Abstract

Foreign Direct Investment (FDI) can be considered as one of the transformation agents in the Malaysian economy. The influx of foreign investments into the manufacturing sector was crucial in its transformation from an agricultural based economy to an industrialized based economy. This study aims to examine the effects of FDI and exchange rate on Malaysian export using OLS method that based on time series data for 37 years. Result shows that FDI and exchange rate have a significantly positive impact on total export. This resultsuggests that the policymakers should aim towards attracting FDI by providing incentives and facilities to enhance the Malaysian export. Since Malaysia uses the managed floating exchange rate system, therefore, the Malaysian government should facilitate the export sector by providing the industry with an appropriate knowledge and promotes research and innovation so that the exporters can find ways to cut costs and raise up their productivity.