PUTRAJAYA, Malaysia, April 19 (Reuters) - Malaysia announced $3.7 billion in investments on Tuesday, hoping to jumpstart foreign interest in its economy even as other Asian countries try to stem speculative inflows in search of higher-yielding markets.
Prime Minister Najib Razak unveiled 12 small and mid-sized electronics, oil and gas and infrastructure projects as part of a target to attract $444 billion of investments to become a developed economy by 2020.
The investments include $159 million in spending by Infineon Technologies (IFXGn.DE) to upgrade as production plant, a $165 million commitment from Asia Media to develop digital media infrastructure and the creation of a state-owned energy development agency to draw $106 million of investments this year.
“Today’s announcement shows the continued interest of investors in the Economic Transformation Programme,” Najib told reporters in the administrative capital, referring to the 10-year investment plan.
“The government aims to place the private sector as an engine of growth.”
Malaysia’s investment drive had earlier drawn about $5 billion in commitments from oil giants Exxon Mobil and Royal Dutch Shell Plc (RDSa.L) but most other projects have been more modest. [ID:nSGE69O0B4]
In contrast to its neighbours Thailand, Indonesia and the Philippines, which have been taking steps to stem hot money inflows, Malaysia is trying to attract more investors. [ID:nN15290614]
Najib has set a goal of transforming the Southeast Asian country into a high-income economy within 10 years by generating new growth areas and restructuring the economy to lure investors.
But analysts say a slew of past investment blueprints, including a $105 billion plan to develop the southern Johore state, has yielded limited results.
The Malaysian economy has been stuck in second gear as it lacks the skilled workforce to become a financial services hub but has outgrown its niche as a low-end manufacturing centre with the rise of cheaper competitors such as Vietnam.
“For investors hoping for substantive reform, with these announcements it’s clear that nothing is taking off yet,” said Ibrahim Suffian, director at the independent opinion polling firm Merdeka Center.
“But this helps to sustain Najib’s popularity among the public because it shows he is at least doing something about the economy.”
Foreign ownership of stocks on Malaysia’s exchange stood at just 21.2 percent of market capitalisation in September, versus 26.2 percent in 2007. Portfolio investment was at 3.5 billion ringgit in the fourth quarter compared with 16.3 billion ringgit in the third quarter.
Over the years, Malaysia has partially opened its financial sector to more competition but investors want the government to take more aggressive steps to reduce its fiscal deficit and overhaul an affirmative action policy they say hinders competition. (Editing by Liau Y-Sing)