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Ministry of International Trade and Industry Malaysia Official Blog

Malaysia Expects FDI To Rise Over 20% In 2011 – Minister

Posted by admin2 on June 24, 2015 at 2:57 pm
KUALA LUMPUR (Dow Jones)–Malaysia expects foreign direct investment in the country to rise more than 20% in 2011 from a year earlier, and doesn’t expect fresh conditions placed on a rare earths plant being constructed by an Australian firm to deter other foreign investors, the country’s trade minister said Tuesday.
Foreign direct investment in the country is expected to reach close to $11.0 billion this year, Minister of International Trade and Industry Mustapa Mohamed told Dow Jones Newswires Tuesday.

“Our policy on foreign investment is very clear and has been very consistent,” Mustapa said. “Going forward we believe it (FDI) will gather momentum.”
Investments are the centrepiece of the government’s Economic Transformation Program, which it embarked on last year to raise Malaysia’s average per capita income to $15,000 by 2020 from about $7,000 at present. The program calls for an investment of $450 billion over 10 years, and Mustapa said more than 20% of the investment will come from FDI.
The FDI target for this year will be an increase from $9.0 billion last year, which was a big jump from the low of $1.4 billion that the Southeast Asian nation attracted in 2009, in the aftermath of the global economic recession that hit in 2008.

Malaysia has been lagging behind its neighbors such as Thailand and Indonesia in recent years in attracting foreign investments. Mustapa said that part of the reason for this is Malaysia has higher wages than these countries.

“We can’t compete with some of these countries, because our wages are a lot higher. Also, we have been rejecting some of the investments” that fall below the country’s minimum wage criterion.

The minister also downplayed worries that recent publicity over new conditions placed on Lynas Corp.’s (LYC.AU) planned rare earths processing plant in the eastern state of Pahang could discourage foreign investors.

“This is the first time that we are faced with this kind of situation, partly because it deals with rare earths, and partly because public interest in it coincided with happenings in Fukushima,” Mustapa said.

“But as far as the government is concerned, we are not applying any new rules to Lynas, or resorting to new interpretations of long-established guidelines for investors. What we are doing is simply taking an added measure to ensure that the conditions of the manufacturing license granted in 2008 are adhered to,” he added.

“The manufacturing licence granted to Lynas has not been withdrawn, and neither has it been suspended,” he said.

Lynas, which plans to become the largest producer of rare earths outside China, was granted a manufacturing license in January 2008 to process rare earths, which are used in many high-technology and energy-efficient applications.

Last month, Malaysia said it would appoint an independent panel of international experts to assess the environmental impact of the plant after it drew protests from residents and green groups over its environmental and health implications amid worries it would produce large amounts of radioactive waste.

Mustapa said the panel, which is likely to be established over the next few days, will complete its job within one month of its appointment.

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