The International Investment Position (IIP) document published by the Department of Statistics Malaysia (DOSM) shows that total stock of foreign direct investment (FDI) in Malaysia rose by 10.3% to RM667.5 billion in the second quarter of 2019, from RM605.1 billion a year ago. The steady rise in total FDI stock shows the continuing attractiveness of Malaysia as an international investment destination, amid rising trade tensions across the world.
Sustained growth prospect attracts FDI
Sustained economic growth is one of the reasons behind rising FDI stock. The Malaysian GDP during the same quarter expanded 4.9% year-on-year, an acceleration from 4.5% growth in the first quarter of 2019, at a time when various regional economies are experiencing synchronised growth slowdown. The 4.9% GDP quarterly growth is better than market expectations of 4.7% as compiled by Bloomberg.
The stronger than expected second quarter performance has convinced Fitch to revise its 2019 GDP growth projection for Malaysia upward to 4.6% from a lowly 4.2%. The Government expects the GDP to expand 4.5%-5.0% this year, based on the first half-year trend.
MIDA shows approved FDI is surging in the first half of 2019
The International Investment Position and the Balance of Payments define FDI as lasting investment made by foreign parties into domestic companies giving the former lasting controlling stake. This adheres to the definition provided by the International Monetary Fund (IMF).
It is not only definition available however, and the Malaysian Investment Development Authority (MIDA) defines FDI as investment into projects. Furthermore, approved FDI functions as a leading indicator to actual FDI as defined by MIDA.