Malaysia has made some big foreign investment pledges, but can it walk the talk?
- Malaysia has a history of failing to follow through after signing numerous memorandums with foreign firms but this could change with a ‘monitoring process’
- Analysts urge the government to establish a system to monitor and expedite processes to see through proposed investments
Foreign direct investments (FDI) were key drivers of Malaysia’s period of explosive growth between the 1980s and 1990s. But the country’s attractiveness started to wane at the turn of the millennium amid increased competition from its larger regional neighbours such as Thailand and Vietnam that offer greater access to cheaper labour and natural resources.
Analysts tracking Malaysia’s FDI performance have pinned this partly on the country’s struggle to recover from the Asian Financial Crisis of the late 1990s, when the government imposed capital controls to stabilise the ringgit currency before they were replaced in 2005 with a managed float system that has been adopted by most of its regional peers.
However, successive administrations have also faced a recurring problem with realising their FDI goals.
Numerous memorandums signed between Malaysian and foreign firms are announced every year, promising billions of dollars of capital investment into Malaysia. But the final tally often never matches up to the announcements.
Will Anwar’s administration be any different?
Not unless a proper mechanism is put in place to monitor and expedite processes to realise proposed investments, analysts say.