2. Malaysia: taking stock of our FDI.

Before I proceed from my last posting, it's worth examining our current sources of foreign direct investment. Although our economic path prior to the Asian financial crisis has relied heavily on industrial exports (e.g., microchips, computer hard disks, foreign investment in manufacturing plants) and petrol-chemical products (e.g., Petronas), the rise of China and India in exports and competitive labour markets in global economy has somewhat shifted our economic focus to other industries such as tourism (e.g., Visit Malaysia Year campaign), real estates especially post September 11 in attracting Middle East investors, Islamic Banking hub, financial services through re-structuring and gradual deregulation of the financial industry and corporate governance and export of higher education by granting colleges to convert their status to become a university. The government of Malaysia has been actively seeking investors to promote the above industry sectors as a way of increasing and improving FDI. But these sectors are very competitive. Importantly, the shift from attracting foreign manufacturers to more service-based resources of the country is inevitable - not because of China or India but mainly due to our country lack (1) skilled labour, technical know-how, (2) domestic demand, and (3) added value services such as strategic location of airport or seaport. These will be addressed in later discussion.
Not to mention, domestic economy has also played a part in sustaining the economy mainly through demand in properties, national cars and domestic goods and services. For example, property prices have appreciated steadily over recent years except in 2005, where there is indication that the property market is over-supplied. Coupled with this, the interest rates are not as low as in the early 2000s and there has been high inflationary pressure of oil prices.
Thus, our major sources of FDI consists of a mixture of industrial exports (manufacturing-based), tourism and other resources noted above.