Asia Times: Malaysia a magnet for foreign direct investment



	September 28, 1999	atimes.com

Southeast Asia

Malaysia a magnet for foreign direct investment

KUALA LUMPUR - Malaysia performed well among developing countries in attracting foreign direct investment last year, says a United Nations Conference on Trade and Development (Unctad) report released on Monday.

The report shows that FDI in developing countries had declined to $165.9 billion in 1998 from $172.5 billion the previous year. Malaysia, however, managed to attract about $3.7 billion in 1998, up from $5.1 billion in 1997.

The report was released in conjunction with a World Investment Report 1999 (WIR99). WIR99 said FDI in five crisis-hit Asian countries, including Malaysia, remained resilient in 1998, down only two percent from the peak level of $18 billion the year before despite disparate performances among individual countries in the group. The other four were Indonesia, South Korea, the Philippines and Thailand.

Phillips Young, resident representative of the United Nation Development Program (UNDP), said FDI in Malaysia was spread across all sectors. Of the $3.7 billion, the bulk - $3.4 billion - was invested in the manufacturing sector. He added that the recorded FDI excluded short-term capital like portfolio funds.

Meanwhile, Second Finance Minister Mustapa Mohamad said Malaysia may consider borrowing from the World Bank to promote the growth of small and medium enterprises.

After meeting with World Bank President James Wolfensohn in Washington at the weekend, Mustapa said the discussions included the possibility of obtaining more money for microcredit.

He did not disclose the amount Malaysia wanted to borrow, but under a loan package signed with the World Bank, Malaysia can borrow up to $1.5 billion, of which $704 million has already been borrowed for various projects including education, the social sector and resolving ''millennium bug'' computer problems.

Mustapa said the bank loan would inject fresh capital into the Credit Guarantee Corporation (CGC) ''which is doing a good job but is facing funding problems'' because of an increase in demand for loans from SMEs that do not have enough collateral to borrow from commercial banks.

CGC, which guarantees such loans, had been facing a big increase in demand from SMEs in the past few years. ''Many of these businesses had been frustrated and disappointed - but we hope to increase [CGC's] capacity because it's important for our economic recovery. It's a matter of urgency,'' Mustapa said.

The highlight of Mustapa's trip to Washington will be a seminar on Malaysia's economic recovery that he will conduct on Wednesday. While Mustapa attended last year's annual meeting of the World Bank ''on the defensive'' following the imposition of selective capital and currency controls, this year, he says the atmosphere is ''totally different and friendlier'' following Malaysia's success in turning its economy around.

(Aisa Pulse/Bernama)

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