KUALA LUMPUR, Feb 23 — Private investment growth is expected to soften this year after manufacturing investment approvals experienced a massive decline in the fourth quarter last year due to cautious sentiment, says RHB Research Institute.
Total approved manufacturing investment in the fourth quarter of 2011 had contracted by 26.6 per cent to RM19.1 billion compared with the fourth quarter of 2010.
The report released yesterday said that despite the decline in the fourth quarter of 2011, the overall pace of manufacturing approvals growth for the year at 18.9 per cent was still strong although some could delay investments this year due to the cloudy global economic outlook.
“As a result, real private investment growth is likely to soften to 4.6 per cent in 2012, after slowing down to 5.0 per cent estimated for 2011,” said the report.
RHB noted that the decline in the final quarter of 2011 was driven by domestic manufacturing investment approvals turning south, contracting by 49.6 per cent year-on-year to RM5.1 billion.
Foreign direct manufacturing investment (FDI) approvals also fell by 12.2 per cent year-on-year to RM14.0 billion in the fourth quarter.
However, Malaysia’s net FDI inflow reached RM32.9 billion last year, surpassing the pre-crisis level of RM29.1 billion in 2007, International Trade and Industry Minister Datuk Seri Mustapa Mohamed said on Monday.
Approved manufacturing investment however had yet to recover to pre-crisis levels, despite growing 19 per cent to RM56.1 billion in 2011, as it was still well below the RM62.8 billion recorded in 2008.
Total approved investment in the manufacturing, services and primary sectors last year grew 40.7 per cent to RM148.6 billion and domestic investments exceeded FDI by comprising 55.4 per cent of the total.
Sarawak attracted the highest amount of approved investments at RM14.35 billion, followed by Penang (14.04 billion), Sabah (RM13.68 billion) and Selangor (RM13.47 billion).
Manufacturing remained the largest contributor to FDI at RM16.5 billion, followed by services (RM9 billion) and mining (RM7.3 billion).
Japan was the top source of approved manufacturing FDI at RM10.1 billion, followed by Korea (RM5.1 billion), the US (RM2.5 billion), Singapore (RM2.47 billion) and Saudi Arabia (RM2.17 billion).
Penang attracted the highest levels of approved manufacturing investment at RM9.1 billion, followed by Selangor (RM8.74 billion), Sarawak (RM8.45 billion) and Kedah (RM6.13 billion).
