China is leading manufacturing investments in Malaysia

JOHOR BAHRU: China has moved to become the biggest investor in Malaysia for the manufacturing sector.

Johor State Tourism and Consumerism Committee chairman Datuk Tee Siew Kiong said China has risen from number ten to number five in terms of the biggest foreign investor in the country for the investments in the manufacturing sector.

In 2016, seven major investments, valued at RM685 million have been made by Chinese Forbes 500 property development company – Country Garden – in building Forest City Johor.

Country Garden Pacificview (CGPV) President, Dr. Yu Runze said in 2015, they made only two investments valued at RM28 million.

“But the year after that, seven major investments followed,” he said.

This is because the developments are happening at a rapid pace at Forest City.

This is not an isolated case.

In June this year, DRB-Hicom struck a deal with Zhejiang Geely Holding Group to sell the former’s 49.9% stake in Proton Holdings Berhad. The deal is worth some RM460 million.

That deal is expected to boost the local manufacturing vendors substantially.

READ: Proton-Geely partnership gives local vendors opportunity to penetrate global market

Tee said official figures from the Malaysian Investment Development Authority (MIDA) show that investments from China in the construction sector grew exponentially year-on-year to 2,300% for 2015 to 2016.

These exponential growth figures does not seem to be abated by global economic trends, as the projections for Chinese investments into the country for the next few years is looking very favorably as well.

Market analysts interviewed on Astro AWANI‘s Markets Today show, said that Malaysia will continue to draw investments from China.

But these analysts cautioned Malaysians to be wary of such deals as this could make the economy of Malaysia “decouple” with major markets in the world, hence creating a “single market risk” to Malaysia.

Single market risk is a scenario loosely described by economists to reflect how any particular market is beholden to the economic-destiny of the other market that it is trading extensively with.

In this instance, analysts argue that Malaysia’s economic fate could very much depend, and is highly correlated to, the economic direction of the Chinese market.

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