FDI Figures: What's The Real Thing?

It has been widely reported in the media that International Trade and Industry (MITI) Minister Datuk Mustapa Mohamed said he is confident that the country’s foreign direct investment (FDI) will exceed RM30 billion in 2011 as FDI for the first quarter of this year has topped RM11 billion.

This compares against the achievement in 2010 of RM29.3 billion. The Minister had further confirmed the 1st quarter achievement in his parliamentary response to me on 16th June where he stated that:

Dari segi pelaburan asing, saya ingin berkongsi maklumat Ahli Yang Berhormat bahawa untuk tiga bulan pertama jumlahnya RM11 bilion berbanding RM29 bilion tahun lepas. Bermakna pada tahun ini prestasi pelaburan asing adalah amat menggalakkan berbanding dengan prestasi tahun lepas. (source: Hansard)

However a check on the MITI website revealed a completely different set of numbers.

While the statistics provided confirmed that “approved” FDI totalled RM29 billion in 2010, the “approved” FDI for the first 3 months of this year showed only a figure of RM4.6 billion, a far cry from the RM11 billion boasted by the MITI Minister.

In fact, based on the latest updates from the website, which included the April FDI figures, the amount “approved” was only RM9 billion, still lower than then figure cited by the Minister for the first 3 months. Datuk Mustapa Mohamed should clarify the glaring difference in numbers so that Malaysians and foreign investors will not be confused with the conflicting numbers, while policy-makers are able to measure the progress of the Malaysian investment climate more accurately.

In addition, MITI should not only provide numbers for “approved” FDI, but also a comparative set of numbers for “actual” FDI brought into the country post-approval. Over the years, the government has announced many “approved” investment projects which did not materialise.

The difference between the 2 sets of numbers is most glaring for the year 2009 where UNCTAD had reported a steep fall in FDI for Malaysia to only US$1.38 billion (RM4.3 billion), only a fraction of the figure provided by MITI which showed US$6.48 billion (RM20 billion) in “approved” investments.

The Minister had then admitted that the UNCTAD figure was accurate as it was measuring “actual” investments, as opposed to “approved” investments as published by his Ministry.

We look forward to improved FDI performance by Malaysia in the interest of all Malaysians. However, in order to objectively assess our performance, the Government needs to be consistent and transparent in providing all relevant figures. Any attempts to skew our investment figures or provide a less than accurate picture of our climate will only lead to poor policies and ultimately a long term decline in our economic attractiveness.