Page 146 - Contributed Paper Session (CPS) - Volume 8

CPS2217 Mohd Harith Faiz Md Saad

Addressing the contribution of foreign
investment to Malaysia’s economy
Mohd Harith Faiz Md Saad
Department of Statistics Malaysia

Abstract
In the era of globalisation and technological progression, multinational
enterprises are engaged globally by establishing their operations abroad to
expand their businesses. This expansion initiated the countries to assess the
contribution of the foreign companies to their economy. Hence, the Manual
on Statistics of International Trade in Services 2010 (MSITS 2010)
recommended the standards to gauge the contribution in the economy
through the Foreign Affiliate’s Statistics (FATS). Conceptually, the Inward FATS
refers to the activity of foreign affiliates’ resident in that controlled by parent
companies outside of the country which owns more than 50 per cent of the
equity. Malaysia developed the first Inward FATS in 2009 which was published
in 2010 for internal circulation. Over the years, the number of foreign affiliates
in Malaysia showed an increasing trend, whereby there were 2,964 inward
affiliates recorded in 2016 compared to 2,742 affiliates in 2010. These affiliates
mainly involved in the manufacturing and services sectors and the highest
numbers of foreign affiliates were from Asia region. The main purpose of this
paper is to present the growing role of the foreign affiliates to Malaysia’s
economy.

Keywords
Inward; Foreign Affiliates

1. Introduction
Inward FATS refer to economic statistics relating to the operation of
foreign affiliates in Malaysia. Operation of foreign affiliates in Malaysia
expanded for the past few years which may also contributed to the economy.
This can be measured by quantifying the companies’ cross-border investment,
either by foreign enterprise investment inside the country or vice versa and
other related information. This phenomenon is closely connected with the
issue of economic globalisation and the displacement of productive resources.
Hence, this paper focuses on the represents of the information on Foreign
Affiliates Statistics in Malaysia (Inward FATS) in 2016. Inward FATS reflect the
performance of foreign-controlled companies in Malaysia which hold more
than 50 per cent of the equity. This statistic measures the commercial presence
of foreign affiliates at Malaysia’s market level based on the International Trade

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