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82 Outward Foreign Direct Investment by Small and Medium-sized Enterprises from Malaysia
Figure 1. Malaysia: Gross OFDI flows, by destination, 1999-2004
(Billions of Ringgit Malaysia)
Others
13%
Africa
13%
IOFC
15%
ANIEs
4%
Source: Bank Negara Malaysia.
Note: RM 3.80 = US $1.
The total figure excludes RM5 billion to the Labuan Offshore Financial Centre in Malaysia.
IOFC: International Offshore Financial Centres
countries (figure 1). The international offshore
financial centres (IOFC) accounted for 15 per cent of
the total OFDI, suggesting the channelling of funds
to tax haven locations for financial motives and other
corporate reasons (e.g. holding company purpose,
trans-shipped FDI).
The geographical destinations of Malaysian
investment abroad have diversified in this decade,
compared to the 1980s and 1990s. However, most of
the overseas investments still concentrated in Asia,
particularly in the ASEAN countries. Singapore
was the largest recipient of Malaysian investments
followed by the United States in 1999-2004. More than
a quarter of Malaysian FDI abroad went to ASEAN.
The amount of Malaysian investment in ASEAN was
as large as flows into developed countries. Malaysian
OFDI to African countries started from a low base but
grew rapidly in recent years. Malaysian companies
have significant business interests in Ghana, Namibia,
South Africa, the United Republic of Tanzania and
Zimbabwe. Companies such as Petronas are present
in Angola, Ethiopia, Nigeria, South Africa and Sudan;
and Telecom Malaysia in Malawi. 55 Malaysian OFDI
to China rose from $40 million in 1999 to $62 million
in 2004, suggesting increased investment relationship
and production linkages between the two countries.
Sectoral distribution. There are two sets of
data: investment by public enterprises and by all
55 See “Petronas: International operations» (http://www.
petronas.com.my/internet/corp/centralrep2.nsf/frameset_
corp?OpenFrameset) and “About TM overseas investment”
(http://www.tm.com.my/about_TM/oversea_invest/TMI.htm)
ASEAN
28%
Total 1999-2004 = RM 39.4 bn
Developed countries
27%
other firms, named “resident controlled”. Overall,
Malaysian overseas investments concentrated
in a few industries, especially in oil and gas for
government linked companies, and in finance (mainly
in commercial banking), utilities, construction and in
plantation.
• Public enterprises. A sizable amount of
Malaysian OFDI in 1999-2004 came from
non-financial public enterprises (NFPEs) or
government linked companies (49 per cent).
The bulk of the overseas investments by NFPEs
were in oil and gas (figure 2). NFPEs OFDI in
services declined from 34 in 1999 to 5.6 per cent
in 2004. The significant overseas investment by
Petronas contributed to the country’s oil and gas
OFDI (box 1). Malaysian overseas investments
in agriculture activities have grown from a 3.6
per cent share in 1999 to 8.6 per cent in 2004,
mainly in plantation activities (e.g. rubber and
palm oil) in neighbouring countries such as
Indonesia.
• Resident controlled enterprises. About two
thirds of Resident Controlled Companies
(RCCs) OFDI were in services in 1999-2004
(figure 3). RCCs services investments were
mainly in finance, insurance, real estates and
business services. Overseas investment by the
Malayan Banking and Public Bank contributed
to the dominance of the services investment.
OFDI in utilities have also been growing rapidly
as well as wholesale, retail trade, hotels and
restaurants. Manufacturing OFDI has grown by