PETALING JAYA: A total of 3,056 foreign affiliates operating in Malaysia contributed a value added of RM316.8 billion in 2022, making up 17.7% of the country’s economy.
The Department of Statistics Malaysia said in its Statistics of Foreign Owned Establishment (Inward FATS) and Statistics on Malaysian Affiliates Abroad (Outward FATS) 2022 that Malaysian enterprises registered a turnover of RM341 billion from 2,360 affiliates abroad.
Explaining the concepts, Chief Statistician of Malaysia Datuk Seri Dr Mohd Uzir Mahidin said, “Foreign affiliates refer to enterprises with more than 50% equity owned by a single foreign investor. Inward FATS provides insights into the performance of foreign affiliates in Malaysia, highlighting their contributions to the country’s economy in terms of value added, trade and employment by economic activity. Meanwhile, Outward FATS helps to understand the footprint of Malaysia’s enterprises in foreign economies, emphasising their global reach through turnover, number of affiliates and employment by economic activity.”
Basically, he added, these statistics differ from foreign direct investment and direct investment abroad. Direct investments capture investment flows, stocks and income, while FATS focuses on data related to the operations of enterprises.
Signalling Malaysia’s thriving economy, the number of foreign affiliates in the country increased by 2.3% to 3,056 affiliates in 2022. These affiliates generated RM316.8 billion in value added, reflecting a 15.5% increase compared to RM274.3 billion in the preceding year. Additionally, the number of employees engaged in foreign affiliates expanded by 4.4% on an annual basis to 923,415 persons. The rise in employment signals growing job opportunities from foreign investment. In turn, the compensation of employees in these affiliates also showed a healthy boost, accelerating from RM51.9 billion to RM56.4 billion in 2022.
Looking at the performance of Inward FATS by economic activities, Mohd Uzir noted that the manufacturing sector remained as the main contributor with a value added of RM157.8 billion, making up the highest share of 49.8% in 2022 (2021: 48.6%).
“This sector employed 690,933 persons and paid out RM37.8 billion in compensation, with significant portion coming from electrical & electronic and optical products sub-sector. The second highest value added was recorded by mining & quarrying sector at RM81.8 billion or 25.8% shares, surpassing the services sector (RM73.4 billion) . Nevertheless, the services sector recorded the second highest number of employees at 188,501 workers with a paid compensation of employees RM14.5 billion.”
Furthermore, the trade performance of foreign affiliates showed favourable growth in 2022. Exports from these affiliates expanded by 33.8%, while imports grew by 27.3%. Exports and imports of Inward FATS contributed 36 and 32.3% of Malaysia’s trade in goods and services, respectively.
Investors from Asia registered the highest number of foreign-controlled enterprises in Malaysia, made up 63.7% of the total affiliates.
Mohd Uzir highlighted the impressive growth of Malaysian-controlled affiliates abroad, which continued their upward trajectory. The number of Malaysian affiliates abroad rose by 1.4% from 2,328 to 2,360 in 2022, marking a steady expansion. Malaysian affiliates abroad recorded a 2.1% year-on-year increase in turnover, reaching RM341 billion. The number of employees increased from 412,295 in 2021 to 417,012. The growth contributed to a 4.6% surge in total compensation of employees, amounting to RM25.1 billion compared to the previous year.
As for sectoral distribution, Mohd Uzir said, “In 2022, the services sector continued to dominate Malaysia’s Outward FATS, contributing, 67.8% to the annual turnover with RM231.6 billion. It was followed by the sector of manufacturing (RM58.3 billion), mining and quarrying (RM29.3 billion), agriculture (RM15.9 billion) and construction (RM5.9 billion).”
The regional breakdown showed that Asia generated the highest turnover with a value of RM201.1 billion, nearly 60% of the overall turnover. Malaysian affiliates operating in Indonesia (RM48.6 billion), Singapore (RM48.1 billion) and United Kingdom (RM43.8 billion) played major roles in boosting Malaysia’s global trade success.
