THE drop in foreign direct investment (FDI) is a short-term pain Malaysia must endure as it seeks to transform the nation into a high-income economy, the international trade minister explained.
The government now wants more quality FDI due to the better job opportunities they offer, said International Trade and Industry Minister Datuk Seri Mustapa Mohamed.
He was commenting on 2009 FDI data by UN Conference on Trade and Development. It showed that while FDI wordwide fell by 39 per cent, it plunged over 80 per cent in Malaysia.
"We no longer want to compete with low-end manufacturing assembly type facilities and we cannot compete in these labour-intensive facilities such as textiles and apparel."
Malaysia is beginning to attract these quality investments and Mustapa described how a RM10 million investment could create better job opportunities.
"For example, a company has been employing 1,500 local graduates with starting pay of RM4,000 per month," he said during a media briefing after chairing a dialogue session with the machinery and equipment sector in Kuala Lumpur yesterday.
As to why our neighbouring countries have better FDI numbers, they are beefing up on infrastructure investments.
"In the case of Malaysia, we've done them and there is excess power supply, and infrastructure is in place with roads and bridges," he said.
Mustapa, who is heading the electronics lab under the New Economic Model, said there has been several concrete proposals in the electronics sub-sector, which will make it attractive to FDI.
"Specific proposals for new investment in the E&E sector have been identified, mainly for advanced projects that move up the value chain," he added.
On the heavy outflow of investments last year, Mustapa felt it was not fair to assume that Malaysian companies preferred to invest abroad.
"Many of these companies already have a strong presence in Malaysia and have expanded their operations to other countries. For instance, some companies have gone to other countries to build roads. We hope profits are repatriated."
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