Home Discussion Papers Asia Dimension Tiger in the bush: An overview of Malaysian investment in Africa
Tiger in the bush: An overview of Malaysian investment in Africa
Written by Fiona Dwinger (1) Tuesday, 02 November 2010 08:08

Over the past decade, the Asian emerging economies have consolidated their presence on the African continent through trade, investment, aid and migration. Regarding the continent as a place of enormous potential, the Asian elephants, dragons and tigers have defied the stale Western perception of Africa as a continent plagued by a plethora of problems, and have successfully realised investment opportunities.(2)

The country to have received the most attention - or been regarded with the most suspicion - by policymakers, academics and the media regarding Asia’s involvement in Africa is, of course, the new potential superpower on the horizon - China. Indeed, trade between Africa and China increased 10-fold from 1998 to 2006, and doubled again between 2006 and 2010, making China the largest exporter to Africa. China invested a cumulative total of US$ 2.5 billion in the continent between 2006 and 2008.(3) One should nevertheless consider that Asian foreign direct investment (FDI) in Africa is still dwarfed by that of the developed countries, especially the United Kingdom (UK), United States (US), France and Germany, which contributed 72% of FDI flows to Africa between 2000 and 2008, while Asian countries contributed merely 15.2%.(4)

It is also important to note that the continent’s regional powerhouse - South Africa - ranks first in terms of developing economy investments in Africa, followed by China and then, interestingly, Malaysia. The newly industrialised market economy invested around US$ 600 million in the continent between 2006 and 2008, while India invested merely half of this figure, yet Malaysia seems to attract much less attention than either India or China.(5) This discussion paper aims to provide an overview of Malaysian investments in Africa  - the sectors involved,  the motivation behind these and the implications for the continent.

Sectors targeted by Malaysian investment

Malaysian investment in Africa is widely dispersed both in terms of the countries and the industries targeted.  Much like Chinese investments in Africa, Malaysian firms can be found operating in every sector imaginable from the most valuable and visible (i.e. resource-extraction) to involvement in amusement and recreational activities.(6) Investments in hotels and leisure, real estate, shipping, broadcasting, banking and financial services, palm oil plantations and refining, oil and gas and telecommunications demonstrate the sectoral diversity of Malaysian investments in Africa.(7)

Motivation behind Malaysian investment in Africa

Of the 70% of Malaysian FDI that has been targeted at other developing countries in recent years, around 15% has flown into African projects. Malaysian firms – such as Petronas and Telekom Malaysia - accounted for more than ⅓ of mergers and acquisitions between Asian and African multinational corporations (MNCs) between 1987 and 2005, with the largest recipients having been Mauritius and South Africa.(8) This fact is particularly insightful when one considers that around 25% of the Malaysian population is made up of ethnic Chinese, as it demonstrates that Malaysian multinational corporations (MNCs) utilise their multiple identities and links to the Chinese (and Malay) diaspora in Africa in choosing investment destinations (the 30,000 Chinese living on Mauritius, for example, constitute China’s largest diaspora).(9)

Malaysian investment on the continent is also aided by the strong support of the Malaysian Government. The reasons for this are two-fold. Since the early 1990s, outward FDI flows have been strongly informed by the Government’s emphasis on South-South cooperation and the promotion of mutual benefits. This strategy may be compared to the concept of mutual benefit as understood by the Chinese, which, together with non-interference in the domestic affairs of a country makes up a cornerstone of Chinese strategic economic engagement in Africa.(10)

To demonstrate, Chinese businesses, as well as the Government, tend to receive the bulk of criticism with regards to investments in countries with non-democratic forms of Government. One can consider China’s controversial relationship with Sudan, where China’s demand for oil enables Sudan’s despotic regime to buy Chinese arms, which are then used against the rebels in Darfur. Although Chinese companies are the main investors in Sudan’s oil fields, they are closely followed by Malaysian MNCs such as Petronas – the presence of which enables Malaysia to secure its energy needs. It is also interesting to note here that in 2006, Japan was Sudan’s largest oil purchaser.(11) In 2008, Malaysia also acquired Royal Dutch Shell’s petroleum distribution business in Zimbabwe. Shell sold its stake to South Africa’s largest refined petroleum firm, Engen, which is today 80% owned by Petronas.(12)

The case of Petronas may also be used to illustrate the second reason behind the Malaysian Government’s support for its MNCs’ ventures abroad - to foster the development of ‘world-class Malaysian-owned companies’.(13) The aim is to create companies that are not only the best locally, but also globally. Malaysia International Shipping Corporation (MISC), for example, is the world’s leader in the shipping of liquefied natural gas, owning over 100 vessels which ship everything from woodchips to jet fuel to and for customers worldwide.(14) Petronas is in a similar leading position, with the wholly Government-owned oil and gas company having been ranked Asia’s most profitable company by Fortune 500 in 2008.(15) Petronas operates in 34 countries, with its purchase of a 35% stake in Egyptian LNG in 2003 ranking amongst the top ten cross-border merger and acquisition deals in Africa concluded by developing country MNCs between 1991 and 2009.(16)

Concluding Remarks

This paper describes the sectors and countries in Africa in which Malaysian MNCs have invested and explains the motivations informing these investments. It was demonstrated that the Malaysian Government supports its companies’ investments on the continent for much of the same reasons that Chinese involvement in Africa has grown exponentially over the past decade - the promotion of South-South cooperation, trade and investment; mutual benefit; energy security; realising opportunities for growth and access to untapped markets; as well as the development of world-class enterprises. In a similar fashion, Malaysian investment is spread across a wide variety of sectors and number of countries. 

However, Malaysian involvement in Africa has been the subject of much less academic debate or media attention. Thus, it can be argued that this Asian tiger’s investments on the continent can be construed in a similarly positive or negative light in terms of the opportunities and risks that Asian, and particularly Chinese and Indian investment presents for Africa.


(1) Contact Fiona Dwinger through Consultancy Africa Intelligence's Asia Dimension Unit ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ).
(2) Brautigam, D., The Dragon’s Gift. The Real Story of China in Africa, Oxford University Press, United States of America, 2010
(3) ‘World Investment Report 2010’, United Nations Conference on Trade and Development (UNCTAD), 2010, http://www.unctad.org.
(4) N.A., Asian Foreign Direct Investment in Africa. Towards a New Era of Cooperation among Developing Countries. United Nations, Geneva, 2007.
(5) ‘World Investment Report 2010’, United Nations Conference on Trade and Development (UNCTAD), 2010, http://www.unctad.org.
(6) Ibid.
(7) Zainal, A.Y., ‘Outward foreign direct investment by Malaysian enterprises’, UNCTAD, Geneva, 2005
(8) N.A., Asian Foreign Direct Investment in Africa. Towards a New Era of Cooperation among Developing Countries. United Nations, Geneva, 2007.
(9) ‘Questions Remain About Benefits of Chinese SEZ’, Business Monitor International, November 2009.
(10) N.A., Africa-China-U.S. Trilateral Dialogue, Council on Foreign Relations, New York, 2007
(11) Large, D., ‘From Non-Interference to Constructive Engagement? China’s Evolving Relations with Sudan’, in Alden, C. et al. (eds.),  China Returns to Africa. A Rising Power and a Continent Embrace, Columbia University Press, New York, 2008.
(12) N.A., ‘A Survey of Foreign Direct Investment in G-15 Countries’, Summit Level Group of Developing Countries, Group of Fifteen, Working Paper Series, Vol. 7, February 2010.
(13) N.A., Asian Foreign Direct Investment in Africa. Towards a New Era of Cooperation among Developing Countries, United Nations, Geneva, 2007.
(14) Van Agtmael, A., The Emerging Markets Century, Simon & Schuster, London, 2007.
(15) ‘Global 500 – Asia’, Fortune, 2008, http://money.cnn.com.
(16) ‘World Investment Report 2010’, United Nations Conference on Trade and Development (UNCTAD), 2010, http://www.unctad.org.


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