Malaysia and Vietnam have witnessed exponential FDI growth in 2022. Has their success come at China's expense?
Malaysia has traditionally struggled to compete with its Asian counterparts when it comes to attracting foreign investment. More established foreign direct investment (FDI) hubs such as China, Singapore, Japan and South Korea attracted the bulk of investment while the likes of Malaysia struggled to attract the attention of expanding businesses.
FDI into Malaysia had been decreasing since 2019, when the country registered 153 projects. This went down to 125 in 2020 and then to 117 in 2021. The country ranked seventh for FDI into Asia-Pacific in 2021, according to our FDI Projects Database, although despite project numbers declining in this time, capital investment increased. Capital investment into Malaysia from FDI activity in 2021 surpassed 2019 levels by 48.7% to reach $11.6bn. (RM51.82bn).
Big businesses bring FDI to Malaysia in 2022
Although winning fewer greenfield FDI projects in 2021 than it had in 2019 and 2020, Malaysia did manage to attract several high-profile investments. Electronics was the leading sector for FDI into Malaysia in 2021, with project numbers rising from 16 in 2020 to 23. The electronics industry was also behind the country’s largest investments in terms of capital expenditure.
Vietnam's FDI success story
Vietnam has witnessed exponential growth in inward FDI over the past three decades, with flows rising from $180,000 (VND4.47bn) in 1990 to $15.7bn in 2021, according to figures from UN Conference on Trade and Investment.
Today, Vietnam is considered to be one of most open economies within Asia-Pacific, thanks to a series of economic reforms undertaken by the country's government to create a fair and attractive business environment for foreign investors. Vietnam ranked sixth for inbound FDI in 2021 within Asia-Pacific, recording 139 FDI projects, which put the country ahead of ahead of Thailand, Malaysia and South Korea. However, Vietnam had still experienced a slump in FDI project numbers in recent years. In 2019, Vietnam attracted an impressive 302 projects, which declined to 160 in 2020 during the Covid-19 pandemic, and then only 139 projects in 2021.