KUALA LUMPUR: Malaysia's approved investments hit a record RM329.5 billion in 2023, but the impact on local supply chain companies, banks, and capital markets remains uncertain, according to Affin Hwang Investment Bank.
However, there are promising developments that could enhance the benefits of these foreign direct investments (FDI) across various sectors.
Citing an example, Affin Hwang said Sime Darby Plantation Bhd plans to develop the Kerian Integrated Green Industrial Park (KIGIP) in Perak.
"This project aims to attract industrial plants powered by solar energy, using solar photovoltaic (PV) plants within the park," Affin Hwang added.
The KIGIP project highlights Malaysia's commitment to sustainable industrial growth and could be a model for integrating renewable energy into industrial development.
The Penang Institute, advising the Penang state government, is exploring a Special Financial Zone in the northern region.
"This initiative aims to create a financial hub to make it easier for local companies to access capital," said Affin Hwang.
The goal is to help these companies expand and become key parts of the supply chain for multinational corporations (MNCs), especially in the semiconductor and electric vehicle (EV) battery industries, which are rapidly growing in Malaysia.
Affin Hwang said the Malaysia Investment Development Authority has identified several companies already benefiting from FDI inflows. They include Greatech, Vitrox, Oppstar and YBS International.
"These companies are poised to play crucial roles in Malaysia's industrial growth and integration into global supply chains," Affin Hwang said.
As Malaysia continues to attract significant foreign investments, these strategic initiatives and developments are expected to boost the local economy, drive sustainable growth, and position Malaysia as a key global player.
Significant investments have also been seen in Malaysia's data center industry, attracting global tech companies like Microsoft, Nvidia and Amazon.
With the rapid evolution of AI and cloud computing, Malaysia is well-positioned to capitalise on digital transformation, driving economic growth.
The demand for renewable energy, driven by national and corporate commitments to achieve net-zero emissions, is becoming a pivotal factor in attracting FDI to the region.
Affin Hwang said Malaysia's private investment had grown faster in 2023, indicating a recovery in investment activities amid global recovery.
Revitalising both FDI and domestic direct investment (DDI) is crucial for Malaysia's economic growth, it added.
"By fostering a conducive environment for private investment, Malaysia can achieve significant economic expansion, moving closer to its goal of becoming a high-income nation," it said.