Approved investments vs FDI: Manipulation, or truly a non-issue?
KUALA LUMPUR, Aug 23 — In the past few years, every time the Department of Statistics Malaysia (DOSM) publishes the figures for Foreign Direct Investment (FDI), certain quarters tend to compare the FDI figure against the Foreign Investment (FI) data captured by the Malaysian Investment Development Authority (Mida).
Allegations tend to follow on how they believe the Mida numbers are fudged to achieve a feel-good factor. Never mind that since becoming the Minister of Investment, Trade and Industry (Miti), I have produced at least two explainer videos (and a few more on related topics) clarifying the difference between these technical calculations of investments. Or that Miti has consistently been issuing its quarterly Report Card since 1Q2024 to share the progress of various key projects, including the implementation of committed potential investments captured through either our Trade and Investment Missions, or other means.
What is the difference between the “approved FI” figures released by Mida and the “net FDI” data captured by DOSM? Allow me to unpack this and address some related questions.
Foreign investments vs FDI: Apples vs oranges
Basically, these two sets of figures measure different things. Mida’s approved FI figures for the manufacturing and services sectors represent proposed investment projects with foreign equity participation that have been granted licences, incentives, permits, grants, soft loans and so on by relevant ministries and agencies. They are measured based on CAPEX and OPEX such as land, building, and resources. By the same token, approved Domestic Investment (DI) figures measure similar data but by domestic investors.
DOSM’s figures, broadly, measure inflows and outflows of foreign investments. They capture financial transactions, including equity such as shares and reinvested income. This figure refers to investments by non-residents via transactions of financial instruments including equity, reinvestment of earnings and debt instruments such as inter-company loans, advances, and trade credits.
So, for instance, if a foreign investor buys control of a Malaysian company, this would be captured by DOSM’s figures, not Mida’s. FDI statistics for Malaysia are compiled as part of the balance of payments, based on the IMF’s BPM6 guidelines.
Both are important, but because the Mida and DOSM figures measure different things, they serve different purposes. Therefore, by no stretch of the imagination can anyone conclude that DOSM’s FDI and Mida’s FI are similar. It is like comparing apples and oranges — no wonder many are going bananas over these data points.
Another problem is when certain quarters misrepresent the difference between Mida and DOSM’s figures to allege that the government is not transparent about Malaysia’s investment performance.
A case in point is Malaysia’s RM1.6 billion net FDI inflow for 2Q2025 shared by DOSM, compared to RM15.6 billion in 1Q2025. Some quarters have questioned — how are we still attractive to investors if our 2Q2025 FDI figures fell so much?
DOSM partially attributed the quarterly change to “higher income repatriation to parent companies abroad.” This is a normal phenomenon and is to be expected in economies open to foreign enterprises like Malaysia. These remittances will lower net inflows even if the respective foreign investors are simultaneously expanding their operations in Malaysia. These two events are not mutually exclusive. Such remittances are a sign of a maturing economy, where MNCs generate significant returns worth sending home.
Analysts and economists understand that quarterly flows are not the right yardstick to measure a country’s investment attractiveness. Quarterly statistics, over a longer period, tend to resemble erratic spikes, as opposed to smooth, linear lines. FDI by nature is “lumpy” — a single equity injection or intra-firm loan can swing the quarterly numbers.
It is better to look at annual FDI performance. Malaysia’s FDI was RM51.5 billion in 2024, up from RM38.6 billion in the preceding year. Can this seriously be taken as a picture of economic collapse?
Approved foreign investment: Why bother if they’re just commitments?
Next, what is the value of releasing Mida’s investment figures when the more key question is the implementation rate? What economic spillover are these investments creating? These questions come up regularly, especially when people are debating how well the country is doing economically.
The value lies in the fact that the FI figures are essentially a forward-looking signal of investor confidence and the strength of Malaysia’s investment pipeline. They also show what investors are actively planning, especially for key sectors.
Just yesterday, for example, Mida announced that total approved investments, both foreign (FI) and domestic (DI), for 1H 2025 rose 18.7 per cent year-on-year, with FI accounting for roughly 56 per cent of the 3,011 approved projects. The total value of the projects is RM190.3 billion, which are set to create 89,294 new jobs.
Why do these data points matter? They matter because they allow both the public and private sector to gauge whether Malaysia remains competitive in attracting investments relative to regional peers.
Mida’s quarterly sharing also informs the public on the sectors in which investments are coming in. As Mida tags each project accordingly, this serves as an important gauge on whether they match the target sectors under policies such as the New Industrial Master Plan 2030 (NIMP2030), the National Semiconductor Strategy (NSS) or the Green Investment Strategy (GIS).
Given that manufacturing and exports are key components that make up our GDP, without Mida’s approved investment data, not just we, but analysts, economists and potential investors would also be groping in the dark for the scale or direction of Malaysia’s economy.
How would they know where and when to put their foot on the pedal or take it off? Or whether they should turn left or right, or drive straight ahead? Therefore, far from a sleight-of-hand — Mida’s approved investment figures are a form of accountability, so we can track what was realised against what had been pledged earlier. No one likes empty promises.
Investment is changing in Malaysia… and changing Malaysia
The approved investment figures announced yesterday also reflect the changing nature of foreign investment in Malaysia. The “capital” of much of the new investments now coming into Malaysia — especially tech-based ones — can come in the form of intellectual property, long-term leases, and staggered equipment purchases.
There’s also an inherent time lag in FI realisation. Large manufacturing, energy, semiconductors or data centre projects typically take years to move from approval to implementation, before the inflows show up in the balance of payments. Expecting 2024’s RM378.5 billion in approved investments to be reflected in a few quarters is totally unrealistic.
And just because these things are not “seen” in the public’s daily lives, it does not mean they are not being implemented. Just see the numerous groundbreaking events by both Malaysian and foreign manufacturers that have been announced in 1H2025, and relate these to our unemployment figures, which have gradually eased from 3.6 per cent in January 2023 to 3.0 per cent in June 2025.
Malaysia remains an attractive investment destination
Moral of the story? All data requires careful interpretation rather than simplistic knee-jerk or agenda-driven conclusions. While challenges remain, Malaysia’s long-term picture is much more encouraging than some would have us believe. Miti’s responsibility is to ensure that Mida’s approved investment numbers are translated into high-value jobs, vibrant industries, and stronger communities.
For Malaysia, every investment approved, every ringgit realised, represents a deeper story: of a nation charting its path with confidence, of workers building skills for the future, of communities lifted by new opportunities, to chart our rightful place in the world.
* Datuk Seri Tengku Zafrul Abdul Aziz is the minister of investment, trade & industry.