Foreign Direct Investment Assignment Help Pattern of Foreign Direct investment in Malaysia
Malaysia is a developing country in the world. FDI is an important source of economic growth in the country that helps the country in bringing capital investment, technology and management knowledge for the growth. In the recent years, Malaysia is receiving a lot FDI. It is identified that from 1970, FDI stock in Malaysia starts to grow up slowly. During the years of 1970s to 1990s, the FDI in Malaysia grows from $94 billion to $2.6 billion by 1990s. Due to the reduction in investments, in 1993, FDI rate dropped drastically that impact on the country. As per case study research assignment help experts, The main reason behind this condition was increase in wage rates in Malaysia relative to the other Asian countries such as China, Vietnam and Indonesia. But in 1996, country has achieved its highest FDI investment and achieved $7.3 billion dollar (Mun, Lin & Man, 2008). The changes in the FDI rates influence the country and reduce the investment in the country. It is identified that financial crisis in 1997 affected most of the Southeast Asia that also impacted on Malaysia and its FDI. Economic crisis reduced the FDI rate in the country that influences the economic sector in negative way of Malaysia. From the year of 2000, Malaysia is an attractive country for the investors to invest money because country has stable political environment, increased per capita income and potential for regional integration throughout the association of South East Asian Nations (ASEAN) (Mun, Lin & Man, 2008). In recent years, the pattern of FDI also changed in the country because in the country few vital clues attracts the investors that include political stability, economic stability, lower wages and easy accessibility of raw material, special rights and person safety. In 2003-07, the FDI flows in Malaysia were on top. Countries such as US, Japan and Singapore invest most of the money (50%) in the country in the manufacturing sector. Apart from this, around 16% of FDI came from financial intermediation sector and another 15% FDI came from the mining sector (Mun, Lin & Man, 2008).
Intervene by Government There are various ways that a government uses to ensure that the foreign direct investment is the best interest of its country. A government may intervene in FDI flows in order to achieve more resources and national benefits. Through this, country can increase the access of technology and employee management skills and employment. The government of Malaysia can ensure that the FDI is the best interest of the country through implementing rules and regulations, policies and laws. The rules and regulations can also helpful for the government to determine the inflow of FDI in the country and can also be helpful in identify the influence sectors from the FDI (Jomo, 2007). Through this, the government of Malaysia can control the FDI inflows in the country in significant way. Country should also control balance of payments and maintain it on favorable level. It is because in the country FDI inflows are recorded as an inclusion to the balance of payments. If the country gets increased level of balance of payment, the FDI inflows also increased (Shin, 2007). This can help the government to ensure that FDI is the best interest of the country.
Policy Instruments by Government In order to promote foreign direct investment, the government of Malaysia should use government agencies at the national and international levels. Governmental promotional agencies can help the government to educate foreign investors about the advantage of location as well as to introduce administrative procedures and provide detailed information about the costs and risks to the foreign investors. The government of Malaysia should also use policies such as subsidies and tax breaks in order to promote foreign direct investment in the country (Al-Khalifa, 2010). Country should also use some monitory policies in order to attract global investors and promote FDI in the market. In this, the government of Malaysia should develop free trade agreement with the other countries of the world. This can help the country to attract foreign investors for the investment in the country. The government of Malaysia should also include liberalization and deregulation of foreign direct investment (Handa & Kahsay, 2011). This can support country to attract foreign investors and promote FDI in the country. It is identified that Malaysia did not significantly change its policies towards foreign ownership in the same manner, as other countries such as Thailand, Indonesia and South Korea. In order to promote and attract foreign direct investment in the country, Malaysia should implement some liberalization policies in the different sectors such as finance, manufacturing etc. This can also helpful for the government of Malaysia to improve the different sectors in significant way and enhance the effectiveness of different sectors by providing FDI. In the promotion of FDI, the government should also implement effective industrial policies that include administrative procedures and rules of ownership. In order to attract and promote foreign direct investment, government should make easy administrative policies and rules (Jomo, 2007). Currently, country has complex registration procedures and lack of institutional capacity in host country that lead to additional charges and expenses to foreign investors. It also sends a wrong signal to the potential investors. For this, country should have to reduce some administrative procedures that can support foreign investors to create invest in the country (Dufey, Gran & Ward, 2008).
Regional Integration of FDI in Malaysia In Malaysia, FDI is already a part of regional integration. The ASEAN rules and regulations on FDI help the government of Malaysia to create effective regional integration of FDI in the country. This regional integration supports the government of Malaysia to make country as more attractive investment location for the foreign investors. The regional integration of FDI in Malaysia also provides the benefits in terms of large market. Through the regional integration, the government is able to provide facilities and investment opportunities for the firms that support them to grow larger and stronger in the markets (Plummer & Chia, 2009). Regional integration of FDI also motivates the firm in Malaysia to create effective strategic alliances and mergers with the competitors in order to create and manage the more competitive environment. The regional integration of FDI also provides benefits to the firms in order to invest more in R&D and marketing activities. On the other hand, FDI as a part of regional integration, it also creates some disadvantage for the country in terms of competitive disadvantages. It is identified that due to the ASEAN membership, Malaysia is enable to implement FDI with deeper regional integration that impacts on the firms and the flow of FDI in the country (Lynn, 2010). References Al-Khalifa, L. A. (2010). Foreign Direct Investment in Bahrain. USA: Universal-Publishers. Dufey, A., Gran, M. G. & Ward, H. (2008). Responsible Enterprise, Foreign Direct Investment and Investment Promotion: Key Issues in Attracting Investment for Sustainable Development. USA: IIED. Handa, J. & Kahsay, S. G. (2011). Studies in East Asian Economies: Capital Flows, Exchange Rates and Monetary Policy. USA: World Scientific. Jomo, K. S. (2007). Malaysian Industrial Policy. Singapore: NUS Press. Lynn, D. J. (2010). Emerging Market Real Estate Investment: Investing in China, India, and Brazil. USA: John Wiley & Sons. Mun, H. W., Lin, T. K. & Man, Y. K. (2008). FDI and Economic Growth Relationship: An Empirical Study on Malaysia. International Business Research, 1 (2), pp. 11-18. Plummer, M. G. & Chia, S. Y. (2009). Realizing the ASEAN Economic Community: A Comprehensive Assessment. Singapore: Institute of Southeast Asian Studies. Shin, J. S. (2007). Global Challenges and Local Responses: The East Asian Experience. USA: Psychology Press. We ensure you that your business assignment help content would be authentic, original and according the assignment guidelines. So, hurry up and please e-mail us your any topic assignment help at firstname.lastname@example.org