Although the government has imposed varying degrees of restrictions in the past year. The Covid-19 epidemic in Malaysia has deteriorated significantly. Last week, the reported record number of infections for five consecutive days. The highest daily death toll since the beginning of 2020. The data shows that Malaysia has confirmed more than 595,000 Covid cases and 3,096 deaths in total.

This restriction affects the investor’s point of view, according to economists. Lee Heng Guie, executive director of the Socio-Economic Research Center, told that although the shutdown will curb sentiment. It is expected that foreign direct investment inflows into Malaysia will improve this year, with better medium-term prospects.

Global economic growth is expected to recover rapidly at the expense of the United States and China. He said that higher global economic growth will encourage foreign investment from advanced economies to enter Malaysia. In addition, the Malaysian Digital Blueprint Project aims to increase foreign direct investment. Invest in digital hardware and software infrastructure and 5G development.

The final implementation of the Regional Comprehensive Economic Partnership (RCEP) will also make Malaysia competitive and attract more foreign investment. Domestic and foreign investors want to know which strategic measures and initiatives will help accelerate the country’s growth. And investment paths in the medium and long term. 

The emergence of new digital technologies, the continuous changes in the structure of international competitiveness. And the increasing severity of national problems such as structural problems will all affect the country’s economic potential.

Anthony Dass, the chief economist at AmBank Group, predicts that the prospects for foreign direct investment this year will be better than last year. However, much will depend on national and global macroeconomic conditions. Which are the main catalysts for “renewing” investment during this period.

“For 2021, we do not rule out the possible delay of foreign direct investment inflows. Because investors may be more willing to take a lie-low attitude until the internal situation stabilizes.

Woon Khai Jhek, senior economist of RAM Rating Services Bhd said: the loss of instinct is caused by increasing global uncertainty and limited forecasts of the operating environment. Given the measures taken in response to the increase in Covid-19 cases and the continued spread of vaccination. The current pandemic wave can be seen as a temporary obstacle to long-term direct investment.

This is likely to be driven by economic potential and long-term value propositions. And typical tax breaks and preferential treatment will continue to play a role. After rebounding in the past two quarters, foreign direct investment inflows may recover from stability.

OCBC Bank economist Willian Wiranto said that the group will inadvertently harm Malaysia’s attractiveness for foreign direct investment.

Due to the continuing difficulties of cross-border travel. It is still a logistical challenge for key decision-makers of potential companies to come to Malaysia. And conduct on-site due diligence before investing in FDI. This will be the long-term answer in the future. 

“This will reverse some negative factors and allow foreign direct investment capital to return to Malaysia. In addition to the government’s current measures to attract foreign direct investment through the tax relief system, the epidemic needs to be controlled,” William said.