Approved investments versus FDI: Manipulation or truly a non-issue?
25 Aug 2025
By Tengku Zafrul / The Edge Malaysia
In the past few years, every time the Department of Statistics Malaysia (DOSM) published the figures for foreign direct investment (FDI), certain quarters have tended to compare the FDI figure against the foreign investment (FI) data captured by the Malaysian Investment Development Authority (MIDA).
Allegations tend to follow as to 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 on the progress of 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.
FI versus FDI: Apples versus 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 capital expenditure (capex) and operating expenditure (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 for 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 and advances as well as 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 International Monetary Fund’s Balance of Payments and International Investment Position (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 net FDI inflow of RM1.6 billion in 2Q2025, as reported by DOSM, a sharp decline from RM15.6 billion in 1Q2025. Some quarters have asked — how are we still attractive to investors if our 2Q2025 FDI figures have fallen 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 the attractiveness of a country’s investment. 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 FI: 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 on Aug 21, for example, MIDA announced that total approved investments, both FI and DI, for 1H2025 rose 18.7% year-on-year, with FI accounting for roughly 56% 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 sectors to gauge whether Malaysia remains competitive in attracting investments relative to regional peers.
MIDA’s quarterly report also informs the public about the sectors that are attracting investments. 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 of our GDP, the absence of MIDA’s approved investment data would leave not just the public, but also analysts, economists and potential investors, in the dark about the scale and 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 on Aug 21 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 is 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 materialise in a few quarters is totally unrealistic.
And just because these things are not “seen” in the public’s daily lives does not mean they are not being implemented. Just look at the numerous groundbreaking events by both Malaysian and foreign manufacturers that have been announced in 1H2025, and relate these to our unemployment figures, which has gradually eased from 3.6% in January 2023 to 3% 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.
Tengku Datuk Seri Zafrul Aziz is the Minister of Investment, Trade and Industry
Source: The Edge Malaysia
