Malaysian Economy: Malaysia sees unexpected surge in FDI

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Malaysia has seen an unexpected surge in foreign direct investment despite global headwinds and the poor performance of its own stock market. That's come as approved FDI was up more than 73 percent to seven billion dollars in the first quarter of the year with Chinese companies front and center. Rian Maelzer has more from Kuala Lumpur.

Malaysia's finance minister says the diversion of investments due to the US-China trade war helped boost foreign investment by close to 50 percent in 2018, and even higher growth so far this year. But Lim Guan Eng says the trade war benefits no one in the long run, and that the FDI numbers also reflect his government's performance.

LIM GUAN ENG MALAYSIAN FINANCE MINISTER "The foreign investors are confident about the reforms that are carried out by the present government, they are confident about the economic prospects, despite the challenges that we will still enjoy sustainable growth, and most important of all I think they are also very confident in the political stability."

Initial fears that the new government was not so open to investment from China have faded after the two countries agreed to revive the multi-billion dollar East Coast Rail Link project.

Chinese companies have been investing in steelmaking, in train building, in ports, in textiles, in the solar industry. And increasingly they've been investing in ICT services, with notable examples including Alibaba and Huawei.

NG WAN PENG, COO MALAYSIA DIGITAL ECONOMY CORP. "In terms of investment, it has grown like about 400 percent since two years ago. And it has shifted also from more traditional transaction-based services to higher value in the area of data analytics and AI, so we are really encouraged."

Beijing-based IT company Beyondsoft has just opened its first office in Malaysia, drawn by the growing market, strategic location and government backing.

BOB YIN, ASSISTANT VP BEYONDSOFT "We are trying to bring more new technology solutions and products to this market. We customize them and import to the market here to enable the local industry's digital transformation."

RIAN MAELZER KUALA LUMPUR "China has been Malaysia's largest foreign investor for the past few years. But the biggest chunk of FDI approved so far this year – 5 billion dollars worth – is from the US, with most of it channelled into the electronics industry. Rian Maelzer, CGTN, Kuala Lumpur."