Amanda Siddharta
Research expert covering Malaysia
Foreign direct investment (FDI) into Malaysia - statistics & facts
Strategically situated right in the heart of Southeast Asia, Malaysia’s stable economy and well-developed infrastructure make it an attractive country for overseas investors. As a highly industrialized country, Malaysia relies on foreign direct investment (FDI) to accelerate its economic growth and increase capital inflows. The country is the fourth biggest FDI destination in ASEAN, with an inward flow of around 8.8 billion U.S. dollars in 2023.
In addition to intra-ASEAN FDI, China also holds vast potential as a foreign investor. China’s special administrative region, Hong Kong, was the second largest FDI contributor to Malaysia, with a net inflow of around 17.5 billion Malaysian ringgit in 2023. With 22.4 percent of the population in Malaysia being ethnic Chinese who speak at least one Chinese dialect, including Mandarin, Cantonese, and Hokkien, the Southeast Asian country is an attractive destination for Chinese businesses.
Meanwhile, the manufacturing sector, especially in the electrical and electronics (E&E) industry, has been identified as one of the priority sectors in the New Industrial Master Plan 2030. Thanks to the global chip shortage during the COVID-19 pandemic, Malaysia emerged as a leading semiconductor manufacturer in Asia Pacific. This resulted in a significant surge of FDI inflow in manufacturing in 2021 and 2022. In December 2021, the global technology corporation Intel pledged 7 billion U.S. dollars of investment in Malaysia over the next decade, which included a new chip packaging facility in Penang.
Despite a decline in the overall FDI inflow to Malaysia in 2023, the current government’s efforts to attract more foreign investors, coupled with political and economic stability, will likely result in improvement in FDI in the coming years.
Leading source of FDI remains in the region
Although Malaysia attracts foreign investors from economic giants like China and Japan, the country’s largest source of FDI inflows was its neighbor, Singapore. With net FDI value of more than 22.5 billion Malaysian ringgit coming from Singapore in 2023, the proximity of the two countries and historical ties were some of the reasons for their strong bilateral partnership. Moreover, the two countries signed a memorandum of understanding (MoU) in January 2024 on the Johor-Singapore Special Economic Zone to increase economic cooperation.In addition to intra-ASEAN FDI, China also holds vast potential as a foreign investor. China’s special administrative region, Hong Kong, was the second largest FDI contributor to Malaysia, with a net inflow of around 17.5 billion Malaysian ringgit in 2023. With 22.4 percent of the population in Malaysia being ethnic Chinese who speak at least one Chinese dialect, including Mandarin, Cantonese, and Hokkien, the Southeast Asian country is an attractive destination for Chinese businesses.
Services and manufacturing are the key FDI sectors
The services sector in Malaysia saw a 50 percent increase in net FDI inflows in 2023, with a total value that reached more than 35 billion Malaysian ringgit. This sector was led by the information and communications segment, with a total FDI worth nearly 12 billion Malaysian ringgit in the same year. This is not a surprise since Malaysia has made significant investments to improve its information, communication, and technology (ICT) infrastructure to accelerate its Digital Economy vision and attract investors in this industry.Meanwhile, the manufacturing sector, especially in the electrical and electronics (E&E) industry, has been identified as one of the priority sectors in the New Industrial Master Plan 2030. Thanks to the global chip shortage during the COVID-19 pandemic, Malaysia emerged as a leading semiconductor manufacturer in Asia Pacific. This resulted in a significant surge of FDI inflow in manufacturing in 2021 and 2022. In December 2021, the global technology corporation Intel pledged 7 billion U.S. dollars of investment in Malaysia over the next decade, which included a new chip packaging facility in Penang.
Despite a decline in the overall FDI inflow to Malaysia in 2023, the current government’s efforts to attract more foreign investors, coupled with political and economic stability, will likely result in improvement in FDI in the coming years.
