As Malaysia faces increasing FDI competition from other Asian countries, its strategy is to focus on the manufacturing and services sectors. To help make the environment more conducive to investment, the government has established industrial training institutes and introduced measures to improve the public delivery system, among other things.

The five most attractive Asian locations for FDI in 2004-2005 are China, India, Thailand, Vietnam and South Korea. What can Malaysia do to move up the list?


Malaysian Industrial Development Authority (MIDA) is the first point of contact for investors. With its headquarters in Kuala Lumpur, MIDA has established a global network of 16 overseas offices in North America, Europe and the Asia-Pacific region. In Malaysia, MIDA has 10 branches to assist investors in the implementation and operation of their projects.

I asked MIDA director general Datuk R. Karunakaran how Malaysia intends to compete with its many formidable neighbours for FDI inflows.

Q What is the government’s current strategy for promoting and sustaining economic development?


It is to ensure the continued economic development of Malaysia, under the Industrial Master Plan 3 (2006-2020) currently undertaken by the government. The thrust is to sustain the contribution of the manufacturing sector to the Malaysian economy at more than 30% while increasing the contribution of the services sector. The intense competition for FDI and the emergence of new economies will pose major challenges in the years to come.

Q What are Malaysia’s FDI disadvantages and how are they being addressed?


The Malaysian government is aware of the growing requirements of industry for new and specific skills. To address the concerns of industry, the government has established many industrial training institutes, including several advanced skills training institutes, in collaboration with foreign governments.

To lower the costs of doing business in Malaysia for investors, the government has introduced measures to improve the public delivery system in the country.

Q What efforts have been made to improve the country’s business and investment climate?


To maintain the attractive business and investment climate in Malaysia, the government has introduced efforts to ensure, among other things, that: Malaysia’s costs of doing business remain competitive; there is continuing improvement in key infrastructural facilities; the public delivery system is efficient; and the investment incentives are competitive in attracting targeted activities and new sources of growth.

Q Which sectors and source countries are you targeting?


In line with its aim of creating a dynamic and vibrant industrial sector, Malaysia focuses on attracting investments into the manufacturing and services sectors. The industries being promoted include:

  • High-technology, capital-intensive and knowledge-driven industries, such as advanced electronics, biotechnology, optics and photonics, wireless technology, display technology, petrochemicals, pharmaceuticals, medical devices, and information communication technology.


  • Industries manufacturing intermediate goods, such as machinery and equipment, components and parts, and moulds and dyes.


  • Resource-based industries, such as food processing and value-added products from palm oil biomass.


In the services sector, Malaysia also welcomes the setting up of regional establishments, such as operational headquarters, international procurement centres, regional distribution centres, and regional and representative offices, as well as other service activities, such as research and development, design, prototyping, testing, logistics, marketing, sales and distribution.

The source countries being wooed actively are the major capital-exporting countries in North America, Europe, east Asia (China, Taiwan, Japan and South Korea) and Australia.



Lawrence Yeo is CEO & principal consultant at investment consultancy

AsiaBiz Strategy Pte Ltd.