The Causes Of Foreign Direct Investment (FDI) Slowdown In Malaysia

By Anne Liew


The latest Malaysian Foreign Direct Investment (FDI) results released by World Investment Reports of the UN Conference of Trade and Development of the year 2010 did sound alarming but digging out its causes just might resolve the problem. Any topics about Foreign Direct Investment (FDI) in Malaysia.

The 2-Party System, even if many might disagree that this 2-Party System, the local company and the foreign company, is barely not the main cause of the problem as many first world countries had effectively confirmed this from their economic experiences. However, the truth is that there's no such thing as second world country as many countries claimed they are such. It's either the first world or the third world. The 2-Party is just beneficial if both the residing company and the overseas company are equal in everything.

Local investors tend to venture out their business abroad instead of establishing their business around the mother country. Economic exchanges by investing to business abroad are healthy to world trade and industry since it allows currency rate exchanges and active participation in the global market. Looking at the other side, it's somehow very impractical especially if the business of the local investor is more in demand to the country where it was situated than the richer country to invest.

Another thing is that more and more countries around the Southeast Asian region have started to flourish and became a major competitor from inviting foreign investors to venture their business in the country. These countries tend to attract more foreign investors not only because their political and economical issues started to stabilize, but because of the fact that they are just about to develop their country.

It is also the first time of the country to have allocated an outward FDI stock amounting up to US$75.62 billion over time exceeding the cumulative foreign direct investments coming in to the country or the inward FDI stock which amounted US$74.64 billion.

The FDI progress in the country is a derivative from foreign exchanges, price infliction and some other constant changes during its developing period. On the other hand, the country slowed down its FDI as an effect of global economic crisis. Just recently, it acquired the lowest progress compared to its neighboring countries.

Moreover, FDI started to decline during the late 2000's. It's poor performance in attracting new local and foreign investors have constantly affected the economic growth of the country. New strategies to attract possible foreign investors as well as local investors has not been so effective that with the latest result of the World Investment Report assessed by the united nations, the country had its first ever negative net FDI flow.

The government is however not to be blamed for the very disappointing results of the WIR 2010 since it's doing its best to promote the country as one of the excellent business hub in the world. It has gone a long way in its FDI. It's just a matter of sustainability of good economic development. To read more any topics about Foreign Direct Investment (FDI) in Malaysia, read those article online that provide valuable information.




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