Factors affecting foreign direct investment inflows in Malaysia / Najwan Hafiz Azhan

A developing country's foreign direct investment performance is crucial to determine the performance of the economy for a country like Malaysia. This research provides further insight on how dependent variable can be determined by independent variable which is gross domestic product per capita, inflation rate, exchange rate and real interest rate can affect the foreign direct investment inflows in Malaysia. The data used for this research is yearly data from 1990 to 2019 and has been analysed using descriptive analysis, correlation test, normality test and regression analysis. The result obtained from the variables are expected to have positive relationship with dependent variable except for exchange rate and interest rate which has negative relationship with foreign direct investment inflows. The results are expected such as mentioned due to gross domestic product per capita is a variable that explains the size of the market in the country which businesses has increased gross value of products within a year. The interest rate shows that accumulation of growth shows that the country is at good production level which would attract foreign investors. Exchange rate is expected to affect FDI inflows negatively due to depreciating currency in the host country means a lower to invest for foreign investors. Meanwhile real interest rate is expected to affect FDI negatively as a higher real interest rate shows that the country is at a high inflation rate, and it might indicate the lower purchasing power of the host country.