Malaysia’s leap in competitiveness, investments reflect strong investor confidence, economic resilience - Economists - Relevant News

Malaysia’s leap in competitiveness, investments reflect strong investor confidence, economic resilience - Economists

Malaysia’s 2025 WCR leap and Shell’s RM9 billion investment reflect rising investor confidence and early success of the Madani Government’s economic framework despite global challenges. Photo: Edited via Canva

SHAH ALAM, 20 JUNE 2025 – Malaysia’s impressive 11-spot leap to 23rd in the 2025 World Competitiveness Ranking (WCR), coupled with Shell’s commitment to invest over RM9 billion in the coming years, is widely seen as a strong affirmation of the country’s growing attractiveness to investors, despite ongoing global economic challenges.

Economists welcomed these developments as clear indicators that the Madani Government economic framework is beginning to bear fruit.

They pointed to the government’s focus on fiscal reform, long-term economic stability and inclusive growth as key factors behind this renewed investor confidence and improved global perception of Malaysia’s economic direction.

Economist and Putra Business School Business Administration Programme Director Associate Professor Dr Ahmed Razman Abdul Latiff said these indicators were highly encouraging, particularly given the current global uncertainties.

“I view these recent developments as highly encouraging, particularly given the challenging global economic environment Malaysia is currently navigating, including potential tariff hikes from the United States (US).

“Despite such external pressures, Malaysia's significant improvement in the 2025 WCR and Shell’s RM9 billion investment signal that investor confidence remains robust.

"This affirms Malaysia's standing as a preferred investment destination, bolstered by our political stability, strong growth potential and increasing competitiveness," he told Sinar Daily when contacted.

Razman credited the government’s fiscal reforms, especially subsidy rationalisation and deficit reduction efforts, for improving efficiency and laying the foundation for long-term sustainable growth.

These measures, he clarified, help curb wastage and enable better resource allocation.

“The Madani government's commitment to sustainability, resilience and inclusivity is evident in its initiatives to reduce inequality, raise household incomes through better wages and manage the cost of living.

“When such efforts are effectively implemented and truly benefit the population, they help preserve social cohesion. This stability, in turn, enhances Malaysia’s attractiveness to investors," he added.

Razman also cited the importance of creating high-skilled jobs as a key strategy to address income inequality and job mismatches.

He described that aligning individuals’ skills with the right employment opportunities not only improves their livelihoods but also boosts domestic consumption and overall economic activity.

However, he cautioned that public perception plays a critical role in the success of these reforms.

To ensure citizens recognise the benefits, he stressed the need for clear and effective communication.

On June 18, Anwar (right) confirmed Shell CEO Wael Sawan’s (left) pledge to invest over RM9 billion in Malaysia within two to three years. Photo: Anwar's Facebook page

Malaysia Airports Holdings Bhd (MAHB) Chairman and economist, Dr Nungsari Ahmad Radhi echoed similar sentiments, noting that Malaysia’s rise in the global rankings was a sign that the Madani economic framework was producing results.

“Malaysia’s recent rise in the 2025 WCR is a highly encouraging development, especially given today’s uncertain global environment.

"It signals that the Madani economic framework is beginning to deliver tangible results.

“Since the index assesses economic performance, government and business efficiency and infrastructure, our improved ranking reflects progress across all these areas," he said.

Nungsari said that fiscal reform must remain a top national priority and emphasised the importance of public understanding of the rationale behind such reforms.

Strengthening Malaysia’s fiscal position, he added, inevitably involves making difficult decisions, whether through spending cuts, reallocations, or revenue increases. It is therefore crucial for the public to grasp why these measures are necessary.

He cited the Fiscal Responsibility Act 2023 (FRA) and the ongoing subsidy rationalisation efforts as key components of these reforms.

According to him, such initiatives are vital to preserving Malaysia’s sovereign credit rating, which in turn helps to keep the country’s borrowing costs manageable.

“In the context of the Madani administration, sustainability is fundamentally about fiscal sustainability. If we fail to protect our fiscal space, our ability to spend or borrow during a crisis, we risk undermining our resilience.

“Our companies must look toward larger markets, particularly across Asean.

"At the same time, we must strengthen our workforce through upskilling and make it easier to do business. These efforts, collectively, will reduce income inequality and build a more inclusive economy," he added.

On June 18, Anwar (right) confirmed Shell CEO Wael Sawan’s (left) pledge to invest over RM9 billion in Malaysia within two to three years. Photo: Anwar's Facebook page

Economist and Director of Williams Business Consultancy Sdn Bhd, Dr Geoffrey Williams saw Shell’s RM9 billion investment as a clear indication of long-term confidence in Malaysia’s economic environment.

He described the move as a welcome development, noting Shell’s decades-long relationship with the country.

“In many ways, such enduring partnerships speak more meaningfully to the strength of Malaysia’s economic environment than short-term fluctuations in metrics like the WCR.

“From a macroeconomic standpoint, the Malaysian economy is performing well. Growth remains strong, inflation is stable and the financial system is sound. The country’s fiscal position, particularly regarding debt and deficit levels, has stabilised," he said.

However, Williams pointed out that despite Malaysia benefiting from decades of foreign direct investment, these investments have yet to significantly translate into the creation of high-skilled jobs or meaningful wage growth.

He argued that the existing wage-setting mechanisms have failed to distribute the benefits of the country's development fairly.

“The system has not effectively channeled the gains from economic development into salaries, upward mobility, or reduced income inequality...an area that clearly needs reform.

“While there is still considerable work to be done to achieve lasting improvement, the path forward is clearer with the proper implementation of the Medium-Term Fiscal Strategy (MTFS) and the Fiscal Responsibility Act (FRA).

"Alongside these efforts, continued focus on reducing wastage, leakages, and corruption remains essential. In this context, subsidy rationalisation is a key tool and progress has already been made in areas like electricity and diesel subsidies, with RON95 fuel reforms expected in the near future," he said.

Williams affirmed that the Madani framework is grounded in strong principles and holds the potential to bring real benefits to the public while promoting long-term economic development—provided it is implemented effectively.

However, he pointed out that a major challenge lies in the way these benefits are identified and communicated.

“Both areas need considerable improvement to ensure the public can fully understand and feel the impact of the initiatives under the framework,” he said.

On June 18, Prime Minister Datuk Seri Anwar Ibrahim revealed that Shell’s Global Chief Executive Officer (CEO) Wael Sawan had pledged to invest over RM9 billion in Malaysia within two to three years.

The announcement came after a courtesy call on the Prime Minister following his engagement at Sasana Kijang.

Anwar described the investment as a commitment to creating high-skilled jobs and a reflection of Shell’s long-standing trust in Malaysia’s direction under the Madani government, which he said was built on stability, sustainability and long-term resilience.

Malaysia also rose 11 places in the 2025 WCR, from 34th to 23rd—a rare and significant improvement.

Malaysia University of Science and Technology (MUST) economics expert, Professor Emeritus Dr Barjoyai Bardai said the jump reflected a strong recovery, driven by prudent fiscal policy, targeted subsidies and growing investor trust.

While the effects may not yet be fully felt by the public, he predicted they would translate into higher incomes and more job opportunities in the medium term.

Source: Sinar Daily