As for Malaysia, it remained an attractive and competitive destination for foreign entities and multinational corporations to invest in and expand their productive capacity despite the greater headwinds in the global economy.
In 2016, Malaysia managed to attract investments worth RM207.9 billion in mostly high quality projects despite the challenges from external headwinds.
The Malaysian Economy In 2016 continued to face considerable external and domestic headwinds. While some of the impact of earlier domestic shocks gradually dissipated during the year, growth performance was affected by the materialisation of new risks and ongoing adjustments to external shocks that have impacted the economy since end of 2014. Despite these challenges, however, the economy recorded a commendable performance and grew by 4.2% in 2016.
The strong fundamentals of the Malaysian economy have accorded Malaysia the ability to weather these challenges. The diversified sources of growth in the economy have allowed the adverse impact of sector-specific shocks to remain manageable. Despite some softening, labour market conditions remained stable with continued income growth providing continued support to household spending. Healthy financial institutions and ample domestic liquidity also ensured orderly financial intermediation. Notwithstanding the weak global demand, Malaysia’s external position remained strong, supported by ample international reserves and manageable levels of external debt.
With its skilled and culturally diverse workforce, a comprehensive communication and transportation infrastructure, efficient tax regime, strong governance structure and a sound regulatory framework, Malaysia absolutely offers many advantages as an investment destination.
In addition of being ranked 23rd for the most competitive nation in the world, Malaysia is also ranked:
In its latest State of the Global Islamic Economy report, Thomson Reuters estimates that Muslims could spend as much as USD2.5 billion on halal food by 2019, double the current amount, and says Malaysia is well-positioned to take advantage of this upward trend. Ranked first in the world in that same study for the health of its halal food economy, Malaysia excels at governance, certification and general awareness of halal foodstuffs. In the absence of global and even regional certification standards, JAKIM’s certifications for halal foods and beverages are recognised and respected worldwide. To date, Malaysia has developed 13 standards for the halal industry, and its MS1500:2004 standard has been adopted as the international halal standard by the United Nations.
However, Malaysia remains a net importer of food, particularly of meat, with annual food imports exceeding USD15 billion. Meat and animal production is especially low in Malaysia, as it is in other member countries of the Organisation for Islamic Cooperation (OIC). The high volumes of halal meat imports from countries like Australia, Brazil, and, more recently, China, occasionally pose challenges regarding compliance with certification standards. That is not to say that Malaysia does not export halal products. In 2013, its halal exports amounted to USD10 billion, 40 per cent of which were food and beverages. However, the significant negative trade balance points to a greater need for larger production volumes domestically.
As of 2015, almost 4,000 companies were registered as manufacturers and traders of halal products in Malaysia. The majority of the producers and retailers are domestic, with big brands like Marrybrown leading a sector that includes numerous small-and medium-sized enterprises. However, Malaysia is also a destination for foreign investors in halal agro-processing. Nestlé, for example, produces the biggest range of its halal products in Malaysia and exports them all over the world, despite the fact that it operates over 140 shariah-compliant factories in other countries.