Malaysia attracts RM89.8bil in Q1 2025 investments despite global challenges
KUALA LUMPUR: Malaysia secured RM89.8 billion in approved investments for the first quarter of 2025 (Q1 2025), a steady 3.7 per cent year-on-year increase despite a challenging and less favourable global economic backdrop.
An economist said this reflects continued confidence among domestic and foreign investors, particularly in targeted growth areas.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid, however, cautioned that the outlook for the second half of 2025 could be more challenging as investment sentiment remains sensitive to global uncertainties.
"While the first quarter data is encouraging, much will depend on the outcome of ongoing tariff negotiations. Heightened trade tensions could weigh on investor confidence going forward," he told Business Times.
Disclosing the Q1 figure on Wednesday, Malaysian Investment Development Authority (MIDA) said the RM9.8 billion approved investments - spread across 1,556 projects in manufacturing, services and primary sectors - are set to generate over 33,300 new employment opportunities for Malaysians.
"The results reflect continued investor confidence in the country's clear policies and long-term fundamentals, bucking the trend of cautious international capital flows due to geopolitical and macroeconomic volatility, as well as intensifying global competition for fresh investments," MIDA said in a statement.
Afzanizam noted that the key driver behind the performance is the establishment of the Johor-Singapore Special Economic Zone (JS-SEZ).
Launched in January this year, the SEZ has so far attracted RM28.3 billion in investments from Singapore alone.
"With Johor emerging as the largest recipient of approved investments in the quarter, this suggests that the SEZ development model is not only a powerful catalyst for investment activity but also a strategic tool for fostering regional economic integration.
"The JS-SEZ is expected to bring spillover benefits to other sectors, particularly the construction industry, with the development of data centres and supporting infrastructure now underway," he added.
Investment, Trade and Industry Minister Tengku Zafrul Abdul Aziz said while the investments are set to create 33,300 new jobs, what is equally important is the increase in the country's managerial, technical and supervisory index.
Tengku Zarul noted that the index had risen from 44.2 per cent in Q1 2024 to 46.3 per cent in Q1 2025, reflecting the nation's steady success in creating higher-skilled, better-paying jobs for Malaysians.
"With a better integrated Asean economy, which we are working hard on as Asean chair, we are also paving the way for Malaysia's continued positioning as a manufacturing and services hub to this fast-growing 680-million strong region," he said.
According to MIDA, foreign investments (FI) dominated the investment landscape, contributing RM60.4 billion or 67.3 per cent of total investments, while domestic investments (DI) accounted for RM29.4 billion or 32.7 per cent.
Singapore emerged as the leading foreign investor with RM28.3 billion, followed by the United States (RM9.9 billion), China (RM7.9 billion), British Virgin Islands (RM6.6 billion) and Taiwan (RM1.7 billion).
"In terms of states, Johor recorded the highest value of approved investments (RM30.1 billion), followed by Kuala Lumpur (RM15.0 billion), Sabah (RM10.9 billion), Selangor (RM10.2 billion), and Penang (RM9.2 billion)," it said.
MIDA said the services sector emerged as a powerhouse of economic growth, securing RM57.8 billion in approved investments across 1,342 projects.
The sector's performance is highlighted by a robust 39.5 per cent year-on-year growth, and will create 15,051 new jobs, marking a significant milestone in the nation's economic development.
As for the manufacturing sector, MIDA secured RM30.5 billion in approved investments for Q1 2025. The approval of 207 projects is anticipated to yield 18,317 new job openings.
For the primary sector, it secured RM1.5 billion in approved investments across seven projects, mainly in mining.
"The approved investments are dominated by domestic sources with RM1.1 billion (72.1 per cent), while foreign sources contributed RM0.4 million (27.9 per cent)," it said.
MIDA said Malaysia continues to position itself as a top-tier investment destination.
As of June 10 this year, MIDA managed a robust pipeline of proposed projects valued at RM48.5 billion.
"The services sector leads this momentum, with 683 projects accounting for RM27.6 billion, while the manufacturing sector, contributing RM20.9 billion across 89 projects.
"Complementing this pipeline, an additional RM59.3 billion in high-potential investment leads are currently under negotiation.
"These figures signal not only a healthy appetite for investment but also growing confidence in Malaysia's economic fundamentals and policy direction," it said.
Overall, Tengku Zafrul said the investment environment in 2025 is expected to remain challenging due to continued geopolitical and macroeconomic headwinds stemming from the US-China trade war.
Nonetheless, he said although major markets' protectionist policies and supply chain frictions continue to weigh in on companies' investment decisions, Malaysia's clear policies should be able to attract more investments from Asia's growing economy.
"This is expected to expand to about 42 per cent of global growth domestic product by 2040," he added.
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