Determinants of foreign direct investment in Malaysia

This thesis elaborates on the driving forces behind the significant inflow of Foreign Direct Investment to Malaysia in recent years. In this study, there were 4 variables choose by researcher. Foreign Direct Investment is the dependant variable while 3 economic indicators which were GDP Growth, Gross Fixed Capital Formation and Exchange Rate selected to be independent variables. The period of this study is 35 years which is between years 1975 until year 2009. This research used quantitative data which gathered from World Bank Data Stream. The data was then produced using E-views 7 for regression analysis. The result then has been analyzed to see whether there are correlation between the dependant and independent variables or not. The study found that GDP Growth and Gross Fixed Capital Formation has significant relationship and gives positive impact towards Foreign Direct Investment. Meanwhile Exchange Rate gives negative impact and insignificant perhaps due to the 7 years pegging regime. This finding is supported by Czernicka Sinnathamby (2009) who made a study for Poland’s FDI and Lv Na (2006) who find determinants FDI at the regional level in China.