By Tengku Zafrul Abdul Aziz
IN recent years, every time Malaysia’s Department of Statistics (DOSM) releases data on Foreign Direct Investment (FDI), some quarters are quick to compare it with the Foreign Investment (FI) figures published by the Malaysian Investment Development Authority (MIDA).
Often, accusations arise when MIDA’s figures appear not to align with DOSM’s. Since being appointed Minister of Investment, Trade and Industry (MITI), I have published at least two explanatory videos (and several others on related topics) detailing the technical differences between these two sets of data. MITI has also consistently published its quarterly Report Card since Q1 2024 (Q12024) to communicate progress on various key projects, including the implementation of investment commitments secured through MITI’s Trade and Investment Missions or other channels.
So, what exactly is the difference between MIDA’s “approved FI” and DOSM’s “net FDI” data? Allow me to explain.
At its core, the two measure entirely different things. MIDA’s approved FI figures for the manufacturing and services sectors refer to proposed investment projects involving foreign equity participation that have received licences, incentives, permits, grants, soft loans, and so on from the relevant ministries and agencies.
These are measured based on capital expenditure (CAPEX) and operational expenditure (OPEX), such as land, buildings, and resources. Similarly, approved Domestic Investment (DI) figures reflect the same types of spending by local investors.
DOSM’s figures, however, generally capture actual inflows and outflows of foreign investments. They represent financial transactions, including equity sectors such as shares and reinvested earnings. DOSM's data refers to foreign investments through financial instruments — equity, reinvested earnings, and debt instruments (e.g. inter-company loans, trade credits, etc).
For instance, if a foreign investor purchases shares in a Malaysian company, this is reflected in DOSM’s data, not MIDA’s. Malaysia’s FDI statistics are compiled as part of the Balance of Payments, in accordance with the IMF’s BPM6 guidelines.
Both datasets are important, but since MIDA and DOSM data serve different purposes, they measure different realities. So how can one conclude that DOSM’s FDI and MIDA’s FI are the same? It's like comparing apples and oranges — no wonder confusion persists.
Another recurring issue is when some individuals deliberately manipulate the differences between MIDA and DOSM figures to claim the government is being opaque about Malaysia’s investment performance.
These critics often cite DOSM’s reported net FDI inflow of RM1.6 billion in Q2 2025 — a sharp drop from RM15.6 billion in Q1 — and question whether Malaysia is truly attracting investors.
According to DOSM, one major factor behind this change was “...higher income and dividend repatriation to parent companies abroad.” This is a common feature in economies like Malaysia that are open to foreign firms.
“These repatriations naturally reduce net inflows, even while foreign investors are expanding operations in the country. Both can happen simultaneously. Such outflows are also indicative of a maturing economy, where multinational firms are capable of generating significant returns for repatriation.
Analysts and economists understand that quarterly flows are not a reliable gauge of a country’s investment appeal. Quarterly statistics often show sharp fluctuations over time. For example, a single large intra-company equity injection or loan can drastically shift a quarterly figure.
We should assess FDI performance annually. Malaysia’s FDI in 2024 was RM51.5 billion, up from RM38.6 billion the previous year. Does this reflect economic decline?
National Economy
Next, what is the value of MIDA’s investment figures, if the real question is the rate of implementation? What kind of economic spillovers are these investments creating? These questions often arise in debates about Malaysia’s economic performance.
In truth, FI figures reflect investor confidence and our strength in attracting capital into the country. They also show strategic planning by investors, particularly in key sectors.
For example, just yesterday, MIDA announced that total approved investments — both foreign and domestic — for the first half of 2025 rose by 18.7% year-on-year, with FI contributing about 56% of the 3,011 approved projects. These projects, worth RM190.3 billion, are expected to generate 89,294 new jobs.
This data is vital as it allows both the public and private sectors to evaluate whether Malaysia remains competitive in attracting investment compared to its regional peers.
MIDA’s quarterly updates also inform the public about which sectors are drawing investment. Each project is tagged by sector and must align with national policy targets, including the New Industrial Master Plan 2030, National Semiconductor Strategy, or the Green Investment Strategy.
Given that manufacturing and exports are among Malaysia’s GDP pillars, MIDA-approved investment data is crucial for MITI, analysts, economists and investors aiming to understand the country's economic trajectory.
Without this, how can investors decide whether to “accelerate” or “wait”, to “turn” or “drive straight ahead”? There is no spin here — MITI has consistently been transparent with MIDA’s investment approvals. These figures help track what has been realised versus what was promised — no one wants empty promises.
The investment figures released yesterday also reflect a shift in the nature of foreign investments entering Malaysia.
Many new investments are technology-based, coming in the form of intellectual property, long-term leases and phased equipment procurement.
Realising these investments takes time. Large-scale manufacturing, energy, semiconductor or data centre projects typically take years between approval and execution before flows appear in balance of payments data. It's unreasonable to expect that the RM378.5 billion in approved investments for 2024 will be fully realised in the immediate quarters.
Even if the implementation of these projects isn’t always visible to the average Malaysian, that does not mean they aren’t progressing. Just look at the number of construction activities by local and foreign manufacturers from January to June 2025. Then consider our unemployment rate — Alhamdulillah, it has steadily declined from 3.6% in January 2023 to 3.0% in June 2025.
The key takeaway from this episode is the need to examine all data thoroughly — not to jump to conclusions based on selective narratives. Challenges always exist, but Malaysia’s long-term growth outlook remains far more encouraging than some portray.
MITI’s responsibility is to ensure that MIDA-approved investments are translated into high-paying jobs, globally competitive industries, and stronger communities.
For Malaysia, the deeper message behind every approved investment and every realised ringgit is of a nation charting its path with confidence — equipping its people for the future, empowering its communities with new opportunities, and making its mark on the global stage. - August 23, 2025
*Tengku Zafrul Abdul Aziz s Malaysia’s Investment, Trade and Industry Minister
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