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Note: Increasingly more Malaysian companies are setting their eyes on Singapore as an investment destination, either by spending on projects there or shifting their company listing to the island republic.
THERE SEEMS TO HAVE BEEN A swing in the balance of investment flow between Malaysia and Singapore lately. The last three years have seen a marked increase in outbound investment by Malaysian companies to the island republic.
In 2006, foreign direct investment (FDI) from Malaysia to Singapore surged 21.6% to RM4,625 million from RM3,805 million in 2005. Conversely, FDI from Singapore to Malaysia declined by 23.8% to RM3,015 million, from RM3,958 million in 2005. This means a net outflow to Singapore.
Still, last year saw a huge jump in FDI both ways. Investment from Singapore totalled a whooping RM7,756 million in the first three quarters compared to RM2,418 million in the previous corresponding period. Nonetheless, investment from Malaysia into Singapore was higher, totalling RM10,050 million over the same period.
Bilateral trade and investment between Malaysia and Singapore has always been strong due to the historical and cultural ties between the two nations. With Singapore's strong currency, coupled with Malaysia's lower costs of land, labour and energy, inbound investment had traditionally exceeded outbound flow, with the island nation ranking among the top three investing countries into Malaysia.
However, Malaysia is probably falling behind in the pecking order as a destination for Singapore investments, notes HwangDBS Investment Management Bhd's chief investment officer David Ng. `Countries such as China and Vietnam would be favourites now due to their lower costs, larger domestic markets, and possibly more progressive policies,' he says.
That Malaysian companies are increasing their investments into Singapore can be seen by some of the big corporations making their way to the island republic to tap its tourism and property sectors.
Among the most notable is Genting Bhd's heavy investment in developing Singapore's second casino resort. Its Singapore-listed Genting International Plc recently said it would invest S$200 million to buy more shares in the project, raising its investment to S$1.1 billion.
Earlier, the group said it would raise its budget for the project to S$5.75 billion from S$5.2 billion as it adds more attractions and because costs had increased.
IOI Properties Bhd and its Singapore partner...