Foreign direct investment (FDI) in Malaysia from Japan will hit over $30bn in 2023, Malaysia’s Ministry of Investment, Trade and Industry (MITI) has said.
According to the country’s Minister of Investment Tengku Datuk Seri Zafrul Abdul Aziz, private investors in both countries have expressed confidence in business prospects this year despite the slowdown in global trade.
“When we look at the local and global economy, we hope that the [Malaysia-Japan trade] growth will continue, but we still have to see [the progress because there are] too many uncertainties now in global trade,” said Zafrul Aziz, cited by the Malaysian media outlet The Star.
According to GlobalData’s FDI Database, companies headquartered in Japan launched 12 FDI projects in Malaysia between January and October 2023, with the electronics (3) and industrial machinery, equipment and tools (3) sectors being the most popular for investors.
In June, Koa Denko, a Malaysian chip resistors manufacturer and subsidiary of Japan-based chip resistors company Koa Corp, announced plans to invest $162.5m in an 82,000m² new factory in Malacca, a city in southwestern Malaysia.
Outside trade with Japan, other Western giants have been looking to invest in Malaysia, with US-based Vantage Data Centers promising to build a $3bn data centre in Cyberjaya in May 2023. The centre will include ten data centres covering 256,000m² deliver 256MW once it opens.
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Last year, FDI in Malaysia decreased to MYR19.3bn ($4.4bn) in Q4 2022, which was lower than the MYR24.7bn recorded in Q4 2021, the country’s Department of Statistics says. Overall, the US Department of State reports that the government in Kuala Lumpur managed to attract over $36.9bn in FDI in 2022, 78.3% of which went into the manufacturing sector.
However, despite the high borrowing costs that investors often face, GlobalData experts forecast Malaysia’s economy to grow at an annual average rate of 4.2% from 2023 to 2025.