Publication: Custom Activities On Foreign Direct Investment Inflows Into Malaysia
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Date
2025-01
Authors
Razali, Tengku Rafidatul Akma Tengku
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Abstract
Fdi inflows into malaysia have been declining, despite its third-place ranking on the fdi attractiveness index among asian countries. The roles of customs that act as indirect tax collector, trade facilitator and law enforcer remain overlooked the interplay between it towards fdi. Hence this study examines customs' roles as indirect tax collector (import duty, export duty, consumption tax, excise duty and vehicle levy), trade facilitator (aeo, fz, lmw, 14(2), kbc, gba, gbp, pkm, icd and ta), and law enforcer (smuggling and tax evasion) from 1999 to 2018, using the ardl technique. Findings indicate that import duty and consumption taxes negatively affect fdi, whereas export duty, excise duty, and vehicle levy have positive impacts. Trade facilitation measures like icd, gba, and lmw negatively influence fdi, while the shadow economy also hampers fdi inflows. Policymakers could use these insights to attract more fdi by reducing import and consumption taxes while maintaining revenue from export duty, excise duty, and vehicle levy. They should refine trade facilitation offers to balance revenue and fdi attraction, and ensure transparent laws and regulations to remove uncertainty and bias, thus fostering a more favourable environment for fdi in malaysia.
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Custom Activities Foreign Direct Investment Inflows