KUALA LUMPUR (April 1): Malaysia’s progress in realising RM46.1 billion or nearly one-third of the total RM152 billion approved investments for the manufacturing sector in 2023 is deemed to be reasonable, given that it typically takes between 18 and 24 months to implement, according to economists.

The Ministry of Investment, Trade and Industry (Miti) has also been improving its information tracking system over the years to ensure that agencies like the Malaysian Investment Development Authority (Mida) is capable of providing timely assistance to businesses in implementing their capital expenditure in the manufacturing sector, Socio-Economic Research Centre (SERC) executive director Lee Heng Guie told The Edge.

“Usually, [Miti] looks at it at a longer horizon, because they said a typical investment takes 18-24 months to implement, so if last year alone one-third of what they approved is already realised...that by itself is quite good,” he said over the phone.

Lee said SERC requested data from Mida last year for one of its research projects, and was told that for the period 2016-June 2023, a total of 6,103 manufacturing projects had been approved, of which 5,202 projects or 85.2% had been implemented.

UOB senior economist Julia Goh also said the progress last year is reasonable considering that implementation rate over the past three years was over 70%.

“Bank Negara Malaysia did share that the rate of implementation between 2021 and 2023 was 74%, more than two-thirds, hence one-third in one year seems reasonable,” she said.

Miti on Monday told Dewan Negara that the RM46.1 billion of realised investment involved 445 projects and created 29,693 jobs. The ministry said this is encouraging, considering that the projects had been implemented in less than the usual 18-to-24-month period.

Miti also said approved investment refers to investment planning for the capital expenditure of a project in the long term, including the cost of purchasing land, factories, machines, machinery and others.

CGS International Securities Malaysia head of economics Nazmi Idrus said the faster implementation last year could be attributable to revival of investment interest in the second half of 2023.

“Not surprising [about Miti realising one-third of approved investment in 2023], as in 3Q2023 and 4Q2023 we saw a revival in investment interest into Malaysia, particularly from China or those seeking an alternative to China,” he said.

University Malaya faculty of business and economics associate professor Dr Lau Wee Yeap also said unlike the services sector, approved investment for manufacturing activities would take a longer time to realise.

“I think it takes time for the approved projects to be implemented...it depends on a lot of factors. [It is] reasonable that building factories and getting everything ready for production takes time. Maybe projects related to the services sector can be implemented faster,” he said.

Datuk Seri Anwar Ibrahim's administration has been touting that approved investment rose 23% to a record high of RM329.5 billion in 2023, of which 57.2% was from foreign capital while 42.8% was from domestic sources.

The services sector constituted the largest portion of total approved investment in 2023, amounting to RM168.4 billion or 51.1%, followed by the manufacturing sector’s RM152 billion or 46.1% and the primary sector's RM9.1 billion or 2.8%.

As the first quarter of 2024 came to a close, economic trackers will be keen to watch if the country could beat its record last year, amid a mixed element of external geopolitical uncertainties, weakening ringgit, expectations towards government’s austerity measures and the several boycott initiatives against certain businesses over the past few months.