Malaysia attracted 96 greenfield FDI projects in the first nine months of 2019, the lowest level seen since 2005 and marking a 20.7% decrease from the first nine months of 2018, according to data from greenfield investment monitor fDi Markets, a serce from the Financial Times that tracks global flows of greenfield foreign investment.  

In terms of announced capital expenditure, greenfield FDI into Malaysia fell by an annual 41.6% in the period. The country’s FDI slowdown was not an exception in the region. In the first nine months of 2019, south-east Asian countries suffered a fall in greenfield FDI projects and capital expenditure of 32.5% and 50.5%, respectively, compared to the same period last year, shows fDi Markets. 

Advertisement

The stalling can be partly explained by the record levels seen in 2018, the year the US-China trade war broke out, forcing multinationals to transfer operations out of China. 

Greenfield investment into Malaysian manufacturing slipped in the first nine months of 2019. The number of greenfield foreign investment projects into Malaysian manufacturing fell by annual 41.7% to 14 greenfield projects, while estimated capital expenditure into greenfield projects in manufacturing declined by annual 39.7% to $3153m in the period. 

Asian companies have been the most active investors into Malaysian manufacturing this year, with Hyundai Motor from South Korea investing $2bn. Japanese and Chinese companies such as AVX and Longi Green Energy Tech in the electronics sector invested $125.5m and $193.6m respectively, shows fDi Markets. 

Malaysian prime minister Mahathir Mohamad acknowledged that ASEAN member countries were negatively affected by falling demand from a slowing Chinese economy as the ongoing US-China trade war began to take a toll. However, he added that Malaysia is a promising choice for those international companies who are considering relocating from China to avoid US tariffs in the coming years, according to the Prime Minister’s Office of Malaysia.  

Despite greenfield FDI announcements decreasing in 2019, the government claims a record high number of FDI projects, worth a total of $25bn, were approved in the 12 months from July 2018 to June 2019, according to figures from Malaysian Investment Development Authority, which were published by the Financial Times.