Foreign direct investments vs domestic investments

THE domestic debate on whether a country should focus on foreign direct investments (FDIs) or direct domestic investments (DDIs) is gaining traction as Malaysia moves towards increasing private investment under the 10th Malaysia Plan. Questions are being raised on the impact and contribution of FDIs versus domestic investments on the economy.

Before I go any further, some definitions are in order. What is FDI? What is direct investment abroad and what is domestic investment?

FDI is defined as a long-term investment in a foreign country. It has three components, namely equity capital, reinvested earnings and intra-company loans. Domestic investment is investment by local companies in the domestic market. Cases where Malaysian conglomerates invest overseas are known as direct investments abroad.

The labs initiated by PEMANDU have identified 131 projects, also referred to as Entry Point Projects. These are projects which will be launched in the next five years. It is hoped that the implementation of these projects will help stimulate private investment.