Did UNCTAD and Tony Pua get the FDI figure wrong? A look into Misleading Statistics…

ARCHIVES 2010

By admin-s On Jul 29, 2010

By Snowball

I read a letter by the same author in both The Sun and Malaysiakini and some socio-political blogs. The writer claimed that UNCTAD got its figures wrong. Then, he blamed Tony Pua for not cross-checking with the MIDA statistics before attacking the government for the bad performance.

I highly doubted that UNCTAD and Tony Pua can get it wrong. As someone who enjoys looking into numbers and finding the true answer, I decided to look into the writer’s claim.

It is actually quite hard to find the FDI inflow figure for Malaysia. The Malaysia Department of Statistics website is more un-user friendly even when compared against the notoriously difficult to navigate National Bureau of Statistics of China website. But, I manage to find the press release by MIDA. Here’s the important excerpt from the press release.

From the total approved investments last year, foreign direct investments (FDIs) accounted for 67.8% or RM22.1 billion and domestic investments made up the balance of RM10.5 billion or 32.2%.

The figure above more or less matches the figure provided in the letter by Mr. Calvin Sankaran after converting it into USD.This Mr. Calvin Sankaran goes about attacking Tony Pua credibility and qualification as an Oxford economics graduate without looking at his own qualification. Hello uncle, total approved investments is not FDI. Total approved investments are proposals to invest in Malaysia that is approved by the government but the actual act of investing the money in Malaysia have not complete or begin yet. The proposed amount may take a few years to be deployed fully. The RM22.1billion figure being mentioned by MIDA is the best case scenario. Some investors may decide not to proceed on with the investments after the approval like the case of some Dubai-based investors in Iskandar.

Another allegation by Mr Sankaran is quoted below:

First of all, had Pua followed the FDI trends, he would have taken cognisance of the fact that Uuctad’s data on Malaysia’s FDI inflows are completely wrong. Further, had Pua done his homework, he would have surely discovered that the data provided by the UN agency simply does not make any logical sense.

I am not sure how did Unctad arrive at the FDI figure of US$1.38 billion but Mida had months ago had published on its website that Malaysia procured FDI worth US$6.48 billion in 2009.

On one paragraph, he claimed that UNCTAD data do not make any logical sense, then, he went on to say that he did not know how UNCTAD arrive at the FDI figure. I would like to ask Mr Sankaran, how you know the figure is illogical when you do not know how they arrive at the figure? A quick check at the UNCTAD methodology would reveal that there are nothing wrong with their definition of FDI. You would expect a responsible person to spend a minute or two to google UNCTAD methodology before writing a letter that will be published in a national newspaper. I also find it laughable that the author can question the UNCTAD figure but trust the MIDA figure blindly.

I would also like to take this opportunity to highlight a lot of reasoning error that the writer made. I think our Malaysian education system is so screw up that most people cannot think logically anymore. This problem is not just limited to Mr Sankaran, it happened to most Malaysian (me included but at least I try guard against making such an error).