Investment refers to additions to physical stock of capital (road construction, factory construction, purchasing of machinery, etc) and not buying of bonds and shares in the stock market.

Figure 2a - Before 1997/98, investment was a major driver of Malaysia's economic growth.

Figure 3a : Real GDP and Investment Growth in Malaysia

Figure 3b - In 1995-1997, investment's share in GDP was greater than private consumption - sign of overinvestment.

Figure 3b: Malaysia's Private Consumption and Investment

(1) MIDA approved investment

Under the Industrial Coordination Act (ICA), a manufacturer with RM2.5 mln or more shareholders’ funds or 75 or more full time employees, needs to get MIDA’s approvals on its investment projects.

MIDA’s statistics cover approved projects by number, industry, proposed capital and by country. Foreign investments concentrate mainly in the electrical & electronic products industry while domestic investments are more evenly spread out.

Table 3a : Approved Projects Jan-Jun (amount in RM mln)

Figure 3c - Driven by foreign direct investments, approved investments were strong towards the end of 1980s.

Figure 3c : Proposed Capital Investment in Malaysia

Figure 3d - Foreign investments were led first by Japanese and Taiwanese investors, the US joined in in the 1990s.

Figure 3d : Foreign Investment in Malaysia

(2) Imports of investment goods

Figure 3e - Imports of investment goods (machinery, aircraft, ships) is also a good indicator of investment.

Figure 3e: Malaysia's Invsetment and Capital Goods Imports

(3) Bank Lending

Investment needs capital financing. So bank lending is also a good indicator of investment.

Figure 3f - Bank lending growth.

Figure 3f: Malaysia's Bank Lending

Figure 3g - Bank lending to property and manufacturing sectors.

Figure 3g :Malaysia's Bank Lending

Figure 3h - Bank lending to construction and manufacturing sectors.

Figure 3h : Malaysia's Bank Lending

(4)US Durable Goods Orders

Durable goods orders refers to manufacturing items intended to last for 3 years or more (computers, machineries, etc).

Figure 3i - Total durable goods orders.

Figure 3i : US's Durable Goods Orders

Figure 3j - Durable goods orders excluding defense and aircrafts. This reflects a more accurate picture of private investment because defense and aircrafts goods orders are volatile.

Figure 3j : US's Non-defense Capital Goods Orders Excluding Aircraft

(5) Japan’s core machinery orders

The major investment indicator for Japan is core machinery orders. It refers to total machinery orders minus electric power machinery and ships.

Figure 3k - Investment and core machinery orders move in close steps.

Figure 3k : Japan's investment and core machinery orders

(6) Tankan survey

It is a business sentiment survey, asking businesses their judgement on business condition. High business sentiment leads to high investment spending.

Figure 3l - Tankan and investment spending move in the same direction.

Figure 3l : Japan 's tankan and investment