Malaysia's foreign direct investments (FDI) in 2008 has dropped marginally from US$8.4 billion in 2007 to US$8 billion last year.

According to the World Investment Report 2009 released by the United Nations Conference on Trade and Development (Unctad), investment flow into Malaysia dropped to US$8.053 billion in 2008 versus an inflow of US$8.401 billion recorded in 2007.

National Economic Advisory Council member Zainal Aznam Yusof, who released the report yesterday, however, said Malaysia's investment abroad increased a significant 26 percent to US$14.059 billion in 2008 from US$11.087 billion the previous year.

malaysia stock exchange market klse 141008 05 He said FDI outflow rose steadily over the last few years, reflecting an increase of 370 percent, from 2005's figure of US$2.972 billion.

"The sizeable increase in Malaysia's investment overseas in 2008, as in previous years, is a reflection of the country's more globalised and integrated position in the world economy," Zainal Aznam said.

On the regional side, he said despite the slow inward and outward flow of foreign investments in the region, South, East and Southeast Asia recorded a 17 percent jump in FDIs to US$298 billion in 2008.

Nevertheless, overall FDI inflow into the region was one third lower in the first quarter of 2009 compared with the same period last year.

Further drop in FDIs expected

Themed "Transnational Corporations, Agricultural Production and Development", the 2009 World Investment Report also focuses on the impact the crisis has had on the world's top 100 non-financial transnational corporations (TNCs).

Zainal Aznam said six Malaysian conglomerates were among the top 100 non-financial TNCs, namely Petronas, which ranked fifth followed by YTL Corporation in 31st placing, Genting Bhd 38th, Sime Darby Bhd 46th, Telekom Malaysia Bhd 57th and Tanjong Public Limited Company 37th.

"The inclusion of the six companies from diversified areas, clearly reflects Malaysia's continued capacity to invest abroad through leading corporations, which is potentially a key component of enhancing its international competitiveness and access to international technology," he said.

Looking forward, the report cited government policy responses such as recently seen in Malaysia, Korea and Thailand, as assuming a big part in the recovery of FDIs and economic growth.

"To attract more FDIs, Malaysia should speed up liberalising its economy, particularly in the sub-services sector.

"Investment in this sector is expected to take over investments in the manufacturing sector as much as 75 percent by 2020," Zainal Aznam said.

Global FDI inflows, estimated at US$1.7 trillion in 2008, is expected to dip below US$1.2 trillion this year.

The FDI recovery is expected to be slow in 2010, reaching no more than US$1.4 trillion, the report said, adding that it is expected to recover to about US$1.8 trillion in 2011.

- Bernama