The impact of selected macroeconomics variables to wards foreign direct investment inflows in Malaysia during pre- and post- COVID-19

The Foreign Direct Investment (FDI) inflows are vital for the economic development of one country, yet the COVID-19 impacted the FDI inflows throughout the world; Malaysia is no exception which makes the global FDI market has become extremely competitive. This paper examines selected macroeconomics variables' impact on foreign direct investment inflows in Malaysia during Pre- and Post- COVID-19. The result is based on secondary data analysis using time-series from 1983 until 2021and applying the OLSAugmented Dickey-Fuller (ADF) for stationary unit root, Durbin-Watson test, Johansen Cointegration also Breusch-Pagan Test – Heteroskedasticity. According to the author's finding, the inflation rate and market size had no substantial impact on FDI inflows, while economic growth and exchange rate correlated with FDI inflows. Even though it is tough to control the inflation rate during COVID-19 pandemic outbreak times, the government should ensure that inflation must be minimum and not surpass the existing or latest inflation rate limit to avoid negatively impacting FDI inflows into Malaysia. The research's possible factors why inflation rate harms FDI inflows in this study because it can conclude that external factors influence inflation rate. Also, why market size has a negative impact on FDI in the context of this study it is concluded that instead of using the Real Gross Domestic Product Per Capita (GDPCAP) as a proxy for market size, better use aggregate size which can influence more FDI inflows for the market in developing nations like Malaysia. The findings offer foreign investors all around the country, policymakers, SMEs, and all business sectors helpful information and some insights regarding the impact of selected macroeconomics variables on foreign direct investment in Malaysia during pre and post COVID-19.