Saturday, January 26, 2008

Malaysia FDIs to grow at 15%

By The Edge

Malaysia is expected to see a growth of 10% to 15% in foreign direct investments (FDI) this year, with spillover effects benefiting sectors like construction, property and manufacturing, said consulting firm Frost & Sullivan GIC Malaysia Sdn Bhd managing director for Southeast Asia Manoj Menon.

While investors would generally be more cautious in making investments, China, India, South Korea and Middle Eastern countries would continue to spur FDI growth in Malaysia.

“Investors from the Middle East are looking very aggressively at the Malaysian market so we see collaboration with Middle East investors going up substantially,” he said.

Its partner and head of automotive and transportation practice for Asia-Pacific Kavan Mukhtyar said despite bearish sentiments on the US economy and its possible impact on the domestic economy, construction and property segment in Malaysia would be one of the fastest growing sectors in 2008.

“There is an overall buoyancy in these markets which is not solely driven by foreign buyers. We believe there is huge home demand and corridor projects driving these segments,” Kavan said after its Futurewatch 2008-The Frost & Sullivan Asia Pacific Outlook briefing on Jan 25.

Asked on the possible impact of a recession in the US on the Malaysian economy, Manoj said: “While our overall view is that the US is showing signs of slowing down, we believe strong domestic demand within Asia would, in many ways, soften the impact of any slowdown from US.”

Manoj said there would be an indirect impact on the local economy, in industries like electronics and manufacturing where the US was the predominant market. “The overall growth pattern for these sectors however, would range between 8% and 10%.”

“If there is a serious recession in the US and this continues for more than 12 months, or up to 24 months, 2009 will then be a recessionary growth year. However, as we have strong domestic demand, we will be relatively insulated from what happens in the US,” he said.

Meanwhile, the firm’s director of chemicals, materials and food for Asia-Pacific Kumaraguru Veerasamy said crude palm oil (CPO) prices would likely decline to RM2,800 per tonne towards June due to a possible slowdown in the US economy.