Malaysia’s foreign direct investment (FDI) performance has been highlighted as a key success story in the last few years.
According to investment, trade and industry minister Johari Ghani in a parliamentary answer last week, a total of 1,361 foreign investment projects, worth RM357.1 billion were approved from 2022 to September 2025. This works out to one per day.
About 71%, or 966 projects, have been realised over the same period which means they have commenced operations, started installing machines or are in the process of building or renting factories, buildings or warehouses. This is about one for every working day, so the rate of approval and realisation appears to be brisk on these metrics.
The 1,361 approved investments are expected to create 185,044 job opportunities and the 966 realised projects have already created 141,470 jobs. This is where the analysis becomes interesting.
Jobs from approved FDI account for 1.1% of the total workforce and realised FDI jobs make up just 0.8%. So concerns raised by some that FDI, especially recent data centre investment, is not creating very many jobs appear to be justified when looked at in the big scheme of things.
The jobs are also expensive to create. The realised FDI projects cost RM292.1 million and created 146 jobs on average and the approved investments cost RM262.4 million and will create 136 jobs on average. Overall, it costs RM1.9 million to RM2.0 million for each job created.
Around 356 manufacturing projects are still at the planning stage. These projects involve RM60.1 billion in approved investments that are expected to generate 39,121 new job opportunities. This means each new job will cost RM1.5 million to create.
Approved and Realised FDI 2022-2025: Summary
Many of the jobs created in realised FDI projects would be in construction and installation of infrastructure which are often jobs taken by migrant workers. Afterwards rental agents, maintenance and warehouse management jobs become available which are often low-skilled jobs and are increasingly automated.
Johari also gave us information on the salaries people earn. He said the 966 realised FDI projects had already created 141,470 job opportunities, of which 7,865 or 5.6% offered salaries of more than RM10,000 a month. This is just 1.3% of jobs in this pay bracket in Malaysia.
Approved and realised FDI 2022-2025: Job creation
This was followed by 21,550 jobs, or 15.2% with salaries of between RM5,000 and RM10,000, which is just 1.9% of jobs in this pay bracket.
The balance of almost 80% of FDI-related jobs pay less than RM5,000 per month, which is 2.2% of jobs in this salary scale which includes machine operators, sales staff, clerks and general workers.
Based on these numbers we can estimate that the RM282.2 billion in realised FDI generates RM7.4 billion in wages per year which is a wage-based return of 2.6% of the value shared with employees.
In other words, for every ringgit of FDI each year, employees in Malaysia, most of whom are locals, make 2.6 sen.
Of this RM7.4 billion the top earners, who have 5.6% of jobs get 12.8% of the wages, the middle 15.2% get 26.3% of the wages and the majority 79.2% of workers get only 61.0% of the wages.
So, while it is certainly true that RM282.2 billion of realised FDI is welcome, it also appears to be true that it provides relatively few jobs which are mostly low paying, are very expensive to create and represent a poor return on investment where wages are concerned.
Perhaps more important is that FDI-related jobs do not move the dial when it comes to creating large numbers of high-paid jobs so urgently needed in the wider economy. This can only happen if the FDI creates wider spillovers.
The views expressed are those of the writer and do not necessarily reflect those of FMT.