Abstract

Foreign Direct Investment (FDI) supports the national economic when it facing the lack of internal investment resources and it can cover the gap of investment resources and national investment. In this way, Foreign Direct Investment can affect the economic development and increase the speed of economic development. In this regards, among other countries, especially developing countries, that coped with the lack of internal financial resources have more interest to use Foreign Direct Investment. Since 1970 until now, the Foreign Direct Investment has been strongly growth and it outstrips from the trade growth and its causes to double exports of goods and services.

In other words, the Foreign investment in the developed world’s economy is development of transnational companies for improving competitiveness, higher profit, accessing to cheaper labor market and reaching a broader consumer market. Providing sufficient capital to finance investment is as one of the important factors in economic growth. In this regards, developing countries have tried to accumulation of capital through internal resources or by foreign direct investment to complete the deal. Also, foreign direct investment has a significant role in developing process in many countries.

Gross domestic product in Malaysia has the maximum growth rate comparing the other Association of Southeast Asian Nations and one of the remarkable strategies of the administration to encourage its growth is by create a center of attention to foreign direct investment. Malaysia is one of those developing countries that promote Foreign Direct Investment in order to increase speed growth and development. Foreign Direct Investment has cooperated a significant role in capital formation in Malaysia and the developing economy that has enhanced quickly.