Malaysia Q4 Foreign Direct Investment Largest in a Year

Malaysia’s economic landscape in the fourth quarter of 2023 (Q4 2023) witnessed a significant surge in foreign direct investment (FDI), marking the highest influx in a year. According to data released by the statistics department, Malaysia’s current account balance (CAB) recorded a surplus of RM253.4 million during this period, primarily boosted by the robust performance of the travel sector.

In contrast, the financial account experienced a notable shift, transitioning from a net inflow of RM14.9 billion in the previous quarter to a net outflow of RM19.9 billion in Q4 2023. This change was attributed primarily to outflows in other investments totaling RM14.4 billion and financial derivatives amounting to RM3.8 billion.

Chief statistician Uzir Mahidin highlighted that for the entirety of 2023, the CAB attained a surplus of RM22.8 billion, a notable decline from RM55.1 billion recorded the previous year. Meanwhile, the financial account saw a net outflow of RM18.9 billion in 2023, contrasting with a net inflow of RM12.4 billion in 2022.

Analysing the quarterly performance, Mahidin pointed out that the goods account showcased a net export of RM30.8 billion in Q4 2023, slightly lower than the RM32.7 billion recorded in the previous quarter. Noteworthy increases in goods exports, particularly in electrical and electronics (E&E), petroleum products, and palm oil-based products, contributed significantly to this export growth.

On the services front, Mahidin noted a reduced deficit of RM7.4 billion in Q4 2023, largely driven by a surge in inbound travel. Services export witnessed an 8.7% increase to RM55 billion during this period, with a corresponding rise in services import to RM62.4 billion.

The travel surplus for Q4 2023 stood at RM6.5 billion, indicating an 18.9% increase from the previous quarter.

However, challenges persisted in the primary income account, which registered a widening deficit of RM20.9 billion, primarily due to increased net payments from direct investment. Similarly, the secondary income account recorded a higher deficit of RM2.3 billion in Q4 2023.

Reflecting on accumulated investments, Mahidin highlighted that Malaysia’s foreign direct investment position reached RM926.3 billion by the end of 2023, while direct investment abroad amounted to RM662.8 billion. The nation’s international investment position showed a net asset of RM119.4 billion, with international reserves standing at RM520.7 billion.

Amid evolving economic dynamics, Malaysia continues to position itself as an attractive investment destination, leveraging its strengths to navigate global challenges and capitalise on emerging opportunities.