Higher-quality investments may take time to lift wages, household incomes: Bank Negara

Malaysia's pursuit of higher-quality investments and advancement up the value chain could potentially lead to increased wages and household incomes, although the advantages may take some time to manifest, according to Bank Negara Malaysia Governor Datuk Seri Abdul Rasheed Ghaffour. The governor explained that stronger economic growth does not automatically result in higher household incomes, as there is often a lag before the benefits reach the population.

Despite this, the quality of investment currently being attracted, which generates higher income jobs, indicates positive prospects. Abdul Rasheed emphasized the importance of continuing to attract quality investments, ascending the value chain, and enhancing productivity to support higher wages and incomes. These actions would ultimately contribute to improving the livelihoods of the population and bolstering the economy.

He noted that foreign investment flows have been directed towards high-value-added activities in manufacturing and services sectors, particularly in electrical and electronics (E&E), chemicals, and information and communications technology (ICT) services. By June, 85% of manufacturing projects approved between 2021 and February 2026 had progressed to implementation, including factory construction, production, and machinery installation.

As of the second quarter of 2026, foreign direct investment (FDI) recorded a net inflow of RM7.4 billion, resulting in total FDI inflows of RM30.2 billion for the first half of the year. This FDI was largely directed towards the services sector, mainly in ICT and professional and technical sub-sectors, with significant contributions from China, Hong Kong, and Singapore.