Factors affecting foreign direct investment in Malaysia / Wan Nor Azlin Wan Azura

Foreign direct investment is recognized as a powerful engine for economic growth. FDI inward not only serves the long-term financial interest of foreign investor, but it can also play a significant role in the growth dynamics of a host country. The decreasing on Foreign Direct Investment in year 2017 is the reason of this research conducted. The purpose of this study is to investigate the effect of foreign direct investment and macroeconomic variables on Malaysia from years 1974 to 2017. Ordinary Least Square (OLS) method has been used to apply on the data to examine the effects of the exchange rate (EXR), gross domestic product (GDP), export (EPT) and inflation (INF) on foreign direct investment activity in Malaysia. Hypothesis of this study state that exchange rate has negative significant relationship on foreign direct investment while gross domestic product, export and inflation have positive significant relationship on foreign direct investment. The findings indicated that exchange rate and export have negative significant relationship effect to foreign direct investment. Besides, gross domestic product and inflation have positive significant relationship on foreign direct investment. The future researcher can add more variable such as firm size, export and tax break in order to measure foreign direct investment. FDI is an important activity to increase the revenue of the country. Thus this study is crucial to determine the factors that affecting foreign direct investment in Malaysia.