Malaysia: Investment Approvals normalized in Q122 – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting assess the latest approved investment figures in Malaysia.

Key Takeaways

“Total approved investments normalised to MYR42.8bn in 1Q22 (or -56.6% y/y from record MYR98.7bn in 1Q21) following a high base of comparison whereby a megaproject was approved in the same period last year. Bulk of 1Q22 approvals was channelled to the manufacturing sector (MYR30.0bn or 70.0% of total approved investment), with the electrical & electronics (E&E) subindustry remaining the top beneficiary. The real estate and agriculture sub-sectors were the biggest recipients of approved investments in the services and primary sectors respectively.”

“Foreign direct investment (FDI) remained a key source of overall committed investments, totalling MYR27.8bn or 65.0% of total approved investment. Top FDI sources in 1Q22 were Germany (MYR8.9bn or 32.0% of total approved FDI), Brunei (MYR5.1bn or 18.3%), the USA (MYR3.9bn or 14.0%), Hong Kong (MYR3.3bn or 11.9%), and Japan (MYR3.2bn or 11.5%), which collectively accounted for 87.7% of total FDI approved in the manufacturing, services and primary sectors.”

“Going forward, the government’s approach to managing endemic COVID, targeted trade and investment missions, and medium-term prospects are expected to support Malaysia’s investment momentum amid multiple external headwinds on the horizon. MIDA has identified a pipeline of potential investments worth MYR150.4bn and proposed investments of MYR14.4bn. As such, we maintain our total approved investment projection at MYR200bn for 2022 (2021: MYR309.4bn, prepandemic five-year average: MYR204.5bn).”