Malaysia Attracts US$3.4 Billion FDI from China and Hong Kong

Malaysia experienced a 3% increase in foreign direct investment (FDI) inflows from mainland China and Hong Kong, reaching US$3.4 billion (RM15.98 billion) in 2023, compared to US$3.3 billion (RM15.51 billion) in 2022, according to OCBC global markets research and strategy.

Lavanya Venkateswaran, senior Asean economist at OCBC, highlighted Malaysia’s position as one of the Asean-6 economies benefiting from the diversification of global and regional supply chains, along with the adoption of ‘China+1’ strategies. The net FDI inflows were notably concentrated in the services and manufacturing sectors.

Data compiled by the American Enterprise Institute and the Heritage Foundation indicates significant Chinese investment in Malaysia’s energy, technology, and transportation sectors.

Chinese firms have shown strong interest in investing in Malaysia, with pledges amounting to RM170 billion in April 2023, followed by commitments of RM19.84 billion in September 2023. Lavanya expects further commitments to be made at the Malaysia-China Summit 2024 scheduled for December 17–19, 2024.

Foreign capital investment approvals, serving as a proxy for approved FDI, have been steadily flowing into Malaysia, reflecting a more diverse source of inflows in recent years. Investments from the European Union, other Asean countries, the United States, Japan, and China have contributed to Malaysia’s growing role in regional and global supply chains.

Regionally, FDI inflows into the Asean-6 economies reached US$236 billion (RM1,109.67 billion) in 2023, surpassing the annual average of US$190 billion (RM893.35 billion) recorded in 2020-2022.

As Malaysia continues to attract investment from China and Hong Kong, it solidifies its position as an attractive destination for foreign investors, contributing to the country’s economic growth and development.