Malaysia's Third Investment Upcycle Started Mid-2023, Driven By Cyclical And Structural Factors - BNM

KUALA LUMPUR, March 24 (Bernama) -- Malaysia’s third and current investment upcycle started in mid-2023, driven by a confluence of cyclical and structural factors, according to Bank Negara Malaysia (BNM).

The central bank, in its Economic and Monetary Review 2024 released today, said catalytic projects and focus areas under the New Industrial Master Plan 2030 (NIMP 2030), the National Energy Transition Roadmap (NETR) and various positive efforts towards improving the investment ecosystem helped create further impetus for investment growth.

"Policy stability was also an important factor underpinning investor confidence in embarking on more capital expenditure," it said.

According to BNM, the current upcycle saw a notable increase in the services sector’s share of total investment, driven mainly by the modern services cluster, encompassing finance, insurance, real estate, and business services, as well as transportation and storage, and information and communication subsectors.

While the share of manufacturing investment was broadly sustained, a positive development was the increase in the share of electrical and electronics (E&E), optical products, and transport equipment subsectors, it said.

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"On the other hand, the share of investment in the mining sector declined quite substantially," it added.

The central bank also opined that a significant development is the larger role of the private sector in driving investments in the third upcycle.

"Approximately 77 per cent of investments in the current upcycle were undertaken by the private sector (2015: 65 per cent). Foreign investments also saw a notable rise, making up 45 per cent of the total approved investments in 2024, compared to just 18.7 per cent in 2015.

"This reflects foreign investors’ confidence in Malaysia's investment landscape, alongside continued investment by domestic firms (2024: 55 per cent; 2015: 81.3 per cent)," BNM said.

BNM noted that during the current upcycle, public investments focused mainly on projects related to connectivity such as highways and 5G network, and utilities such as development of renewable energy. Public corporations are heavily involved in driving these investments.

-- BERNAMA