 years and renewable for another 5 years for Global Trading Centres (GTC);
- An extension of the Principal Hub, Industrialised Building System (IBS) components manufacturing, and shipbuilding and ship repairing industry (SBSR) incentives’ application period; and
- Expansion of the scope of special tax rates to selected manufacturing companies which relocate their businesses into Malaysia or undertake new investments, to include selected high-technology services sectors.