Since the emergence of China as a top destination for FDIs, there has been a widely held view that Asean countries are no longer receiving FDIs due to their higher costs.

Ironically, the Asean country with the highest FDI this year is the one with the highest costs Singapore. The island republic has, for instance, attracted FDI projects totalling about RM14 billion (US$3.8 billion) for its electronics industry so far this year, according to a recent report.

The FDIs into this region now seek a skilled labour force, not low-cost unskilled labour. The amount of FDIs in Malaysia had been relatively stable in recent years, contrary to general perception.

The value of FDI projects in the country's manufacturing sector increased to RM17.9 billion ($4.87 billion) last year, exceeding the 2004 figure of RM13.1 billion ($3.56 billion) and RM15.6 billion ($4.24 billion) in 2003.

It is also clear that FDIs tend to be projects for the production of high value-added products rather than low-tech goods, like textiles or basic semiconductors, as was the case in the past.

The latest proposed FDI, for instance, is from Germany's SGL Carbon AG, the world's largest producer of carbon and graphite products. The company announced earlier this week that it would invest up to RM940mil, over several years, in its regional plant to be located in Banting, Klang.

Graphite electrodes are used to conduct electric current to melt scrap steel in steel mills.

In the electrical and electronics (E&E) sector, traditionally the biggest recipient of FDIs, Malaysia continues to draw new investments. Germany's Infineon, for instance, is building a semiconductor wafer fabrication plant at the Kulim High-Tech Park in Kedah.

The United States remains the consistently largest foreign investor in Malaysia, accounting for almost 30 per cent of the total FDIs of RM17.9 billion last year.

American Malaysian Chamber of Commerce (Amcham) president Vince Leusner said the Government should, in Budget 2007, consider making it easier for foreign investors to invest in the local services sector.

Amcham has observed that in the past few years, nearly all the companies that had looked at Malaysia had considered investments in the services sectors, especially in shared services and business process outsourcing.

Leusner noted that although Malaysian Industrial Development Authority (Mida) was a one-stop Government agency for manufacturing investments and incentives, investors in the services sector, however, had to go through "various other agencies or ministries''.

He suggested that Mida be "empowered to be a truly one-stop centre for all investments, including those in the services arena".

There is an opportunity in a free trade agreement (FTA) now being explored with the United States. That would create more awareness of Malaysia among American leaders and consumers, he added.

The FTA "is critical to help Malaysia achieve its goals set out in the Ninth Malaysia Plan and to help it further develop in the knowledge economy'', Leusner said.