Frost & Sullivan: Mideast will be major FDI source

MALAYSIA will see a 10 to 15 per cent growth in foreign direct investment (FDI) this year, according to global growth consulting company Frost & Sullivan.

Its South Pacific partner and managing director, Manoj Menon, said the FDI will spill into sectors like services, manufacturing, real estate, property, and retail.

"We believe this year Malaysia will see growth in investment and it may come from the Asian region and the Middle East," Menon said at a media briefing in Kuala Lumpur yesterday.

"The Middle East is looking aggressively at the Malaysian market. So, for the Iskandar Development Region, we see collaborations increasing substantially," he said.

Menon said the top three FDI contributors are expected to be the Middle East, China and India.

"The overall outlook for 2008 is that investors are going to be a little bit cautious in making investments. Still, the FDI from Asia will grow in terms of value," he said.

Frost & Sullivan's director of chemicals, materials and food, Asia Pacific, Kumaraguru Veerasamy, said crude palm oil (CPO) prices are expected to soften to RM2,800 per tonne this year.

"We estimate that it should taper off at about RM2,800," he said.

"Malaysia exports 80 per cent of palm oil while the balance is for the local consumption, so I'm quite perplexed to understand why there is a shortage," he added.

According to Veerasamy, bioethanol is seen as the next market trend as in the case of biodiesel last year due to high feedstock prices.

Bioethanol is used as a petrol substitute and is mainly produced by the sugar fermentation process although it can also be manufactured by the chemical process of reacting ethylene with steam, he said.

Frost & Sullivan's Asia Pacific head of automotive and transportation practice, Kavan Mukhtyar, said the Malaysian automotive industry is expected to grow seven per cent this year.

"We believe that replacement car buyers, a lot of interesting new models and the fairly positive economic outlook for 2008 are among the factors driving sales," he said.

According to Frost & Sullivan, the healthcare market in Asia Pacific will grow to US$236.5 billion (RM766.26 billion) this year, a compound annual growth rate of 10 per cent, from US$214.8 billion (RM696 billion) last year.

By Bernama