(AFP) Malaysia, hounded by reports alleging it was a launchpad for terrorists, has mounted a media offensive across the seas to assure investors it is a safe haven. The renewed drive to woo US and European investors came as investments appeared to be hurt by the recent arrest of 23 Muslim militants allegedly linked to Osama bin Laden's al-Qaeda and other terror networks.

Approved manufacturing investment in Malaysia shrank 26.5 percent to RM24.72 billion in 2001 due to the global economic downturn, aggravated by the Sept 11 terror attacks in the United States, International Trade and Inductry minister Rafidah Aziz said.

Proposed investments last year tumbled even more sharply, by 65.8 percent to RM15.8 billion.

In a bid to reverse the downtrend, the Malaysian Industrial Development Authority (MIDA) has mapped out an aggressive campaign of media advertisements, roadshows and invitations to foreign journalists.

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As a first step, MIDA late January took up a half-page advertisement in the International Herald Tribune and New York Times , carrying endorsements from top business leaders of Malaysia as the "profit centre in Asia".

"We are worried about the impact of Sept 11 on new investors and the perception that as a Muslim nation we are an unsafe country to live and invest in," a senior MIDA officer told AFP .

"We are undertaking a very aggresive PR and advertising campaign in the US to change this negative perception of Malaysia. It is a preemptive move."

The MIDA official said the ministry may appoint an international consultant to help boost the country's image.

Trade and investment seminars were being planned in Europe to coincide with Prime Minister Dr Mahathir Mohamad's proposed visit to Russia, Germany and Poland next month.

Missions to be led by Rafidah to Japan, Korea, Taiwan and China are on the cards for later in the year.

"We need to give them assurance that we are a safe country to invest in. We believe once they are here and they see our country, more than 50 percent of the battle is won," the official added.

"Marked deterioration"

Rafidah has noted that foreign investments in Malaysia last year were "generally sustained," dipping only 7.6 percent year-on-year and accounting for 74 percent of total investments.

She said the government had nipped the threat of terrorists in the bud following the arrests of the militants and this helped assuage investors' concerns.

Economists hailed Malaysia's initiative as a necessary step.

Nizam Idris, regional economist with Singapore-based IDEAglobal.com said applications for new foreign investment slumped 57 percent year-on-year in the last four months of 2001 alone.

"This is quite a marked deterioration in (the value of) foreign applications in the last four months and this shows that foreign investors are quite concerned," he told AFP .

"While this is a global phenomenon, it may have been more pronounced in Malaysia, Indonesia and Singapore because of implications due to linkages to terrorist networks."

Uncertainties

Nizam said the global economic uncertainties and fears of a possible devaluation of the ringgit - fixed at 3.80 to the dollar in 1998 - if the yen continues to fall also kept investors at bay.

He noted that Philippines President Gloria Arroyo had managed to procure 1.2 billion dollars of investment on a recent tour to the United States, Britain and Canada.

"This shows there is room for investment and that such efforts are necessary. But whether it helps to address fears or not depends on the global situation," he added.

Rafidah has said there were signs that investors had put aside memories of the Sept 11 tragedy and were returning to the region.