Foreign direct investment (FDI) in Malaysia dipped to US$3.97bil (RM14.69bil) last year from US$4.62bil (RM17.09bil) in 2004.
For the first time since 1990, Indonesia managed to overtake Malaysia in drawing FDIs. Inflows to Indonesia surged by 177% to US$5.26bil (RM19.46bil) last year.
As a whole, FDIs to South, East and South-East Asia reached a new high of US$165bil (RM610.5bil) last year, a 19% increase over 2004. China, Hong Kong and Singapore were the largest recipients of FDIs in 2005.
Economist Datuk Dr Zainal Aznam Yusof told a press conference yesterday that Malaysia had been losing its competitiveness over the last eight to 10 years due to a whole gamut of factors – among them shortage of human capital, pressure on wages, and increased competition from China, India and elsewhere.
Dr Zainal, who is a member of the working group of the National Economic Action Council under the Prime Minister’s Department, said there was a need to liberalise new growth areas such as the services sector, which was currently heavily protected.
He added that there was a need to critically examine the policy framework, institutions, procedures and processes to make Malaysia an even more attractive destination for FDIs.
Source: The Star
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