APRIL 27 ― China's commitment to invest a record RM170 billion in Malaysia is set to provide a massive boost to our economy for years to come. The investment follows 19 memoranda of understanding signed between businesses in China and Malaysia, including in infrastructure, renewable energy, telecommunications, and tourism. These MoUs with Chinese companies represent the largest single investment commitment between Malaysia and China to date.
If the RM170 billion agreement materialises, the positive impact on our Gross Domestic Product is massive, with approximately 11.2 per cent of 2022 GDP. At the same time, the high correlation between Foreign Direct Investment and GDP growth rate at 0.95 indicates that the potential FDI could fuel our GDP growth moving onwards. While Malaysia's GDP growth for 2023 is predicted to decelerate to 4.
Moreover, China's investment is expected to attract more foreign direct investment into Malaysia. New infrastructure projects, including the expansion of ports, airports, and highways, are expected to attract businesses from across Asia and beyond. By providing the infrastructure needed to support these businesses, Malaysia could become a hub for international investment in the region.
To take full advantage of China's investment, Malaysian policymakers should proactively focus on improving the country's investment climate, promoting innovation, and enhancing human capital. This includes developing regulatory frameworks that promote transparency and accountability, improving infrastructure, and attracting high-quality talent.