Global Players from Emerging Markets: Strengthening ... - Unctad

A. Introduction
This paper examines Malaysian investment
abroad with emphasis on SMEs. It assesses the drivers,
motivations, obstacles, and the regulatory framework
relating to the internationalization of Malaysian
enterprises through OFDI. It also highlights how
OFDI has helped increase the competitiveness of
selected Malaysian enterprises.
B. OFDI from Malaysia: Trends
and development
Malaysia is a growing source of FDI for other
developing countries. Its OFDI stock rose from $2.7
billion in 1990 to $29.7 billion in 2003 (table 1).
The country’s annual average OFDI flows increased
steadily in 1980-1989, 1990-1994 and 1995-1999.
However, annual average OFDI flows dropped to $1.4
CHAPTER VII
OUTWARD FOREIGN DIRECT INVESTMENT BY
ENTERPRISES FROM MALAYSIA*
Table 1. Malaysia: OFDI flows and stock, 1980-2003
OFDI Stock (US$ billion)
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billion in 2000-2003 due to the impact of the 1997
Asian financial crisis, the slower pace of economic
growth in Malaysia and corporate consolidation.
OFDI stock as a percentage of Gross Domestic
Product rose from 6.1 in 1990 to 28.8 per cent in
2003, indicating the increased internationalization
of Malaysian economy. Large Malaysian enterprises
such as Kulim, Kumpulan Guthrie, Sime Darby, UEM,
Amsteel Corporation, Genting, Hume Industries,
Telekom Malaysia, Malaysian Airline and Malaysian
International Shipping Corporation have significant
presence overseas (Annex table 1). They were among
UNCTAD’s top 50 TNCs from developing countries
and most of them were government linked companies
(GLCs) (UNCTAD 1999, 2001, 2004). Examples of
Malaysian SMEs investing abroad include Top Glove,
Ingress Corporation and Munchy Food Industries.
Geographical distribution. The largest share
of Malaysian OFDI flows goes to other developing
1980 1990 1995 2000 2003
0.2 2.7 11.0 21.3 29.7
OFDI flows (annual average) (US$ billion)
1980-1989 1990-1994 1995-1999 2000-2003
0.2 0.8 2.2 1.4 –
OFDI stock as a percentage of gross domestic product
0.8 6.1 n.a. 23.6 28.8
Source: UNCTAD, World Investment Report 2004.
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* This paper was prepared by Zainal Aznam Yusof, Working Group, National Economic Action Council (NEAC), Malaysia.
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