However, recently, Malaysia as a host country suffered a massive decline in FDI inflows
whilst it also experienced a substantial increase in FDI outflows especially after 2007
(see Fig. 1). These were attributed to the higher cost of labour in the home country
(Tham, 2005) as well as the emergence of more attractive destinations for FDI such as
People’s Republic of China (PRC), India and transitional economies from Indochina, due
mainly to their relative lower labour cost (see Hussain and Radelet, 2000) and larger
market size.2 Since 2007, the outflows of FDI exceeded its inflows, and this trend