By Nurunnasihah Ahmad Rashid
KUALA LUMPUR, June 24 (Bernama) -- Malaysia’s ability to attract strong foreign direct investment (FDI) while domestic companies continue expanding overseas underscores the country’s growing economic strength, competitiveness and investor confidence in the country’s long-term prospects, economists said.
The Department of Statistics Malaysia (DOSM) today reported that net FDI rose 41.2 per cent to RM65.9 billion in 2025 from RM46.7 billion a year earlier, while Malaysia’s direct investment abroad (DIA) recorded net outflows of RM12.4 billion, moderating from RM35.5 billion in 2024.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the latest investment data points to a healthy external position, supported by both foreign capital inflows and Malaysian companies’ continued expansion into international markets.
“It shows that Malaysia’s balance of payments remains healthy,” he told Bernama.
Mohd Afzanizam said the country’s current account recorded a surplus of RM32.8 billion, reflecting continued growth in international trade activities and investment income.
At the same time, the financial account, which includes FDI activities, also registered a surplus balance, indicating that foreign interest in the Malaysian real economy is also positive, he added.
He said Malaysian companies investing abroad demonstrate the growing scale and competitiveness of domestic firms, indicating that local companies have achieved the scalability needed to penetrate international markets.
“For instance, companies (that have expanded internationally) across sectors include oil & gas, banking, plantation, healthcare, power, leisure, telecommunications, airports, and construction and infrastructure,” he said.
Meanwhile, CGS International Securities Sdn Bhd research department, head economist, Ahmad Nazmi Idrus said the strong FDI performance was largely driven by investments linked to artificial intelligence (AI), particularly data centres and the electrical and electronics (E&E) industry.
He said while part of the current investment momentum is linked to the global AI investment cycle, the inflows also reflect Malaysia’s improving economic fundamentals.
“We must admit that much of this FDI has been driven by the cyclical surge in AI-related investments. But these investments would not have come in the first place if not for the government’s efforts to strengthen the country’s economic fundamentals.
“For instance, the data centre boom is the result of investor-friendly policies, investments in energy infrastructure and availability, and perhaps attractive cost advantage,” he said, adding that the net FDI in 2025 was Malaysia’s second highest on record, behind only the post-covid boom of 2022 when it reached RM75 billion.
He added that Malaysia is moving towards higher value-added segments within the E&E industry to build specialised skills and capabilities that are less exposed to cyclical fluctuations.
On the broader impact of data centre investments, Ahmad Nazmi said the sector has the potential to create new industries that further diversify Malaysia's economy.
“I think the government has done a lot to encourage spillover effects into local economy including promoting local participation and developing domestic talent.
“But the impact of data centres is much greater -- they create a whole set of new industries for Malaysia, further diversifying the economy,” he said.
DOSM said within the services sector, the information and communication sub-sector accounted for 53.6 per cent of total services FDI inflows in 2025, reflecting the global shift towards digitalisation and expansion of data centre infrastructure.
The department also reported that Malaysia’s cumulative FDI position expanded to RM1.087 trillion at end-2025, while the total DIA position stood at RM589.3 billion.
-- BERNAMA
