Foreign Direct Investment: Key to Poverty Reduction in Malaysia.
Malaysia’s rapid economic growth has given rise to the realization of distributional objectives for achieving its ultimate goal of national unity. Reducing poverty and income disparities among races, income groups and regions is continuously emphasized by the Government of Malaysia in the country’s series of national development plans. This paper concentrates on the significance of Foreign Direct Investment (FDI) in poverty reduction across the states of Malaysia. In the econometric analysis, a set of panel data covers eight sub-periods over the period 1984-2005. All the 13 states and 3 federal territories of Malaysia are taken into account in the analysis. The FDI-poverty model selected is in the log-linear form and the FDI inflows into the manufacturing sector is the only explanatory variable. The empirical results show that the FDI coefficient has a statistically significant negative sign, suggesting that the poverty incidence could be reduced by increasing FDI inflows into the Malaysian states.
Source: IUP Journal of Applied Economics . Sep2009, Vol. 8 Issue 5/6, p55-64. 10p. 4 Charts. By Karim, Noor Al-Huda Abdul; Ahmad, Shabbir
FOREIGN DIRECT INVESTMENT –
GLOBAL TRENDS AND DEVELOPMENTS
The regulation of foreign direct investment, or FDI, has been in the spotlight for most of 2022 and will likely remain a key issue for dealmakers and cross-border M&A in 2023.
Globally, we continue to see a trend towards greater FDI restrictions. The degree of regulation, however, varies significantly across different jurisdictions.
Navigating the rapidly developing legal and regulatory FDI landscape will remain a challenge for both sellers and buyers. In addition to FDI regimes, dealmakers will have to take into account other customary investment barriers, including merger control and regulated sectors for which specific licenses may be required e.g., defence, insurance, infrastructure, and energy.
It is crucial, at the time of planning a new transaction, to consider the application of any such investment restrictions. Dealmakers and investors will need to focus on early due diligence, careful transaction structuring and pre-emptive engagement with advisers and the government.
With careful transaction management and deal structuring, we believe investors can successfully navigate many of these regulatory and legal challenges. The alternative is the very real risk of having a transaction blocked from closing or, worse, unwound after closing.
GLOBAL OVERVIEW
The global trend towards greater FDI regulation shows no sign of slowing down, as governments continue to balance the contrasting demands of an open, welcoming economy with protectionist policies around public security and national defence interests.
United States – The Committee on Foreign Investment in the United States, or CFIUS, continues to see its jurisdiction expand and its funding increase. The CFIUS 2021 annual report reflected a nearly 40% increase in declaration and notice filings in 2021 from 2020.
Europe – An FDI screening mechanism was adopted in the European Union to ensure cooperation and exchange of information across member states, with 18 jurisdictions now fully operational. However, FDI regulations remain largely a national matter and so requires a country-by-country analysis. The United Kingdom, which is no longer part of the European Union after Brexit, recently implemented a comprehensive set of FDI laws for the UK government to review and intervene in M&A transactions where they raise national security concerns.
Asia – China continues to develop its FDI regime under the PRC Foreign Investment Law, which came into effect on 1 January 2020. Hong Kong remains a popular investment hub and, while the adoption of the Hong Kong National Security Law has raised concerns, its impact at this stage remains political rather than economic. Other jurisdictions in Asia have introduced new licencing regimes and regulatory restrictions in certain sectors. However, certain governments, particularly in Southeast Asia, appear to be prioritising foreign investment and economic growth.
United Arab Emirates – The UAE federal government and the governments of the seven separate Emirates that comprise the UAE (being Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain) have, in recent years, introduced various measures to liberalise their FDI regimes. The current position is that non-UAE nationals may own 100% of a UAE limited liability ‘onshore’ company, but sector-specific FDI restrictions remain in place.
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The Chinese Diaspora, Foreign Investment and Economic Development in China.
The opening of China to the capitalist world after 1979 was done in a spatial sequence designed to mobilize the resources of the overseas Chinese, with the Special Economic Zones located in the key areas of migrant origins. Including the ‘compatriots’ (tongbao) of Hong Kong, Macao and Taiwan, the great majority of foreign direct investment in China has come from the Chinese diaspora. Local development patterns have been strongly affected by the extent, or lack, of emigrant connections. This article examines the impact on local development of the mobilization of resources from the diaspora. Second, it is suggested that a new stage in the relationship is developing, where the capital of the overseas Chinese is becoming less significant, at least in richer areas such as the Pearl River Delta, as the differentials between Chinese inside and outside are changing. Some new patterns of transnational connections seem to be emerging, however, as China strategically endeavors to develop a knowledge-based economy. The effective interactions between overseas Taiwanese in Silicon Valley and the high-tech sector in Taiwan may be seen as a model for similar processes that are emerging between Taiwanese and certain regions of China, particularly in the Shanghai region.
The Psychology of Intelligence Analysis: Drivers of Prediction Accuracy in World Politics.
This article extends psychological methods and concepts into a domain that is as profoundly consequential as it is poorly understood: intelligence analysis. We report findings from a geopolitical forecasting tournament that assessed the accuracy of more than 150,000 forecasts of 743 participants on 199 events occurring over 2 years. Participants were above average in intelligence and political knowledge relative to the general population. Individual differences in performance emerged, and forecasting skills were surprisingly consistent over time. Key predictors were (a) dispositional variables of cognitive ability, political knowledge, and open-mindedness; (b) situational variables of training in probabilistic reasoning and participation in collaborative teams that shared information and discussed rationales (Mellers, Ungar, et al., 2014); and (c) behavioral variables of deliberation time and frequency of belief updating. We developed a profile of the best forecasters; they were better at inductive reasoning, pattern detection, cognitive flexibility, and open-mindedness. They had greater understanding of geopolitics, training in probabilistic reasoning, and opportunities to succeed in cognitively enriched team environments. Last but not least, they viewed forecasting as a skill that required deliberate practice, sustained effort, and constant monitoring of current affairs.
ResearchFDI, Inc. is a specialized market research firm offering customized lead generation and business intelligence services for economic development organizations and regional promotion agencies to identify and capture direct investment opportunities.
How global cities are innovating to leverage foreign investment
Over the past 10 years, Portland, Ore. has seen its foreign direct investment (FDI) pipeline grow from 5% of the total share of regional investment to 30%. A deliberate effort by Greater Portland Inc., the regional public-private economic development organization (EDO) of Portland, led this progress through the integration of FDI strategy into mainstream economic development. In Portland, foreign business recruitment connects to all other aspects of the regional strategy, from global marketing programs, to industry growth, to talent attraction.
This represents an increasing trend in which regional EDOs proactively seek FDI and make it an integral part of their mission. EDO leaders invest the time, expertise, and resources required to recruit foreign businesses because they acknowledge the innate advantages of attracting foreign-owned firms. Foreign investment contributes to—and in some case drives—economic, innovation, and exports growth by infusing knowledge, technology, and global supply chain connections into local communities. Foreign activity can also catalyze additional foreign investments by signaling the region’s attractiveness globally.
Eight years into the Global Cities Initiative, many EDOs have developed plans to mainstream FDI into broader economic development strategy. As we explain in this brief, EDOs have gained a more sophisticated approach to FDI. They are now better connecting their international outreach strategy in service of local priority sectors. They intentionally target foreign markets. And they acknowledge the importance of mergers and acquisitions (M&A) and the fundamental connections between FDI and exports. FDI365 was launched in response to our clients’ requests for target list development. The platform was developed by combining the newest technologies, human curated business intelligence, online analytics and proprietary research methodologies to deliver an elite platform packed with insight. Predictive company indicators enables us to identify the best possible prospects that match your desired criteria. Each company profile is custom-made which in turn guarantees unrivaled data accuracy, quality and reliability.
Useful links
MIDA – Foreign Direct Investment (FDI) Promotion Programmes
MIDA – Approved Private Investments in Various Economic Sectors, 2022 / 2021
FDI and uncertainty: the Malaysian case
FDI in Malaysia up RM24.1b to RM836.2b in 2Q22
Equity Policy | Malaysian Investment Development Authority
What is Team Intelligence and How to Manage It.