Why Malaysia Foreign Direct Investment Fall That Drastically
I am sure you have read that Malaysia’s Foreign Direct Investment(FDI) on a net basis fell drastically by 81% in 2009 to US$1.4bil from US$7.3bil in 2008 as revealed by the World Investment Report that was released a week ago.
The World Foreign Investment Report (WIR) 2010 released by the United Nations showed that Malaysia suffered an 81.1 per cent drop in FDIs compared to far healthier figures in Thailand (30.4 per cent), Vietnam (44.1 per cent) and Indonesia (44.7 per cent).
We are trailing behind countries like the Philippines, Vietnam, Thailand, Indonesia and Singapore.
Many economists can come out with thousand of one reason to explain this drastically drop.
In my opinion, this can be due to unattractiveness of our Bursa Stock Market.
You can monitor the closing price of Top Big Cap stock price everyday.
I notice some stock is push up on last trading hour.
Look at the Closing price of the Stock Digi on 29 July 2010
Opening Price= RM24.46
Closing Price = RM24.68
Price Change = RM0.22
% Price Change = 0.90%
Total Volume Done = 255,000
Look at the Live Price Above, do you notice on 4:50pm(10 minutes before market closing), the price suddenly jump up!
For the whole day the price range hover between RM24.46 and RM24.48.
** Value Transacted at 4:50pm alone = 72, 200 shares X RM24.68 = RM1,781,896
Since Digi contribute a great Index Weightage to calculation of FTSE Bursa Malaysia KLCI, the FTSE Bursa Malaysia KLCI will jump as well.
Just push any of the Top 10 companies by market capitalization on Bursa Malaysia Main Market and the FTSE Bursa Malaysia KLCI will jump up as well.
Therefore any one with big fund can push the market at it will.
Look at the FTSE Bursa Malaysia KLCI performance for the whole day below:
Top 10 Companies By Market Capitalization On Bursa Malaysia Main Market
- Public Bank BHD
- Malayan Banking
- CIMB Group Holdings Bhd
- Sime Darby Bhd
- Tenaga Nasional Bhd
- IOI Corp Bhd
- Axiata Group Bhd
- Genting Bhd
- MISC Bhd
- DiGi.Com Bhd
I think the foreign fund mangers do not like to see these thing happen in Bursa market.(in any market, in fact).
Without active foreign fund mangers participation in our Bursa Malaysia market or FDI, our market upside potential maybe very limited!
*** The FTSE Bursa Malaysia KLCI is the headline index of the FTSE Bursa Malaysia Index Series representing the top 30 companies by market capitalisation on Bursa Malaysia Main Market.
*** The FTSE Bursa Malaysia Index Series is reviewed semi-annually in June and December to ensure the Indices remain representative of the underlying Malaysia market.
Dr M: Don’t expect much FDI this time
KUALA LUMPUR: Malaysia cannot expect much foreign direct investment (FDI) unlike before, said former Prime Minister Tun Dr Mahathir Mohamad.
He said this was because currently, many countries and foreign businessmen did not have the funds to invest in other countries,
Dr Mahathir said at the same time, these countries and foreign businessmen also wanted to invest in their own countries due to the high level of unemployment there.
“So, we cannot expect much foreign direct investment today,” he told reporters when asked to comment on the World Investment Report 2010 by the United Nations Conference on Trade and Develop-ment.
According to the report, the FDI inflow to Malaysia had dropped 81% from RM23.47bil (US$7.381bil) in 2008, to RM4.43bil (US$1.381bil) last year, trailing behind countries like the Philippines, Vietnam, Thailand, Indonesia and Singapore.
In May, International Trade and Industry Minister Datuk Mustapa Mohamed had announ-ced that investments in the country for the first quarter of this year amounted to only RM5.2bil, mainly from Singapore, Taiwan and Japan.
Dr Mahathir was speaking to reporters after marking the fourth anniversary celebrations of his bakery The Loaf at its fourth outlet at the IOI Boulevard in Puchong near here yesterday.
Earlier in his speech, Dr Mahathir, who is also chairman of The Loaf, said the company intended to set up franchises at the right time and would be opening its fifth outlet in Bangsar by the end of the year.
fr:thestar.com.my/news/story.asp?file=/2010/8/2/nation/6779109&sec=nation
Who wants to come to Malaysia and invest when our political scene is not stable?
What to do as M’sia faces record declines in foreign direct investment?
By FINTAN NG
Effective policy action key to competitiveness
PETALING JAYA: The commitment to push through reforms will be important in helping to stem the slide in Malaysia’s competitiveness as the country faces record declines in foreign direct investment and a flow of human capital out of the country.
Foreign economists told StarBiz that the effective implementation of policies drawn from the New Economic Model (NEM) and the Tenth Malaysia Plan (10MP) were still what was needed to boost Malaysia’s growth and competitiveness, which fell according to the latest report by the World Economic Forum (WEF).
The 2010-2011 report, which was released late last week, saw Malaysia’s competitiveness ranking slipped two notches to 26th spot out of 139 countries. Malaysia’s economic competitiveness fell three notches to 24th spot out of 133 countries in the 2009-2010 report
The latest WEF report noted that the areas that dragged Malaysia’s ranking down were higher education and training, institutions, technological readiness and labour market efficiency. All these areas were lower.
Furthermore, according to the Unctad World Investment Report 2010 released in late July, foreign direct investment (FDI) fell 81% to US$1.4bil from US$7.3bil in 2008, although largely as a result of companies repatriating earnings to foreign-based parent companies.
Noting the mixed record at reforms so far, Citigroup Inc senior Asia Pacific economist Kit Wei Zheng said it was the case of the implementation not going as far as the political rhetoric.
“Its not to say that nothing is being done, but the subsidy cuts for fuel (petrol and diesel) is only 5 sen per litre,” he pointed out, adding that this was a far cry from earlier proposals to cut the fuel subsidy gradually starting from a 10-sen cut.
Kit said the NEM and the 10MP were just broad guidelines, it was still to be seen to what extent the policies and strategies drawn from these papers would be implemented.
He said global competitiveness rankings, while useful, were not always a useful tool to measure such indicators as FDI.
“China does badly in such surveys but that has not prevented the country from getting the largest slice of FDI,” Kit pointed out.
Meanwhile, United Overseas Bank Ltd economist Ho Woei Chen said Malaysia would have to focus on boosting productivity in order to be competitive.
“The reforms recommended in the NEM are a big change in a short period of time from how things were done in the past, that’s why its unpopular,” she added.
Ho said the impact from the reforms would not be seen until later as a lot of the measures were difficult to implement with people sceptical of the outcome.
fr:biz.thestar.com.my/news/story.asp?file=/2010/9/14/business/7026788&sec=business
Can M’sian equity market sustain interest of foreign investors?
By FINTAN NG
US$307.7mil flowed into the local equity market in July alone
PETALING JAYA: There is a big question over how the local equity market can sustain the interest of foreign fund managers as the benchmark FBM KLCI has risen 18.06% since the May 26 low.
“That’s the million-dollar question,” CIMB Investment Bank Bhd research head Terence Wong told StarBiz over the phone yesterday.
Wong, citing Emerging Portfolio Fund Research data, said in a report dated Aug 26 that some US$307.7mil of foreign funds flowed into the local equity market in July alone, which helped to push year-to-date net flows into positive territory.
He said since these fund flows were erratic to begin with, “it is very hard to answer whether it will be sustainable since we don’t know what the fund managers are thinking as they won’t reveal their strategy.”
For the first five months of the year, the local equity market saw net outflows, which then turned positive in June when US$168.8mil flowed into the market.
Wong said foreign interest in Malaysian stocks was part of the “emerging-markets theme” which had been playing out over recent weeks.
“The region’s resilient economies are also seeing domestic demand growth as well as stronger currencies versus the US dollar,” he said, adding that economies in the region buttressed by strong growth in China and India were “better places for fund managers to place their money.”
Morgan Stanley Research analyst Jonathan Garner said in a Sept 2 report that focus in the MSCI Asia-Pacific ex-Japan regional benchmark was now shifting towards the lower-income/faster-growing countries in the region and away from the more advanced countries.
He said this was due to, among others, new and secondary listings, stock buybacks as well as mergers and acquisitions.
Garner said between the current situation and October 2007, the weightage (on the MSCI) of China, Malaysia, Indonesia and India had gained the most while Australia, South Korea and Hong Kong had fallen the most.
He added that the only exception to the trend was Singapore, which gained.
However, Fortress Capital Asset Management Sdn Bhd chief executive officer Thomas Yong was less sanguine, opting for fixed-income securities over equities.
He said the uncertain economic outlook could prompt investors into dumping stocks for safer bonds.
“In my opinion, growth will be fairly moderate for the rest of the year and next year, so investors may want to manage their risks,” Yong said, adding that yields in Malaysian fixed-income securities were higher than in the region and against US dollar instruments, making it a more attractive investment.
fr:biz.thestar.com.my/news/story.asp?file=/2010/9/15/business/7033164&sec=business
Mukhriz: Govt measures have brought back FDIs
PENDANG: Measures taken by the Federal Government have been effective to attract foreign direct investments (FDIs) this year compared with the poor showing in 2008 and 2009, said Datuk Mukhriz Tun Dr Mahathir.
The Deputy International Trade and Industry Minister said the disparaging remarks directed at the Barisan Nasional by the Opposition had instilled fear in foreign investors, so much so that FDIs in 2008 and 2009 dropped by up to 81%.
The Opposition blamed the Federal Government for its inefficiency in drawing investments.
“They caused the problem and they blamed us for it. However, the Government has always done its best to attract the foreign investors,” he told reporters at the Hari Raya open house of Pendang Umno Youth head Akrom Abdul Hamid here yesterday.
Mukhriz said government measures had yielded RM5.6bil in FDIs in the first three months of this year, almost as much as the RM5.66bil in FDIs for the whole of last year.
fr:thestar.com.my/news/story.asp?file=/2010/9/19/nation/7064208&sec=nation
Mukhriz: A total of 239 projects approved till July this year
THE amount of foreign direct investment (FDI) into Malaysia has dropped from RM22.1bil in 2009 to RM9.6bil in the first seven months of this year, International Trade and Industry Deputy Minister Datuk Mukhriz Mahathir said.
He added that the RM22.1bil last year involved 390 manufacturing projects.
“A total of 239 manufacturing projects with a value of RM9.6bil in investments were approved between January and July this year ,” he told Datuk Dr Muhammad Leo Michael Toyad (BN – Mukah).
Mukhriz also said Selangor, Kedah and Penang recorded the highest amount of FDIs between January and July, with RM1.6bil invested in each state.
Sarawak received the highest amount of FDI in 2009 with RM5.7bil being pumped into the state during that year, he added.
To a supplementary question, Mukhriz said FDIs were made in the electrical and electronics sectors, non-metal mining industry, food manufacturing, metal fabrication and chemical products.
On the United Nations Conference on Trade and Development (Unctad) 2009 report, which said the low FDI in Malaysia was due to the country’s failure to promote human capital development and its lack of transparency, Mukhriz said Malaysia was not alone in experiencing a drop in FDIs.
“Since last year, the Government has introduced various new policies, including the New Economic Model, the 10th Malaysia Plan and Government Transformation Programme,” he said.
When Lim Guan Eng (DAP – Bagan) asked what the ministry had done to convince foreign investors who expressed their concern over racial issues in Malaysia, Mukhriz replied that more high-value investors were seen coming to the country.
“The investors still see Malaysia as an exciting destination that fulfils their aspirations,” he added.
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Chua: Liberalise more policies to bring in FDIs
BY NG CHENG YEE
KUALA LUMPUR: Malaysia needs to liberalise more policies and open up further to foreign investors to draw in the millions.
MCA president Datuk Seri Dr Chua Soi Lek, who made the call, said that with the country’s foreign direct investments dipping by 81% last year, the logical thing to do was to liberalise more sectors to remain competitive globally.
“Besides enabling the country to attract more foreign businesses and encouraging them to make Malaysia their regional hub, liberalising the market will also create more jobs for our people,” he said in his keynote address at the 2nd World Chinese Economic Forum dinner at a hotel here.
He said the liberalisation of the services sub-sectors and removal of the 30% bumiputra equity requirement for newly-listed companies had made investment conditions less restrictive.
Dr Chua said the increase in the number of listings in Bursa Malaysia indicated that the moves were well received.
Based on Bursa Malaysia’s records, a total of 38 new listings of companies were recorded between June last year (when the equity requirement for newly-listed companies was removed) and Oct 15 this year, he said.
He said that last year, there were a total of 14 new listings but for the 10-month period for this year alone, there were already 23 new listings.
Urging the Government to maintain consistent policies, he added: “We cannot have an ambiguous or flip-flop policy where the right hand does not know what the left hand is doing. If we need to simplify the way of doing business in Malaysia, by all means we have to make it happen.”
Dr Chua said that with the oil and gas sectors reaching a stage where Malaysia was already an established player on the global stage, the Government should consider liberalising the two sectors.
This was to allow more non-bumiputra investors to be joint-venture partners, contractors and sub-contractors in areas such as exploration, platform construction, logistics, deep-sea operations and others, he said.
Likewise, he said, the telecommunications sector should also be liberalised as increased competition would ensure that consumers got the best deals and services they deserved.
The MCA chief said Malaysia should be ambitious and bold enough to initiate a China-Malaysia Economic Caucus to enhance economic relations and explore possible areas of collaboration and cooperation in trade, technology and science.
“The growing outflow of capital from China seeking investment opportunities in the region has begun, and in future years and decades, it could multiply into a flood,’’ he said.
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