determinant of foreign direct investment in the malaysian manufacturing sector

8/6/2019 Determinant of Foreign Direct Investment in the Malaysian Manufacturing Sector

1/9

PertanikaJ. Soc. Sci. & Hum. 2(1): 53-61 (1994) ISSN: 0128-7702 Universiti Pertanian Malaysia Press

Determinants of Foreign Direct Investment in theMalaysian Manufacturing Sector

ZULKARNAINYUSOP and ROSLAN A. GHAFFARFaculty of Economics and Management

Universiti Pertanian Malaysia,43400 UPM Serdang, Se1angor Daml Ehsan, Malaysia.

Keywords: Foreign Direct Investment (FDI), manufacturing, determinantsABSTRAK

Pelaburan langsung asing (PIA) telah memainkan perananyang penting daIam perkembangan sektor perkilangandi Malaysia. Malangnya, corak PIA tersebut adalah tertumpu kepada beberapa industri tertentu seperti baranganeletronik dan tekstil yang kurang melibatkan tenaga buruh yang mahir, kurang intensif teknologi dan sangatbergantung kepada input yang diimport. Hal ini telah mengakibatkan beberapa masalah seperti asas industriperkilangan yang sempit, mudah dipengaruhi oleh pergolakan (ekonomi) luar negara serta nilai tambah yangrendah. Oleh yang demikian, adalah perlu untukmemperluaskan asas industri perkilangan danjugamenggaIakkanlagi perkembanganindustri yang berasaskan sumber (tempatan). Kajian ini melihat beberapafaktor (kuantitatif)yang mempengaruhi PIA di sektor perkilangan Malaysia. Keputusan kajian menunjukkan bahawa keadaanekonomi negara, kestabilan matawang, kemudahan kewangan tempatan, kemudahan infrastruktur, kemudahantenaga bumh serta insentif pelaburan adalah di an tara faktor-faktor yang mempengaruhi PIA di dalam sektorperkilangan di Malaysia.

ABSTRACTForeign direct investment (FDI) has played a significant role in the development of the Malaysian manufacturing sector. Unfortunately, the pattern of FDI is unevenly concentrated in a few industries such aselectrical and textile which involve less skilled labour, less intensive technology and are highly dependenton imported inputs. This has led to the problems associatedwith a narrow manufacturing base, vulnerabilityto external fluctuations as well as low value added. I t is therefore necessary to promote a broader manufacturing base and to further encourageFDl in resource-based industries. This study attempts to look at severalquantitative factors that in fluence FDI in the Malaysian manufacturing sector. The results of the studyindicate that a nat ion' s economic heal th , currency stability, access to local financing, availability ofadequate human and physical infrastructures as well as investment incentives a re among the impor tantfactors influencing FDI in the manufacturing sector of Malaysia.

INTRODUCTIONForeign direct investment (FDI) has played a substantial role in th e d ev elo pm en t of Malaysianmanufacturing indus tr ie s. Many of the multinational corporations (MNCs) which are involvedin d ir ec t investment in the Malaysian manufacturing sector have brought with them technologica l knowhow and business experiences that havecontributed to t he developmen t of the manufacturing sector and the economy as a whole (Fong1988 and Beaumont 1990). In addition, MNCshave also been cred it ed fo r enhancing the com-

petitiveness of the Malaysian manufacturing exports in th e world market by improving productqualities (Yusof, 1990).The government on its part ha s been encoura gi ng p ri va te sector inves tment (especiallyFDI)more actively since th e mid-eighties whenthe country was experiencing one of its worstrecessions. The Investment Act was introduced in1986 to further stimulate investment activities invarious manufacturing industries. This has generated positive r esul ts with more foreign investors com ing into the country. The share of


2/9

Zulkamain Yusop and Roslan A. Ghaffar

TABLE 2Malaysia: employment by industry asat December, 1991

The uneven pattern ofFDI across the manu-factUring industries has resulted in a narrowmanufactUring base. At present, manufacturing activities are highly concentrated in the electrical andtextile industries. The narrowmanufactUring baseappears to be at odds with the country's diversification policy originated in the 1960's. The narrow manufacturing base also has several negativeimplications in terms of the structure of employment, export and value added. The employmentpattern in the manufacturing sector is concen-trated in the electrical and textile industries. Asat December, 1991, th e electrical industry provided the highest level of employment (22.7% ofth e total employment in the manufacturing) followed by the textile industry, 15.2% (Table 2). Int erms o f exports, electrical products (electronic,electrical appliances and machinery) have accounted for the majority of the share of th e export ofmanufactures. In 1992, the share of electrical products in the total manufactured exportswas 57.5% (Table 3).

foreign proposed capital investment in the approvedmanufacturingprojects has increased from19% in 1984 to 64% in 1992 of the total proposedcapital investment. The trend in FDI (in terms ofproposed capital investment) in Malaysianmanu-facturing indicates a sharp increase during the1984-90 period (Table 1) .

TABLE 1Proposed capital investment in approvedmanufacturing projects in Malaysia(RM Million)Year Local Foreign Total1984 3083.1 718.0 3801.1(81 %)* (19%) (100%)1985 4727.6 959.3 5686.9(83%) (17%) (100%)1986 3475.3 1687.9 5163.2(67%) (33%) (100%)1987 1873.9 2060.0 3933.9(48%) (52%) (100%)1988 4215.9 4878.0 9093.9(46%) (54%) (100%)1989 3562.7 8652.7 12215.4(29%) (71 %) (100%)1990 10539.0 17629.1 28168.1(37%) (63%) (100%)1991 13763.1 17055.3 30818.4(45%) (55%) (100%)1992 10003.0 17772.1 27775.1(36%) (64%) (100%)1984-92 55243.6 71412.3 126656.0(43.6%) (56.4%) (100%)Source: MlDA, 1993'Percentage (rounded to the nearest digit)

Despite the overall increase in FDI, foreignparticipation (in terms of capital) across themanufacturing industries continues to be uneven.Some of the industries are over invested whileothers appear to be overlooked by foreign investors. For example, as at December 1988, in theelectrical industry, foreign share constituted 81 %of the industry's total fixed asset, while for thebeverages and tobacco; rubber products; and textile industries, the foreign shares were 70, 56and 53% respectively. In contrast, foreign sharein the total fixed asset for the wood and woodproducts; plastic; and chemical industries repre-sented only 14.6%, 17.8% and 21 % respectivelyof the industry's total fixed asset (MIDA 1990).

Industry (SITe)Food, Beverages& Tobacco (311-313)Textiles, Clothing& Footwear (321-323)Wood Products (331)Rubber Products (355)Chemicals & PetroleumProducts (351-353)Non-MetalicMineral Products (369)Metal Products (371)Electrical & ElectronicMachinery & Appliances (383)Transport Equipment (384)OtherManufacturesTotal

Source: MIDA, 1993

Employment(%)63,741(9.2%)92,273(13.3%)56,694(8.2%)43,231(6.2%)21,986(3.2%)26,310(3.8%)39,678(5.7%)211,046(30.5%)26,098(3.8%)111,22.1j

(16.1 %)692,282(100.0%)

54 PertanikaJ. Soc. Sci. & Hum. Vol. 2 No.1 1994


3/9

ti'">TABLE 3 aMalaysia: export of manufactured goods (RM millions) S'po:;1970 1980 1985 1989 1990 1991 1992 1;10.."Total (100) 612 (100) 6101 (100) 12111 (100) 36567 (100) 46833 (100) 61427 (100) 38443 >rj"0 0'" ...,..., '"; Food, Beverages (18.3) 112 (7.8) 475 (4.9) 594 (5.0) 1788 (4.4) 2062 (3.7) 2243 (3.6) 1365 dQ'8. :;\>'


4/9

ZulkamainYusop and Roslan A. Ghaffar

The electrical industry has also accountedfo r the major portion of the manufacturingvalueadded. In 1990, electricalmachinery contributed21.5% of the total manufacturing value added,while chemical and chemical products contributed10.7% and food contributed 8.3%(Malaysia, Industrial Surveys, 1992).

The highly dominant electrical and textileindustries, in terms of employment, exports andvalue added, indicate the narrowness of the country's manufacturing base and its vulnerablity toexternal changes in terms ofworld supply and demand for th e products of the two industries.Should there be any severe drop in the demandfor these products in the world market, the employment, exports as well as economic growth, inthe country could be greatly disturbed.In addition, most of the multinational corporations orMNC- owned electronics and electricalappliances plants (which are mainly off-shoreplants) are engaged in the assembly processesof integrated circuits (ICs), industrial equipmentand consumer appliances like air-conditioners,radios and telev is ion sets f rom completelyknocked-down imported units fo r th e localand exportmarkets (Fong, 1988). The nature ofthe Malaysian electrical industry (highlydependent on the imported inputs) hasbeen t he main reason why the industry valueadded is relatively low (Chalmers 1991).

The purpose of this paper is to report on astudy of several countr y r el at ed factorsthat a re considered important when decisionson FDI are made by MNCs. While this study maynot provide specific recommendations for thepromotion of a broader manufacturing base andencourage FDI in the under invested industries,it would be able to provide a general redirectionfor the cur rent FDI policies and incentives. l

SPECIFICATION OF FOREIGN DIRECTINVESTMENT FUNCTIONAttempts at explainingFDI have appeared in threemajor strands of theoretical framework. Thesedifferent theories are important and helpful inunderstanding the international firms' operations.

Basically, analysis of FDI has used the comparative advantage theory, industrial organizationtheory and investment theory (Rock, ]973).

In specifying the FDI function, various country related aspects which influence FDI inMalaysian manufacturing are considered. It isassumed thatmultinational firms take into accountseveral aspects of the host country in their FDIdecision process to reduce the investment risks,minimize the factor costs and maximize their profits. Selection of the variables is based on previous findings on the determinants ofFDI (Rock1973, Goh 1973, Ahmed 1975, Schneider andFrey 1986 and Bardai 1989). For the purpose ofthis study, we are especially interested in severaleconomic factors. Accordingly, an FDI functionfor the Malaysian manufacturing sector cangenerally be written as:

Y = f(GNP, MOG, ER, INT, INF, TBA,CPFC, FGDE)

whereY is the dependent variable. Two differentproxies for the dependent variable were chosenfor this study, namely: (1) the level of total assetsof the foreign controlled firm engaged inMalaysian manufacturing (AFC) and (2) the levelof investment in fixed assets by foreign controlled firm engaged in the manufacturing sector ofMalaysia (lFC). As defined by Oman (1984), afirm is considered to be involved in FDI if theforeign entity owns a majority of the equities andhas direct managerial control in the firm. Thus,for th e purpose of this analysis, a manufacturingcompany with at least 50% of the equities controlled by foreign entities is considered as an FDIcompany. The total assets of foreign companiesinclude stocks and claims on branches as well asaffiliated enterprises abroad, while investment infixed assets includes acquisition of transport equipment, machinery and office equipment.

GNP (gross national product) reflects thegeneral performance of the economy and provides an indication of the size of the local marketfor the manufacturing outputs (Rock, 1973). Apositive relationship is expected between GNP

'Over the years, the government has enacted and implemented various policies to attract foreign invesunent inMalaysia. Such policies and their respective programmes are well documented and will no t be discussed here. Forreference see Yong (1988).



5/9

Detenninants of Foreign Direct Investment in the Malaysian Manufacturing Sector

and FDI. MaG (Ratio of manufacturing output over GNP) measures the degree of the country's industrialization. It also provides a good hintof the supply conditions ofmanufacturing inputssuch as power, transportation, communicationand labour . A higher ratio ofmanufacturing output over the GNP reflects a better supply of investment inputs. Thus, a direct relat ionshipbetween MaG and FDI is expected. The ER orForeign Reserve position provides an indicationon the exchange rate risks associated with FDI byshowing the degree to which the country 's currency is under o r over-valued. Foreign investorsare l ikely to incur losses due to exchange ratechanges if the currency is over-valued (Rock,1973). A decline in th e foreign reserve positionis expected to have a negative impact on FDI.Changes in the levels of external reserve do notdirectly influence FDI, but will first affect theexchange rate because the foreign reserve position actually provides information on the condition of exchange rate. I t is the changes in thelevels of exchange rates thatwill affect FDI. Thus,the effect of the foreign reserve position on FDIis not likely to be immediate. Accordingly, external reserve lagged one period is used for the study.

TBA (total asset of the banking system) provides an important barometer on the availabilityoflocal financial services such as local credits andinsurance services. FDI is expected to increasewi th TBA. CPFC or profitabilityindicateswhetherthe activities of multinational corporations areaffected by the opportunity for high profits. Thisidea is stressed by the investment theory of FDI.To checkwhether the level of profits in year t hasany impact on the level of FDI in year HI, th eamount of profits of foreign controlled companies in Malaysian manufacturing (lagged one period) is used fo r the analysis. INT (Interest rate)is normally associated with high cost of capitalwhich often leads to th e reduction in FDI (assuming that domestic financing is important to theforeign investors). However, in the case ofa poorlydeveloped financial market in which FDI projectsare constrained by inadequate domestic savings,increase in the interest rates can help raise th edomestic savings and finally promote FDI.

FGDE (federal government development expenditure) represents public investment rate. Theimpact of FGDE on FDI can be positive or nega-

tive. FGDE which mainly involves spending onbasic infrastructure such as education, transportation systems, water and sewage facilities cancomplement and thus, promote FDI. Conversely,public investment in projects in which the products compete (for source of funds and other factors of production) with those of the private secto r can dampen FDI to an extent that it substitutes the private projects. INF denotes inflation.In most cases, high rates of inflation provide agood indication of economic instability andfailure on t he par t of the government to controlth e country's macroeconomic environment.

DATA COllECTION ANDMODEL ESTIMATION

Data for the studies were collected from varioussources including The Quarterly Economic Bulletin of Bank Negara Malaysia and the FinancialReports ofLimited Companies (published by theDepartment of Statist ics). To eliminate the inflationary factor, the relevant data were deflatedby the consumer price index (1967=100). SinceMalaysia has been independent for only about33 years and not until mid 1960s were most oftheMalaysian data properly recorded, only a relatively small number of observations are available.For the above reasons, annual data covering theperiod ofl966 to 1988 are used.

A preliminary estimation suggested thatheteroscedasticity was present in the models. Inorder to reduce the problem, all of the dependent and independentvariables were transformedinto log form. The two general equations representing the relationships between eight explanatory variables with FDI which are represented bytwo dependent variables may be expressed as:

LAFC = (Xo + (XILGNP + (X2LER + c({LINT+ (X4LINF + (X5LMOG + (X6LTBA+ (X7LCPFC + (XsLFGDE + III [1]LIFC = ~ + ~ I L G N P + ~ 2 L E R + ~ 3 L I N T+ ~ 4 L I N F + ~ 5 L M O G + ~ 6 L T B A+ ~ ~ C P F C + ~ 8 L F G D E + 112 [2]Estimations of equations [l] and [2] (Table

4) indicate the presence of a multicollinearityproblem. This is supported by the fact that only

PertanikaJ. Soc. Sci. & Hum. Vol. 2 No.1 1994 57


6/9

Zulkarnain Yusop and Roslan A. Ghaffar

few of the explanatory variables are significant inspite of the high values ofR20.9967 for equation[l] and 0.8642 for equation [2]). A partial corre-lation analysis shows that GDP is highly correlatedto total asset of the banking system, and currentprofit of foreign controlled companies. Externalreserve is strongly related to the total asset of thebanking system. Manufacturingoutput/GNP andinter es t r at e a re also highly correlated to th etotal asset of the banking system. To reduce themulticollinearity problem, the models wererespecified with closely related variables appear-ing in dif ferent equations. The following regression equations were used:For LAFC as the dependent variable:

LAFC = 1to+ 1t1LGNP + 1t2LER + 1t3LINT+ 1t4LINF + 113 [3]LAFC = '1:0+ '1:ILMOG + ' 1 : ~ C P F C + '1:3LTBA+ '1:4LFGDE + 114 [4]

For LIFC as the dependent variable:LIFC = 000+ oolLGNP + 002LER + 003LINT+ 004LINF + Ils [5]LIFC = 4>0 + 4>I LMOG + 4 > ~ C P F C + 4>3LTBA

+ 4>4LFGDE + 116 [6]All of the regression results for equation [3]

through [6] are summarized in Table 4. I t is showni n equat ion [3] that gross national product(LGNP), external reserve lagged one pe rio d(LER) and interest rate (LINT) are positively related to the LAFC. The t values are significantat the 5% level for the GNP and LINT and atthe 1% level for LER. The coefficient fo r inflation (LINF) shows the correct negative sign asexpected. However, its t va lue is not significantat the 10% level. Equation [4] demonstrates asignificant positive relationship between manufac-turing output/GNP (LMOG), total assets of thebanking system (LTBA) and current profits offoreign controlled companies in manufacturingsector lagged one period (LCPFC) with the dependent variable (LAFC). Their t values are allsignificant at the 1% level. Public investment(LFGDE) shows a significant negative relation-ship with the dependent variable. Its t value isless than the critical t value at ex =0.05.

Using LIFC as the dependent variable inequation [5], a significant positive relationshipbetween LGNP, LER and LINT with the depen-dent variable was obtained. The tvalue forLGNPis significant at the 5% level while for LINTand LER, they are significant at the 10% level.Inflation (LINF) does not show any significantrelationship with the dependent variable; however, its slope coefficient shows a negative sign.

Regressing LIFC on LMOG, LTBA, LCPFCand LFGDE in equation [6], it is found that threeexplanatory variables, namely LTBA, LMOG andLCPFC show significant positive relationship withthe dependent variable. The t values for LMOGand LCPFC are significant at the 10% level whilefor LTBA its t value is significant at the 5% level.SUMMARYAND POLICY IMPLICATIONS

The analysis presented in this paper reveals thatgross national product (GNP), net external reserves, interest rates, manufacturing output/GNP,current profits of foreign controlled companiesin Malaysian manufacturing and total assets ofthe banking system are impor tant factors influencing FDI in Malaysian manufacturing. Thesignificant positive relationship between GNP andthe dependentvariable is expected because a highlevel of G P is normally associated with positivegrowth and a nation's economic health. Thelevel of external reserve (LER) which indicatesthe extent to which Malaysian currency is underor over-valued also has a positive impact on theactivities of FDI. A low level of external reservediscourages FDI because it leads to overvaluationofa country's currency which can increase the riskof investment activities through the currency exchange loss. The level of interest rate also plays asignificant role in FDI decision. In the Malaysiancase, increase in interest rate is associated withth e increase in FDI. The direct relationshipbetween interest (deposit) rate and savings hasbeen supported by s everal economis ts , forinstance Shaw (1973). According to them, increase in deposit rates can lead to an influx ofdeposits into commercial banks which ultimatelyexpands the real size of th e banking system andhence raises the ne t flow of real bank credit tofinance investment. Inflation does not seem tobe a significant determinant for FDI in Malaysia.A careful review on the trend and degree of infla-



7/9

TABLE 4Results of regressions t:l'"Constant LCPFC(-l) LFGDE Adjusted Durbin- F- "qua- Dep. LGNP LER(-l) LINT LINF LMOG LTBA ation R2 Watson value SIII;:l[1] LAFC 1.4337 0.0968 0.0172 -0.0533 0.0393 0.5347 0.4499 0.3357 -0.1101 0.9967 2.4627 673.11 G0(4.4981) (0.8709) (0.5929) (-1.1447) (2.7812) (7.9965) (8.4658) (8.3840) (-5.0633) *** ....,"rj'"" *** ** *** *** *** *** 0'" ...,..., '"i [2] LIFC -1.9022 -2.0671 0.5764 1.0397 0.1265 -0.8364 1.7358 0.2538 0.2114 0.8643 2.3873 15.16 aq';:l ;:lfr (-0.4998) (-1.4203) (1.6269) (2.0114) (0.8250) (-.9570) (2.6154) (0.6037) (-0.8069) *** t:l':-< * ** ::;.'"/J [3] LAFC 0.6694 0.3642 0.2340 0.2064 -0.1165 0.9923 1.7650 515.430 S'

C/J (0.6921) (2.3765) (3.2192) (2.7512) (-0.5599) *** rip. ** *** ** R" [4] LAFC 1.9049 0.4866 0.4293 0.4437 -0.1191 0.9932 2.0037 585.98 '"r: ;:;c:: (12.863) (5.4876) (22.965) (15.165) (-4.2023) *** s3 *** *** *** *** *** So0.8716 1.8934 18.93 '"5] LIFC -8.0931 0.9444 0.7060 0.9803 -0.0544 3::I'D (-6.0935) (2.6405) (1.7986) (1.7612) (-.5291 ) *** IIIZ iii"*** ** * * '


8/9

ZulkamainYusop and Roslan A. Ghaffar

tion in Malaysia shows that in general, inflationin Malaysia has been well under control and hasnot been as severe as in many other developingcoun tries (Yusof, 1985).

The positive relationship between (LMOG)and FDI implies that certain human aspects andphysical infrastructure related to manufacturingsuch as skilled and cheap labour; reliable supplyof water and energy; and adequate transporta-tion system for dissemination of the products areimportant in the eyes of foreign investors. Furthermore, it suggests that the host country's conducive policies can contribute to the increase inFDI. A greater percentage share of manufactur-ing output in th e gross national product alsoreflects the society's acceptance of the "discipline"of manufacturing industry. Profitability is anotherimportant consideration in the FDI decisionprocess. This is confirmed by the strong positiverelationship between the laggedvalue of currentprofits earned by foreign controlled companiesin the Malaysian manufacturing sector and th e dependent variable. This relat ionship shows thatforeign investors are quite sensitive to investmentincentives which ca n increase the possibility forhigher profits. Accordingly, this finding suggeststhe possibility of controlling FDI through investment incentives. Furthermore, the analysis demonstrates that local funds and other local financial services including insurance are importantfactors influencing FDI. The fact is supported bythe strong positive relationship between the levelof assets of the consolidated banking system andthe dependent variable. This finding provides abase for guiding FDI operations in Malaysianmanufacturing through credit control or creditallocation policies. In fact, a study by Liete andVaez-Zadeh (1986) on credit allocation and investment decision in the Korean manufacturing sector has concluded that limitations on credit availability tend to affect investment decision directlyr ath er t han th rough interest rate movements.Finally, the results show a significant negative impact of public investment rate on FDI. Public investment can e ithe r be i n basic infrastructure(such as education, transportation systems, water

- and sewage facilities) which would facilitate FDIor in projects for the public sector enterpriseswhere the products compete (for input factors aswell as market) with those of the private sector.

In Malaysia, the public sector enterprises havebeen involved in both types of investments. Thetwo different elements of public investments havetwo different directions of impact on investmentactivities. Thus, the negative relationship betweenpublic investment rate and FDI suggests that public investment activities on balance have an adverse effect on FDI. The negative consequencesofgovernment activities via th e public sector havebeen noted by a number o f observers. Amongthese ar e the reduction offair competition amongth e private firms in Malaysia (Ghazali 1988) andthe generation ofmacroeconomic problems suchas infla tion and balance of payment difficulties(Fischer, 1988).

Several aspects should be considered in thepolicy making process in order to improve thepattern of FDI in the various manufacturing industries in th e country.

First, since certain human aspects and physical infrastructures related to manufacturing areimportant in the eyes offoreign investors, th e provision ofa well trained and efficient labour force,special or subsidized industrial sites, and otherinfrastructural facilities can a tt ra ct foreign investors to certain designated industries.

Next, the allocation of special funds or creditfacilities for firms which participate in industrieswhich are under invested can also increase theflow of FDI into those industries because manyforeign firms r egard the possibility for local fi-nance as one of the important considerations intheir FDI decisions.

In addition, policy makers may also utilize taxincentives in order to improve the pattern ofFDI since our analysis shows that increase inprofitability is quite an importantelement in th eFDI decision. The use of tax incentives in guiding th e FDI activities should however be blendedwith other incentives (other than tax) in order tobe more effective.

It should be borne in mind t ha t the bet te rway to design policies is to firs t maintain andfurther elevate the country's attractiveness as aninvestment ground for foreign investors. Guidingthe activities ofFDI accross the various industriesin th e country would be the subsequent step. I t isimportant that the government aim at keeping asteady economic growth, reduce the currency fluc-



9/9

Determinants of Foreign Direct Investment in the Malaysian Manufactuling Sector

tuation, control th e inflation, increase the efficiency of th e public sector and financial institutions, upgrade the quality of labour force andmore importantly, maintain political stability.

REFERENCESAHMED, A. 1975. Determinants of direct investment,

with special reference to developing countries.Ph.D. Dissertation. University of Pennslyvania.

BAROA], B. 1989. Evaluation of Malaysian cmporateinvestment incentives. Malaysian Institute ofEco-nomic Research (!VIlER). Paper TO. 25 (August).

B E . A U ~ [ O N T , P.G. ]990. The role of foreign investmentin Malaysia .Iurnal Ekonomi Malaysia 21 & 22: 6577.

CHALMERS,!. 1991. The political economy of the electronics industry in ASEAN. ASEAN EconomicBulletin. 8(2): 194 -209.

FISCHER, B. 1988. Public enterprises in developingcountries: market structure competition, efficiencyand the scope [or pl-ivatisation. MalaysianJoumal OfEconomic Studies 25(2): 45-61.

FaNG, C.O. 1988. Multinational corporations inASEAN: technology transfer and linkages withhost economies. Paper presented a t the 13thAnnual Conference of the Federation ofASEAN Eco-nomic Association. Penang. Malaysia.

GHAZALI, y. 1988. Malaysia's industrialization policiesand s trateg ies - Have they helped or retardedgrowth? A Paper presented at the Federation OfMalaysia Manufacturing (FMM) National Manufac-tur ing Conference. Jan. 22, 1988.

GOH, K. 1973. Factors Influencing U.S. InternationalFirms in Locating Export-Oriented Manufacturing Facilities in Singapore, Taiwan and HongKong. Ph.D. Dissertation. Indiana University.

LIETE, S.P. and R. VAEZ-ZADEH. 1986. Credit allocationand investment decisions: the case of the manufacturing sector in KOI-ea. Wo1'ld Development.14(1): 115-126.

Malaysia, Bank Negara, Quarterly Economic Bulletin,various issues.

- . Departmen t of Statistics. Industrial Survey,various issues.____ . Department of Statistics. Financial RepOTtofLimited Companies, various issues.____ . Ministry of Finance. Economic Report, various issues.

MIDA (Malaysian Industrial Development Authmity), Statistics on the Manufacturing Sect01: Variousissues.

OMAN, C. 1984. New Forms of International Investmentin Developing Countries. Paris: OECD.

ROCK, M.1973. Cross country analysis of the determinants of d.s. foreign direct investment in manufactlu-ing industl)' in less developed countries.Ph.D. Dissertation. University of Pittsburgh.

SCHNEIDER, F. and B.S. FREY 1985. Economic and political determinants of foreign direct investment. World Development 13: 161-175.

SHAW, E.S. 1973. Financial Deepening in Economic De-velojJment. New YOI-k: Oxford University Press.

YONG, P. C. 1988. Latest Malaysian Investment Incentives.Kuala Lumpur: Longman Malaysia Sdn. Bhd.

YUSOF, M. 1985. Inflat ion and controls: Malaysianexperience in 1970's. Journal Ekonomi Malaysia11: 35-54.

YUSOF, M.I. 1990. Export competitiveness: o ~ j e c t i v e sand performance of the Industrial Master Plan.Iurnal Ekonomi Malaysia 21-22: 99-] 18.

(Received 25 May 1993)

PenanikaJ. Soc. Sci. & Hum. Vol. 2 No.1 1994 61

determinant of foreign direct investment in the malaysian manufacturing sector

Documents