September 23, 2023

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FDI Growth in Malaysia Will be Driven by Digital Economy

FDI Growth in Malaysia

Malaysia’s attractiveness as a hub is growing increasingly apparent to companies around the world. As part of promoting Malaysia as an investment destination, the country’s government has taken an active role in creating initiatives, including competitive investment incentives and tax policies, to attract foreign direct investment (FDI) focusing on technology and the digital economy.

Malaysia’s highly-skilled workforce and well-established manufacturing sector make it an attractive investment destination within ASEAN.

According to the Malaysian Investment Development Authority, in the first six months of 2019, the country attracted RM45.9 billion in FDI, up 97.2 per cent year on year.

The Malaysian government is committed to furthering economic stimulation and investments and improving human capital and productivity as part of its Budget 2020.

One report believes that the following three key trends will continue to draw foreign investments into Malaysia.

  1. Rise of the Digital Economy in Malaysia

Rapid technological advancements in recent years have led to the remarkable growth of the digital economy. In Malaysia, the digital economy is expected to contribute 20 per cent to the economy by 2020, up from 17.8 per cent in 2015.

In particular, e-commerce is expected to exceed RM110 billion by 2020, making up nearly 40 per cent of Malaysia’s digital economy.

The optimism toward the growth of e-commerce in Malaysia is partly attributed to the Digital Free Trade Zone (DFTZ) launched in 2017.

Through the DFTZ, Malaysia aims to attract investments to help drive cross-border e-commerce and trade and the growth of the local logistics industry.

In addition, the aim is to drive exports for SMEs by working with global and regional online marketplaces to increase demand for Malaysian goods.

The Malaysian Digital Economy Corporation (MDEC) encourages the development and testing of next-generation technologies such as financial technology (FinTech) and blockchain.

Within FinTech, digital payments, as a key pillar of the digital economy, accounted for two-thirds of the total FinTech investment deals in 2019. It is expected that Malaysia will see continued growth in this area in the coming years.

The other initiative by MDEC is a Digital Talent Development Strategy Framework that will address the growing demand for a digital-savvy workforce. As the digital skillsets of Malaysians continue to deepen, the quality of the workforce will also help sustain the country’s investment appeal.

  1. Industry 4.0 gaining ground

To increase the productivity and competitiveness of its industrial sectors, the Malaysian government is accelerating business digital transformation through the implementation of Industry 4.0 technologies such as AI and IoT.

It is offering wide-ranging incentives including tax breaks for the electronics sector and related intellectual property, automation equipment capital allowance for services, provision of incentives for digitalisation and innovation efforts, and a generous RM2 billion Industry Digitalisation Transformation Fund.

This commitment by the Malaysian government represents good opportunities for foreign companies that have embraced or are looking to implement Industry 4.0 technologies into their business operations.

  1. Growing Green Technology

The third trend drawing more foreign investments into Malaysia is the development of green technology. For example, the Ministry of Finance’s Green Technology Financing Scheme aims to accelerate the production and use of green technology and products in various sectors by providing financing support through financial institutions.

These sectors include energy, building, manufacturing, transport, waste management and water. As the scheme is open to Malaysian majority-owned companies, foreign investors specialising in this area can consider partnering local firms to tap the incentive for their ventures in Malaysia.

PARTNER

Qlik’s vision is a data-literate world, where everyone can use data and analytics to improve decision-making and solve their most challenging problems. A private company, Qlik offers real-time data integration and analytics solutions, powered by Qlik Cloud, to close the gaps between data, insights and action. By transforming data into Active Intelligence, businesses can drive better decisions, improve revenue and profitability, and optimize customer relationships. Qlik serves more than 38,000 active customers in over 100 countries.

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CTC Global Singapore, a premier end-to-end IT solutions provider, is a fully owned subsidiary of ITOCHU Techno-Solutions Corporation (CTC) and ITOCHU Corporation.

Since 1972, CTC has established itself as one of the country’s top IT solutions providers. With 50 years of experience, headed by an experienced management team and staffed by over 200 qualified IT professionals, we support organizations with integrated IT solutions expertise in Autonomous IT, Cyber Security, Digital Transformation, Enterprise Cloud Infrastructure, Workplace Modernization and Professional Services.

Well-known for our strengths in system integration and consultation, CTC Global proves to be the preferred IT outsourcing destination for organizations all over Singapore today.

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Planview has one mission: to build the future of connected work. Our solutions enable organizations to connect the business from ideas to impact, empowering companies to accelerate the achievement of what matters most. Planview’s full spectrum of Portfolio Management and Work Management solutions creates an organizational focus on the strategic outcomes that matter and empowers teams to deliver their best work, no matter how they work. The comprehensive Planview platform and enterprise success model enables customers to deliver innovative, competitive products, services, and customer experiences. Headquartered in Austin, Texas, with locations around the world, Planview has more than 1,300 employees supporting 4,500 customers and 2.6 million users worldwide. For more information, visit www.planview.com.

SUPPORTING ORGANISATION

SIRIM is a premier industrial research and technology organisation in Malaysia, wholly-owned by the Minister​ of Finance Incorporated. With over forty years of experience and expertise, SIRIM is mandated as the machinery for research and technology development, and the national champion of quality. SIRIM has always played a major role in the development of the country’s private sector. By tapping into our expertise and knowledge base, we focus on developing new technologies and improvements in the manufacturing, technology and services sectors. We nurture Small Medium Enterprises (SME) growth with solutions for technology penetration and upgrading, making it an ideal technology partner for SMEs.

PARTNER

HashiCorp provides infrastructure automation software for multi-cloud environments, enabling enterprises to unlock a common cloud operating model to provision, secure, connect, and run any application on any infrastructure. HashiCorp tools allow organizations to deliver applications faster by helping enterprises transition from manual processes and ITIL practices to self-service automation and DevOps practices. 

PARTNER

IBM is a leading global hybrid cloud and AI, and business services provider. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Nearly 3,000 government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM’s breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and business services deliver open and flexible options to our clients. All of this is backed by IBM’s legendary commitment to trust, transparency, responsibility, inclusivity and service.

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