FDIs: Why Approvals Are Up but Inflow Down

 

The Statistics Department (DOSM) recently reported on foreign direct investment (FDI) into Malaysia - inflow plummeted from RM15.6 billion in the first quarter to RM1.6 billion in the second quarter of this year. 

In their overseas missions, both Prime Minister Anwar Ibrahim and Investment, Trade, and Industry Minister Tengku Zafrul Abdul Aziz routinely announce huge investment commitments made. Mida said in February, Malaysia attracted RM378.5 billion of approved investments in the services (RM252.7 billion), manufacturing (RM120.5 billion), and primary (RM5.3 billion) sectors last year, a 14.9 percent increase compared to RM329.5 billion in 2023. Domestic investments accounted for a substantial 55.0 percent or RM208.1 billion of the total approved investments, while foreign investments contributed 45.0 percent, amounting to RM170.4 billion. 

Impressive, but why are these figures not being translated into actual FDI? The short answer is that commitments and even approvals don’t become investments until two to three years later. There are some valid explanations. Foreign investments are lumpy in nature but might take some time to materialise. There may be changes in investment decisions or even higher repatriation of income by foreign investors. 

According to MIDA, its approved FDI 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). 

Mida does not provide actual FDI figures. The DOSM does. It is instructive to note that actual FDIs in 2024 were RM51.5 billion, up from RM38.6 billion in the preceding year. 

That’s still far from the approval figures of RM380 billion and RM330 billion for 2024 and 2023, respectively, and indicates that these figures must be used with considerable caution.

Perhaps the most instructive of charts for FDIs is as above, which shows volatility in yearly figures but a steady uptrend for cumulative FDIs. The actual FDI (in blue) peaked in 2022 when the Madani government was in power for barely a month and therefore could not claim credit. In 2023, when it was in power for a full year, the actual FDI declined, but made a good recovery in 2024. Considering that actual FDI for the first two quarters was just RM17.2 billion (15.6+1.6), the full-year figure is likely to be much less than last year’s RM51.5 billion. 

We may safely conclude that in the short term, FDIs simply don’t reflect the quality of the government, although in the longer term, it is likely to, especially if investment conditions and incentives remain steady. The seeming paradox of rising approvals and falling of actual FDIs is likely to remain and some people interpret differently to suit their arguments, including yours truly! 

References:

Comment | The paradox of rising approvals and falling FDIs, P Gunasegaram, Malaysiakini, 19 August 2025

My Say: Approved investments versus FDI: Manipulation or truly a non-issue? Tengku Zafrul/The Edge Malaysia, 25 August 2025

More Wealthy Malaysians Join B40

 

Escalating healthcare costs in the private sector are driving more affluent Malaysians, including Tan Sris and VIPs, to seek treatment at Hospital Kuala Lumpur (HKL). Its director told Berita Harian that many of HKL’s wealthy patients were referred from private medical centres, often after their insurance coverage ran out or when treatment costs became too high. This shift has been evident over the past decade, reflecting both financial pressures and confidence in HKL’s specialists and facilities. Trend shows that affluent patients also trust HKL’s quality of care and medical expertise. 

HKL currently houses 417 medical specialists, supported by nearly 900 medical officers and more than 3,800 nurses, treating up to two million patients annually. The public hospital is also equipped with advanced technology, including robotic-assisted surgery in its Urology Department, one of only two such facilities in Malaysia.

 

Source: https://en.wikipedia.org

HKL prioritises low-income groups, but it cannot turn away wealthier patients and has first-, second- and third-class wards to accommodate different needs. The M40 and T20 patients often sought oncology and radiology services at HKL, which are both highly specialised and costly in private hospitals. If we look at other countries, none offer healthcare services at RM1. 

Despite longer waiting times compared to private facilities, patients leave HKL with quality treatment, affordable medication and access to expertise that matches or surpasses the private sector. 

If we have the facilities, the people and leadership, we could do wonders in the public sector, especially in healthcare. This is the same in education or sports. Let the best people rise and we will have quality in our output or outcome! 

Reference:

Insurance runs out, costs too high: More wealthy Malaysians join B40 at Hospital Kuala Lumpur, Malay Mail, 7 September 2025

Malaysia’s Economy: Identity Politics and Reality!

The recent move by the United States to impose new tariffs makes one thing clear: we are heading toward economic warfare. You do not need weapons to attack and bring down a government. Economics is simple. It doesn’t care about your race, religion, or rhetoric. It rewards productivity and punishes inefficiency. It respects innovation, not entitlement. 

And this is where Malaysia keeps failing. We need to educate ourselves that the era of the 1990s and early 2000s—is over. Our future now boils down to pure productivity, innovation, and collaboration. For decades, we’ve been trapped in the politics of identity. We argue about quotas, special rights, and who deserves what, while the world races ahead.

 

Source: https://en.wikipedia.org

 

Vietnam is attracting manufacturers we once had. Indonesia is building a digital economy. Even Singapore, with no natural resources, is outpacing us (and that too with a population one-fifth of ours).

 

Meanwhile, we’re still measuring opportunity through the lens of race. Are we doing a disservice to our nation and to future generations? Here’s the hard truth: the global market doesn’t care if you’re Malay, Chinese, Indian, Kadazan or Iban. Investors only ask: Can you deliver? Can you innovate? Can you be trusted? If not, they will take their money elsewhere. The world owes Malaysia nothing.

 

Every time we reward mediocrity based on race, we punish the excellence that could lift the entire country. Every time we craft policy based on identity instead of merit, we weaken our international competitiveness. Every time we allow politics to divide us, we hand our future over to our rivals.

 

The government should not assume ordinary Malaysians are blind to this. Walk into a pasar malam or a kopitiam, and you’ll see people of all backgrounds trading, buying, and working together seamlessly.

 

On the ground, economics is colour-blind. It is politics that has poisoned the system for decades. If Malaysia wants to prosper, we must have the courage to separate race and religion from economics. This is a bitter pill to swallow, but a necessary one.

Education must focus on skills, not slogans. Our mantra must be quality education that delivers unmatched, excellent skills. Opportunities must be based on merit, not ethnicity. Merit breeds productivity and innovation—a fact proven by our own history. Productivity must matter more than privilege. Otherwise, we will slide into irrelevance.

 

Economics is not sentimental; it is not swayed by hype. It does not reward identity. It rewards those who work, innovate, and cooperate. If Malaysia doesn’t learn this truth soon, we will pay the price—not in political rhetoric, but in lost jobs, declining industries, and a generation left behind.

 

The staggering statistics of brain drain to our neighbours, who were once a part of us, tell the whole story or those that have left us for Canada, US, UK or Australia (over 285,000). And to Singapore… over 2 million. What’s the point of STEM, if we don’t have R&D in this country. What’s the point of space launch pads in Sabah or Pahang when we don’t have the engineers or astro-physicists? What’s the point of national cars which have out-dated technologies and remain shielded from competition? What’s the point of APs if it’s only for Ali Babas to thrive? Time is now to reform this nation. Have the courage please!

 

Reference:

Malaysia’s economy: Identity politics doesn’t pay the bills, KT Maran, Focus Malaysia,
1 September 2025

What Really is Keluarga Malaysia?

 

Malaysians have marked 68 years of independence on Aug 31 with an air display, fireworks, and waving of Jalur Gemilang. Official speeches highlighted our steady gross domestic product (GDP) growth, cultural vibrancy, and Malaysia’s role as Asean chair. We will have of our four-year low in inflation and tourist arrivals that outpace our neighbours.

 

However, shadowing the political platitudes is last month’s protest in Dataran Merdeka over rising living costs and lack of real reformasi promised in November 2022. The disconnect between the staged official optimism and public discontent is growing and glaring.

 

Source: https://en.wikipedia.org

 

Surveys by the Merdeka Centre show that three in four Malaysians rank the rising living costs as the biggest concern. The ruling coalition adds to the perception that 68 years of independence have yet to translate into policies that instil inclusivity and accountability in governance, stem corruption, nepotism, and cronyism. Besides delivering on its reformasi promises, the spirit of Merdeka is tested not in the pompous speeches but in the government’s commitment to “reducing inequality and enhancing (socioeconomic) mobility” (joint report, World Bank Group and the Economy Ministry, February 2025).

 

Many may perceive Merdeka as a hollow celebration when policies are steeped in creating a privileged and underprivileged class, an increasing proportion comprising millions of migrant workers.

 

So, what kind of Keluarga Malaysia are we really?

 

For a more meaningful Merdeka, we ought to march in step to a different beat post-2025 as one Keluarga Malaysia. The people perform their duties. The state recognises the people’s rights as members of the extended family. When an extended family member falls into difficulties, each family member is obliged to help. When a nation state slides into the pits, we are duty-bound to pull it out of sinking further.

 

By this logic, Keluarga Malaysia’s greatness is less measured by material gains than by how each family member is responsible for another. These are the values that grow the extended family and prosper as one people.

 

While protests, placards and political rallies do send a strong message to Putrajaya, ultimately, real change in mindsets and inter-racial engagements starts with us, in our homes, at our front gates, across the fences, and in our neighbourhood ties. But it is always difficult if politicians focus on differences rather than similarities. Diversity (to be celebrated) rather than homogeneity. Meritocracy rather than mediocrity. Openness rather than blinkered narrowness.

 

We don’t have much time. But our politicians and leadership remain oblivious!

 

Reference:

COMMENT | What kind of Keluarga Malaysia are we, really? Eric Loo, Malaysiakini, 30 August 2025

Why are 3 Laws Being Rushed?

 

Justice delayed is justice denied, but justice rushed is justice crushed - William Gladstone, former British Prime Minister

 Recently, three (now may be only two) major laws; the Urban Renewal Authority Bill (is deferred to a later date), the Gig Workers Bill, and the Government Procurement Bill 2025 were tabled in Parliament at a speed rarely seen in Malaysia’s legislative process. On paper, they represent reforms few would oppose modernising urban redevelopment, protecting gig workers, and bringing transparency to public procurement.

Source: https://en.wikipedia.org/wiki/Law

 

Yet, instead of appreciation, these bills have triggered a wave of resistance across Parliament, civil society, and affected communities. The backlash was unusual not because Malaysians oppose reform, but because of how these laws were drafted and rushed forward.

MPs complained about compressed timelines. Residents feared forced evictions under the URA Bill’s lowered consent thresholds. Gig workers felt sidelined as definitions and protections were finalized without real co-creation. SMEs warned that procurement reforms might favour large players if compliance costs went unchecked. 

What makes this particularly striking is that Malaysia already has a system to prevent exactly this kind of situation. The National Policy on Good Regulatory Practice (NPGRP) requires every ministry to conduct a Regulatory Impact Analysis (RIA) for new laws, with clear problem statements, evaluation of policy options, cost-benefit analysis, and at least 30 days of stakeholder consultation before any bill is tabled. The process exists to ensure laws are not only technically sound but also socially legitimate. 

Globally, governments face tight timelines. Scotland mandates a 12-week consultation period for major legislation. New Zealand requires Regulatory Impact Assessments before a bill even reaches Parliament. The EU goes further, obliging governments to publish public feedback reports showing which recommendations were accepted or rejected and why. These practices do not slow reform; they make it stronger, reducing the risk of amendments, court challenges, or public resistance after laws come into force. 

Malaysia can adopt similar safeguards without paralysing the legislative process. A minimum consultation window, fast-track parliamentary committees for complex bills, and pilot programs for high-impact reforms could all strike a balance between speed and substance. The key is transparency: publishing consultation feedback and RIA summaries would show citizens and businesses how their voices shaped the outcome. 

Reforms only work when people trust them. Laws passed in haste risk weak enforcement, constant amendments, and public suspicion. Malaysia needs urban renewal, gig worker protections, and procurement transparency but it also needs to prove that reform is being done with people, not around them.

Reform done right takes time. Reform done wrong takes forever to fix. These are not the reforms for a Unity Government. It creates disunity, lack of transparency and poor governance. 

Reference:

Rushed Laws, Silenced Voices: How Three Bills Shook Malaysia’s Parliament,

Wan Md Hazlin Agyl (Wan Agyl) Wan Hassan CMILT, 28 August 2025

 

13MP Structural Issues Not Addressed

 

The 13th Malaysia Plan (13MP), covering the period from 2026 to 2030, is a comprehensive blueprint that aims to transform Malaysia's economy and society. While it sets out ambitious goals and strategies, many have raised concerns about structural issues that are not be fully addressed or could hinder the plan's success.

 

Source: https://www.thevibes.com

 

Key structural issues that may not be adequately addressed by the 13th Malaysia Plan include:

 

·        Underemployment and Low-Quality Jobs: While the plan aims to create new, high-value jobs, it may not effectively tackle the issue of underemployment, where a significant number of workers are in insecure, low-paying jobs that do not utilize their skills (2 million currently). That’s also related to education.

 

·       Quality of Education: Quality is low in national schools – PISA scores attest to that. Brightest talents work abroad, over 280,000 professionals in Australia, US, UK and Canada. Only 4,673 talents are back between 2011 and Jun 2025. We love mediocrity and not meritocracy.

 

·        Inadequate Retirement Savings: Concerns have been raised that the plan does not have strong enough measures to address the problem of inadequate retirement savings for a large portion of the population, a long-standing issue.

 

·       Healthcare Underfunding: The plan's allocation for healthcare, while substantial, may not be sufficient to fully address the underfunded public healthcare system and its systemic challenges.

 

·   Environmental and Governance Gaps: While the 13MP mentions the green economy and sustainability, some environmental groups are concerned about a lack of firm legal and financing commitments to protect nature and biodiversity. There are also concerns about a lack of accountability and transparency in the implementation of projects, with the risk of patronage and inefficiency.

 

·        Execution Deficit: A recurring criticism of past Malaysia Plans is the gap between ambitious goals and their actual implementation. We meet 70% of targets!

 

·        GLCs and GLICs: Preponderance of their role in the economy. Over 42% of the economy is controlled by GLCs and GLICs. NEP objectives are met but we continue to talk about the shortfall – all the time.

 

·        GERD below 1%: The Gross Expenditure for Research and Development to GDP has been at (or below) 1% of GDP. Many other countries have it at 5% or at least 3%. South Korea and Israel are at the high end. 13MP suggests 2.5% of GDP by 2030. But this was the target to achieve by 2025. So much for plan and execution!

 

·        Plight of Indians: The B40 Indian group contributes 72% of all gangsters in the country. The pittance allocated is not going to change their plight. Apa lagi India mahu? They want education, employment, entrepreneurship, empowerment, and an endowment (like ASN/ASB). Is that too much to ask?

 

In summary, while the 13MP is seen as a step forward with its focus on digitalization, sustainability, and social well-being, its success will hinge on its ability to overcome long-standing structural weaknesses, particularly in governance, social protection, and environmental policy, which some critics believe are not fully or adequately addressed in the current blueprint.

Has Power Hit the Roof?

 

Rooftop solar is becoming a critical component in Malaysia’s clean energy transition. Unlike large-scale solar farms that require vast tracts of land and long development timelines, rooftop systems work through panels on the roof of buildings, offering a quicker and more decentralised way for households and businesses to generate electricity. Despite its benefits, adoption remains low, representing only around 13% of Malaysia’s 269-gigawatt solar resource potential. 

One of the early initiatives to support rooftop solar adoption was the Net Energy Metering (NEM) scheme. Introduced in 2016 with a quota allocation of 500 megawatt up to 2020, the initial uptake came mostly from commercial and industrial sectors. These users had larger rooftops, higher energy usage and more financial capacity to invest in solar PV systems.

 

Source: https://en.wikipedia.org

Subsequent revisions of NEM, namely NEM 2.0 in 2019 and NEM 3.0 in 2021, introduced targeted categories to better support residential adoption, with the government recognising that commercial uptake alone is not enough to meet Malaysia’s carbon reduction goals. 

Collectively, rooftops across homes represent a vast, under-utilised solar real estate. Countries like Germany, Australia, and the United States show that broad residential participation is key to cutting carbon emissions. 

In Malaysia, users with solar panels under NEM could export excess electricity back to the grid and receive credit to offset their electricity bills. This made solar adoption financially attractive for residential users. 

With NEM 3.0 fully subscribed as of June, the government is expected to announce a new scheme by the end of August (still to be announced)! 

The government has been proactively introducing new initiatives such as Self-Consumption (SelCo), the Community Renewable Energy Aggregation Mechanism (Cream), and the Clean Renewable Electricity Supply (Cress). NEM’s success is due to its simplicity and accessibility.

Currently, many homes struggle to optimise solar usage since peak generation occurs during the day while most consumption happens at night. While battery storage could solve this mismatch, it significantly raises the cost and payback period for homeowners. However, panel prices have recently begun to climb, partly due to policy shifts and supply constraints in China, which is the world’s largest solar manufacturer. 

This may add cost pressure to both consumers and installers. To help ease the burden of upfront capital expenditure, many companies are now offering credit card instalment plans, making it more manageable for homeowners to invest in rooftop solar. 

Upfront costs remain a major deterrent for many small and medium enterprises. While rebates and leasing models provide some relief, they don’t fully close the affordability gap, especially for businesses with tighter cash flows or limited access to financing. 

On the Cream initiative, which involves leasing rooftops to energy companies that install solar panels and sell the electricity to nearby green consumers, it needs to strike a balance between homeowners and off-takers. While it taps into residential rooftop space, homeowners don’t get to use the power themselves. The scheme also requires aggregating multiple households, coordinating with different owners and securing a willing buyer within a 5km radius. For the average homeowner, NEM was much more straightforward. 

Can we do a mixture of personal income tax rebate, cost subsidy and NEM 4.0? If the residential market is fixed substantially then we could relieve TNB of more planting-up and they could then dividend-out more to their shareholders. 

Reference:

Power hits the roof? Gurmeet Kaur, Star Biz7, The Star, 25 August 2025