NUR KHALILAH BTE ABD RAHMAN 0933139 DIB 6 MALAYSIAN ECONOMY DMEG 6103 MDM NURZA BT MOHAMED YUSOFF

There are many factors influencing Foreign Direct Investment (FDI) to come to Malaysia. Five of them are advantageous government policy, transport factors, priority on education, availability of labour and market situation.

The first factor that influences FDI to come to Malaysia is advantageous government policy. The government of Malaysia provides very attractive policies to attract FDI to Malaysia. Amongst the attractive policies are the tax incentives from the government of Malaysia to the foreign investors. Investors that set up FDI in Malaysia are relieved from some tax duties. Therefore, this attracts investors of FDI as it would reduce their costs and increase their profit. Secondly, FDIs come to Malaysia because of transport facilities. Malaysia has an extensive and good transport facilities. It has well-managed and big airports, well-maintained roads, cargo train services and other transport facilities. This would ease investors transport of goods to and from Malaysia. It gives the confidence to the investors that their goods and services would be handled properly and at the most efficient time. In economics, time is money. The faster it takes to produce and ship the goods the more money the investors would save. Thirdly, Malaysias priority on education attracts FDIs. This is because when a country prioritizes on education, its citizen would be more educated and this gives confidence to foreign investors to invest in Malaysia. Furthermore a country with educated citizens would normally have a smaller crime rate. This is because they would be more aware of what is right and wrong. Also they would be able to get incomes that does not cause them desperation and resolve to crimes. Therefore, investors would see Malaysia as a country that is working hard to improve the conditions of its people and provide better living condition for its people. Fourthly, foreign investors come to Malaysia because of the availability of labour. Malaysia has moved forward in its economic sectors. It has moved from mainly primary to secondary and tertiary sector. Therefore Malaysia is equipped with skilled labours to help grow the FDIs of the foreign investors. Therfore, FDIs come to Malaysia to get access to the many skilled labours available in here. Lastly, FDIs are set up in Malaysia because of the market situation. Malaysia is a country that is multi-racial and religion. It has a population of around 28 million people. Foreign investors see this as a market for their goods and services. Also as Malaysias Gross Domestic Product (GDP) and Household Income increases every year. This indicates that Malaysians are now more

capable of spending in more areas of goods and services. They have disposable income and want to spend it. Therefore, FDIs see Malaysia as a growing market for their goods and services.