Malaysia's approved investments in 2020 likely to halve from 2019: UOB

APPROVED investments in Malaysia slumped in the first quarter amid the Covid-19 pandemic, with full-year investment approvals likely to halve from 2019, UOB economists Julia Goh and Loke Siew Ting said in a July 21 note.

Total approved investments were down 34 per cent year on year at RM37.4 billion. The bulk of this was domestic investment, at 70.4 per cent, with the rest being foreign direct investment (FDI). The investments were for 892 projects, with a potential 19,134 jobs being created.

Manufacturing accounted for 67.5 per cent of approved investments, worth RM25.2 billion. This was down only a marginal 0.6 per cent year on year, with domestic investments nearly doubling from the year-ago period.

Manufacturing investments were focused in the areas of petroleum products, including petrochemicals, which accounted for 11.7 per cent; machinery and equipment, at 4.6 per cent; and electrical and electronics manufacturing, at 2.3 per cent.

In the services sector, however, approved investments fell 58.1 per cent to RM11.9 billion. Almost all of these (98 per cent) were domestic.

And in the primary sector, approved investments all but disappeared, plunging 91 per cent year on year to just RM0.3 billion. This sector comprises the mining, plantation and commodities, and agriculture sub-sectors.

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Given lingering downside risks and uncertainties due to Covid-19 and the associated Movement Control Order, the UOB economists expect full-year investment approvals to halve to RM100 billion, from RM211 billion in 2019.

"A slower pace of project materialisation will also indicate tepid real private investment growth for 2020, which we forecast to decline by 12.0 per cent," they added.