PETALING JAYA: Umno Youth chief Asyraf Wajdi Dusuki has urged senior minister for economy Mohamed Azmin Ali to explain the 68% decline in Malaysia’s foreign direct investment (FDI) for 2020.
Asyraf said it seemed foreign investors’ trust and confidence in Malaysia were yet to recover after the change of government in 2018, adding that one cause was the absence of a clear economic policy.
He said this gave the perception that the government might change its current policies in a way that would not benefit investors, adding that a determining factor often taken into account by businessmen was “sovereign or political risk”.
“An important indicator of sovereign risk is when contracts that are signed are changed when the government changes. Many incidents have contributed to an increase in sovereign risk in doing business in Malaysia since 2018,” he said in a statement.
Asyraf cited the cancellation of the East Coast Rail Link (ECRL) contract with China Communications Construction Group, the termination of the High-Speed Rail (HSR) project with Singapore and the termination of the Trans Sabah Gas Pipeline project as incidents that would discourage investors.
He also cited the cancellation of various infrastructure projects in Sarawak, the Trans Sabah Gas Pipeline project and the termination of the Multi-Product Pipeline project.
“All these incidents influenced the perception and sentiment of foreign investors toward Malaysia, causing our FDI value to decline. This would directly affect our unemployment rate, with many companies and factories shutting down or moving to neighbouring countries.
“Umno Youth asks Azmin, as the senior minister for economy and international trade and industry minister, to immediately explain the government’s action to manage our waning FDI,” he said.
A United Nations Conference on Trade and Development (UNCTAD) report said Malaysia saw a sharp 68% decline in FDI last year to a mere US$2.5 billion, while FDI in Southeast Asia only decreased by 31%.
In comparison, Singapore’s FDI fell by 37% to US$58 billion, Indonesia by 24% to US$18 billion and Vietnam by 10% to US$14 billion.
The Philippines bucked the trend with its FDI rising by 29% to US$6.4 billion.