International investors are questioning Malaysia’s regional economic competitiveness as they begin to evaluate potential post-crisis investment opportunities in the Asian region. Global economists have cited political instability, uncertainty in the constitutional application of Sharia law, and the lack of more concrete plans to develop local infrastructure as some of the key structural and institutional problems that might mar the country’s ability to attract and retain capital.
Investment in Malaysia has been falling by almost 11 per cent year-on-year for the past two quarters and the country’s political volatility seems to be harming businesses and deterring future investment opportunities.
Malaysia’s recovery will be slower than that of Singapore due to its greater reliance on foreign demand for commodities. The latter had already seen a recovery in the past month.
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