Malaysia achieved its highest-ever approved Foreign Direct Investment (FDI) in 2023, reaching a total of 399.5 billion ringgit. This exciting news quickly became the talk of social media, but it raised some questions. Why is this amount considered high, yet its impact is not reflected in the value of the ringgit?

It is important to understand the journey of FDI before it materializes. FDI goes through three phases before becoming a reality: Memorandum of Understanding (MOU), project approval, and project implementation. Although an MOU is signed, not every project receives approval and implementation. The decision on FDI approval and project implementation are closely linked. According to Tengku Zafrul, over 85% of approved manufacturing projects will be implemented.

FDI approval data is collected by MIDA and Bank Negara Malaysia, and when viewed in historical trends, it shows a significant increase. Although approval data does not include implemented FDI, changes in approved projects affect the actual FDI flow. In 2024, we may see the inflow of funds approved in the previous year, but it will not happen all at once.

However, the question of why the ringgit value did not strengthen in line with the high FDI amount is a concern. It should be noted that the funds approved in 2023 may not have been fully disbursed in the same year. Furthermore, FDI project implementation is done in stages. Approximately 85% of approved manufacturing projects are expected to be implemented, but the remaining projects require further research to understand the issues and address existing weaknesses.

If we want to fully understand Malaysia’s economic strength and the impact of FDI, we need to focus on project approvals and implementation effectiveness, not just approvals alone. Through in-depth studies and understanding, we can identify potential improvements to ensure that Malaysia continues to be a preferred destination for foreign investment.