Malaysia polishes its economic strategy to draw more foreign investors. Source: Shutterstock

Malaysia polishes its economic strategy to draw more foreign investors. Source: Shutterstock

Why is Malaysia attracting greater foreign direct investment in technology?

FOREIGN direct investment (FDI) is an important focus of developing countries all around the world, especially for those looking to boost their economy. Malaysia is one such country.

With a new government in power, the country is quickly becoming an attractive investment destination within ASEAN.

The Malaysian Investment Development Authority has reported that the country scored a total of US$11.3 billion in FDI within the first half of 2019 alone.

According to experts, this is a result of attractive tax policies, competitive investment incentives, a highly-skilled workforce, and a booming manufacturing industry. Overseas investors are also confident of the country’s progress with green technology and Industry 4.0.

Green technology is something that the country has been focused on to ensure sustainability and competitive agility in the global market.

In fact, the finance ministry has launched the Green Technol0gy Financing Scheme where financial support is provided to accelerate the production and deployment of green technology solutions.

Applicable to various sectors, this has proven to be an opportunity for foreign investors to build partnerships and tap into the incentive-driven revenue opportunities with Malaysian-majority-owned businesses who are eligible for the scheme.

Next, there is also notable growth in the country’s digital economy as technology develops rapidly and transformation programs are effectively implemented.

The e-commerce segment alone – which makes up 40 percent of Malaysia’s digital economy -is projected to bring in more than US$27.1 billion this year. The digital economy is expected to contribute 20 percent to the overall economy.

Further, the development of Malaysia’s Digital Free Trade Zone (DFTZ) also has a role to play in attracting FDI since it allows investors to tap into cross-border trade and logistics capabilities.

Efforts by the Malaysian Digital Economy Corporation to sharpen the digital skills of the country’s workforce is also quite attractive to overseas investors.

Finally, Malaysia has been gaining traction thanks to a maturing Industry 4.0 capabilities. Effective and impactful transformation programs across various business segments have allowed maturity to be achieved.

Incentives and tax breaks are being offered to key industrial players who leverage artificial intelligence and internet of things (IoT) capabilities to accelerate digital growth.

Overall, FDI is expected to continue to grow well into the future and the country will evidently be a more prominent influence in the global marketplace.