Domestic Investments Play Crucial Role Alongside FDIs, Says MIDA Ceo

KUALA LUMPUR, Feb 23 (Bernama) -- The contribution by domestic direct investments in the continued growth of the economy must not be underplayed for they too play a vital role alongside foreign direct investments in the nation's quest towards greater industrialisation and development. Noharuddin Nordin, the chief executive officer of the Malaysian Investment Development Authority (MIDA), said the New Economic Model, Economic Transformation Programme (ETP) and the 10th Malaysia Plan from 2011 to 2015 are premised on a growing contribution of domestic direct investments (DDIs). "Under the ETP, domestic investment is targeted to account for 73 per cent of total investments by 2020," he said in a statement on Thursday. The recently announced Malaysia’s investment figures for 2011 indicate that approved DDIs accounted for 55.4 per cent of total approved investments during the year with foreign direct investments (FDIs) accounting for the rest. The contribution of the DDIs was particularly marked in the services sector, where DDIs accounted for 74.8 per cent of approved investments, he said. At 39 per cent, DDIs' share of the approved investments in the manufacturing sector was less than that of FDIs but if DDIs sustain the 21 per cent growth registered in 2011, it will not be long before they approach or exceed the share of FDIs in the manufacturing sector, said Noharuddin. "Unfortunately, this is a fact that is often overlooked. For various reasons, often it is the performance of FDIs that headlines most reports on investment performance," he said. Nevertheless, inflows of FDI are crucial for the continued development of the economy, and the role of domestic investments is not to be underplayed. He said that domestic investors have equal access to various investment incentives as do foreign investors. Guidelines for various incentives are meant to ensure that the investments are aligned with the government’s goal of transforming the economy, stimulating business activities that are higher up in the value chain and creating quality employment for Malaysians. Domestic investors, in addition to having equal access to various incentives, also benefit from special sets of incentives and other fiscal and non-fiscal support. The special incentives provided were aimed at domestic investors in the resource-based industries (rubber, palm oil and wood), food processing and machinery and equipment, small-scale manufacturing companies, and for the commercialisation of R&D in the resource-based industries. There are also a wide range of other incentives, financial assistance and other support provided by various ministries and agencies to promote domestic investments in the manufacturing and services sectors, he said. These include the incentives and financial assistance provided by the Ministry of Agriculture and Agro-based Industry (MOA), Ministry of Science, Technology and Innovation (MOSTI), SME Corp, Biotech Corp and Multimedia Development Corporation (MDeC). Noharuddin said that Malaysia’s continued competitiveness is now dependent on strengthening of the manufacturing and services sectors and accelerating the shift to high value-added, high technology, knowledge-intensive and innovation-based industries. "This transformation will not take place in the absence of active participation of domestic investments, beside inflows of a new breed of FDIs, in new growth areas," he said. In this regard, he said Malaysia needs to deploy new strategies to enable domestic investors to develop new sources of competitive advantage and for them to become active participants in the global ecosystems of industries of the future such as life sciences, environmentally friendly products and services, alternative energy and aerospace. The new strategies being pursued will help Malaysia make the quantum leap required in driving the national investment agenda in transforming the economy, he said. -- BERNAMA