Malaysia Leads Emerging Southeast Asia for Foreign Investment Attractiveness

Feb 2022

Malaysia ranked first among emerging Southeast Asia in terms of potential in attracting foreign investors, as demonstrated by Milken Institute’s Global Opportunity Index for 2022. Malaysia is Asia’s third-largest bond market (behind Japan and the Republic of Korea) and has taken strides in recent years to ease regulations and establish policies in response to the global trade changes. In particular, emerging Southeast Asia surpasses other emerging and developing economies in robust economic performance, highly qualified workforce, and strong global integration indicators.

United Overseas Bank anticipated investment approvals in Malaysia to reach MYR 200 billion (USD 47 billion) in 2022, amid the tight global monetary landscape and COVID-19-related uncertainties. In the first nine months of 2021, the country’s total investment approvals increased by 51.5% to MYR 177.8 billion (USD 42 billion), compared to MYR 117.4 billion (USD 28 billion) in the same period of 2020. The manufacturing industry had the highest investment, which accounted for MYR 103.9 billion (USD 24 billion) or 58.45% of the total, followed by the services sector with MYR 57.8 billion (USD 13.8 billion) (32.5%), and the primary sector with MYR 16.1 billion (USD 3.8 billion) (9.1%). These investments will fund 3,037 projects, resulting in the creation of 79,899 employments.

For example, SK Group, South Korea’s second-largest conglomerate with a market capitalization of USD 177 billion, has invested over USD 700 million in Malaysia in 2021 and aims to invest further in 2022. SK Malaysia chief representative Jung Kyu Kim said the company is interested in exploring growing industries such as fintech services, electric vehicles (EV), digitalization and the environment. Among SK Group’s key activities in Malaysia are

  • SK Group’s battery copper foil-making subsidiary, SK Nexilis, announced an MYR 2.3 billion (USD 553 million) capital expenditure in 2021 to establish a copper foil manufacturing facility in Sabah as part of its EV value chain.
  • SK Group’s SoCar Malaysia, the country’s largest car-sharing company, raised more than USD 55 million from EastBridge Partners and local corporation Sime Darby Bhd to fund its expansion and create an EV platform, with targets to deploy hundreds of EVs over the next five years.
  • SK Group announced a strategic announcement of up to USD 100 million into BigPay in August 2021. The group mentioned that the investment demonstrated the ability of Malaysia’s fintech firms to grow both domestically and regionally,  and become a major player in Southeast Asia. SK Group will also participate in the BigPay consortium in applying for Malaysia’s digital banking license.

(Sources: Business Wire; Business Times; New Straits Times)

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