The determinants of foreign direct investment in Malaysia

Foreign Direct Investment has been a major source of private external financing for developing countries like Malaysia. As the Covid-19 pandemic hit economic activity globally, it found that Malaysia's net foreign direct investment decrease for about 56% in 2020. The performance of FDI in Malaysia has fluctuated and been volatile. The issue about the downturn of Foreign Direct Investment in Malaysia has happened back in year 2000, and it happened again last year in 2020. Due to the issue, we are interested to investigate the factors that affect the FDI performance. The independent variables used in this research are exchange rate, inflation rate, and market size (using GDP per capita) in Malaysia. All of the information gathered is secondary and consists of time series data. The strategy utilized in this study to regress the data was multiple linear regressions analysis. Due to restrictions, the data was collected on a yearly basis for 20 years, from 2000 to 2019. From the findings we can see only market size is significant in this study, meanwhile, the other two variables; inflation rate and exchange rate is not significant.