Malaysia still attractive to foreign investors, tourists

comments     Beh Lih Yi and Kevin Tan     Published     Updated

It is not true that foreign investors are losing interest in Malaysia as claimed by certain quarters, the government said today.

"I strongly deny the claim that foreign investors are shying away from Malaysia," said Finance Ministry parliamentary secretary Hashim Ismail in parliament today.

He was responding to a comment by opposition member of Parliament Abdul Rahman Yusof (Keadilan-Kemaman) who said foreign investors were losing confidence in Malaysia because of the lack of transparency in the government, corruption and crises resulting from the jailing of former deputy prime minister Anwar Ibrahim.

Hashim, in refuting Abdul Rahman's claims, said foreign direct investment for the first quarter amounted to RM2.5 billion, with 29.3 percent of portfolio investment made up of foreign equity. He also said a total of 1.2 million tourists had visited Malaysia.

Earlier, Hashim was also asked by Seripah Noli Syed Hussin (BN-Sepang) to comment on the recent Economist Intelligence Unit (EIU) report that forecast Malaysia's sharp decline — from current eighth ranking to the 33rd spot — as an investment destination over the next five years.

The EIU report is published by Hong Kong-based Political and Economic Risk (Perc) consultancy.

Hashim countered the EIU report by highlighting the report in the World Competitiveness Yearbook by the International Institute of Management Development (IMD) which said Malaysia's position as a "competitive nation for investment" rose from 29th place in 2001 to 26th place this year.

The report, published on April 30 this year, ranked Malaysia ahead of South Korea, Japan and China, he said.

Hashim said the assessment criteria for both EIU and IMD reports are almost the same, adding that the EIU report was only a "forecast based on perception".

No protest

"However, the government will not lodge an official protest against this report although it is subjective," he said.

To another supplementary question from Seripah who asked how Malaysia will face the challenges posed by China which is now the most popular investment destination, Hashim said the government is "responding positively" to the development.

"We do not consider the rise of China as a challenge to Malaysia. Malaysia provides better infrastructure and our government is pro-business," Hashim said.

He also quoted an article which claimed that although China's market was attractive to foreign funds, the risk was relatively high.

He said that though China's domestic market and human resource were huge, Malaysia still has a competitive edge — lower corporate tax and cost of living compared with cities like Shanghai — over the emerging giant.

Quoting from the survey of Worldwide Business Cost Ranking, he said Malaysia's corporate tax for foreign investors was 28 percent per annum compared with China's 33 percent per annum. He also gave comparisons on housing and education (international school) costs for both countries.



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