'Vital to improve investment climate'

MALAYSIA, which is fast losing its lead position as an investment destination in Asia, needs more than just good infrastructure to woo back foreign capital, a top Deutsche Bank economist said yesterday.

"Malaysia is no doubt interesting for investors, (but) your focus should be on improving the investment environment," said Norbert Walter, chief economist of the German bank and managing director of Deutsche Bank Research.

He said big multinationals seeking to expand in the region were having second thoughts about investing in Malaysia because of a whole host of new realities in the country."Now, with more frequent government changes, application of law becomes more difficult to predict; long decision time is involved for investment; and the uncertainty in syariah law - there is an international discussion about whether the good infrastructure alone is enough to make them come here," he told a media briefing in Kuala Lumpur.

Walter, who has been advising some international companies, is familiar with the way multinationals review each global market.He said that Malaysia should be concerned about the sharp net investment fund outflows, which have reached some US$30 billion (RM105 billion) this year as tracked by CEIC, a global financial data provider.

The ongoing capital outflow is putting pressure on the ringgit and dragging down the country's foreign exchange reserves, he said.The outflow was not solely a result of the global downturn, he added."What is important is that Malaysia must understand that there is no status quo," Walter said.

Previously, the political stability, good infrastructure and competitive investment incentives gave the country an edge against its peers in the region."If you stand still, you'll lose out because your competitors will become more attractive," he said