Malaysia attracted 223.1% more foreign direct investments (FDIs) in the first half of 2021 than it did in the first half of 2020. This augurs well for the sustainable economic recovery of the country and is a testament to the confidence that foreign investors have in the country’s stable and conducive economic climate and business ecosystem.

Malaysia's economy is already relatively well internationalised and relies on diversifying and growing its exports. However, as it seeks to position itself as a gateway to the ASEAN market, it strives to make its economy attractive to FDIs by implementing broadly liberal and transparent investment policies as well as various incentives.

Most notably:

At present, Malaysia is an attractive investment destination and supply chain hub in ASEAN, particularly for manufacturing operations. In 2021, it attracted 69% more investments than it did the previous year resulting in RM107.5 billion in FDI and domestic direct investments (DDI). Of this figure, RM66.9 billion (62.2%) was invested in the manufacturing sector, followed by RM34.1 billion (31.7%) in the services sector, and RM6.5 billion (6.1%) in the primary sector.

94.6% of the 367 manufacturing projects in 2021 involved the production of electrical and electronic products (E&E) (RM47.1 billion), fabricated metal products (RM5.1 billion), chemicals and chemical products (RM3.8 billion), food manufacturing (RM3.7 billion), and rubber products (RM3.6 billion).

Of the 1,717 services projects in 2021, RM14.9 billion was invested in real estate. Increases were also recorded in other subsectors; such as the global establishments, support services, transport services, distributive trade, hotel and tourism, financial services, and education services; following the easing of restrictions on economic activities.

In the primary sector, mining attracted the most investments (RM6.4 billion), followed by plantation and commodities (RM79.8 million), and agriculture (RM11.5 million).

Malaysia is an attractive choice for high value and high-tech investments due to its capacity and ability to provide a highly skilled and English-speaking workforce as well as firms that are ready to adopt advanced technologies in value-added industries. As such, the World Bank's Doing Business 2020 Report ranked Malaysia in the 12th position out of 190 economies in terms of ease of doing business.

In tandem with the its National Investment Aspirations (NIA), Malaysia consistently pursues more capital-intensive projects that support its development agenda as well as its Environmental, Social, and Governance (ESG) goals. This is evidenced by the increasing number of capital-intensive projects that were approved by the Malaysia Investment Development Authority (MIDA).

Notable projects approved in the first half of 2021 include the Republic of Korea’s SK Nexilis project for a new copper foil manufacturing plant, Risen Energy’s proposed project to produce bi-facial technology solar products, and OCIM’s proposed investment to expand the capacity of its solar grade polysilicon plant.

Malaysia has various national, regional, and municipal investment promotion agencies, including InvestKL and MIDA; which is tasked as the central coordinator for all investments incentives to meet the national investment agenda.