Malaysia’s foreign direct investment (FDI) is expected to remain robust in the long term, but there could be repercussions in the short term as investors hold back on their investment decisions amid heightened global uncertainties.

These uncertainties triggered by geopolitical risks are further exacerbated by US president Donald Trump’s import tariffs and the looming trade war.

However, economists viewed this scenario as a temporary setback as the country’s economic fundamentals remain intact.

Furthermore, they said Trump’s delayed tariffs on Canada and Mexico for another month may reduce the chances of an outbreak of a broader trade war.

HSBC Asean economist Yun Liu told StarBiz despite recent tariff announcements from the United States on Mexico, Canada and China, there remains huge uncertainty on future tariff risks.

She said this would likely put investors on a cautious footing in the near term when looking not only at Malaysia, but also other Asean countries.

That said, she said there are still good reasons to believe in Malaysia’s growth prospects, as the determinants of FDI often focus on long-term fundamentals.

“If we measure FDI commitments as a percentage of gross domestic product (GDP), Malaysia has topped the region since late 2021.

“After all, a confluence of factors, including its significance in the global tech supply chain, friendly FDI policies, existing industry clusters, a skilled labour force and extensive free trade agreements or FTAs make Malaysia an outperformer in the region.

“One thing worth keeping an eye on is the New Investment Incentive Framework, expected to be unveiled in the first quarter of the year (1Q25) and implemented in 3Q25.

“Malaysia needs a set of new incentives to lure investments into high-tech sectors that produce high-value jobs,” Liu added.

RAM Rating Services Bhd economist Nadia Mazlan said in the short term, the perils of potential Trump tariffs may lead investors to hold back on their investment decisions, which could weaken FDI into Malaysia.

However, she said as jitters wear off, tariffs that are currently being imposed on China may prompt even more manufacturing companies to adopt the China Plus One strategy.

This supply chain realignment could lead to a rise in investments into Asean, including Malaysia, as seen during the first United States-China trade war.

“As transpired back in 2018, when the first trade war was initiated, we saw Malaysia’s net FDI slip to RM30.7bil from RM40.4bil in 2017, before rising to RM32.4bil the following year.

“Thus, if history serves as any guidance, the unpredictability of Trump’s trade policies could hamper investor sentiment in the near term, leading to a more moderate net FDI inflow this year compared to last year.

“That said, foreign capital investments are typically made to further an entity’s long-term goals and objectives. Thus, the committed FDIs in Malaysia are unlikely to be swayed by short-term geopolitical fluctuations,” she noted.

Nadia said Malaysia’s FDI will likely remain relatively robust this year on the back of a still-favourable FDI outlook, albeit somewhat dampened by heightened global uncertainties.

She said the latest foreign investments approved data suggest a healthy FDI pipeline, registering RM106.7bil worth of foreign investments approved for the first three quarters of 2024, most of which were in manufacturing.

The full-year investment approval amount for 2024, she said, while likely to come in lower compared to RM188.4bil in 2023, is still markedly higher than the pre-pandemic average (2016-2019 average: RM69.1 bil).

“We expect some of these investments to materialise soon, which should continue to support Malaysia’s FDI inflow this year,” Nadia said.

OCBC Bank senior Asean economist Lavanya Venkateswaran expects FDI inflows to remain steady this year.

She said notwithstanding global volatilities, Malaysia’s economic fundamentals have become stronger in recent years.

“Malaysia remains an attractive destination for manufacturing and services FDI inflows based on relatively solid infrastructure, young workforce, strong positions in the electrical and electronics (E&E) and commodities supply chain.

“These factors will continue to hold water even in 2025. This is complemented by the government’s push to diversify growth across the country, for example, setting up of the Johor-Singapore Special Economic Zone (SEZ), facilitate and develop infrastructure and implement the various medium-term economic plans will keep FDI inflows into Malaysia well buoyed,” Venkateswaran said.

Malaysia recorded FDI inflows (on a balance of payments basis) of RM29.1bil for the first three quarters of 2024, about 39% higher than the period in 2023. The trend for FDI inflows is upward and this is also being reflected in broader investment approvals. For the first three quarters of 2024, Malaysian Investment Development Authority (Mida) approved RM254.7bil of domestic and foreign investments across various sectors.

Juwai IQI global chief economist Shan Saeed said Malaysia continues to draw investment from local and foreign investors due to its macroeconomic stability, increasing demographics and policy consistency.

“The outlook for investment in 2025 looks promising with FDI expected to increase by 10% to 15% in the current fiscal year. Malaysia has created its own niche as information and communications technology (ICT) and data centre reliable hub for the global market in the last three to four years.

“The main drivers that will attract FDI inflows into the country include accelerated economic growth trajectory, ⁠macroeconomic stability, foreign investors positive outlook on the country, tech savvy labor force, modern infrastructure, and its strategic geographical location in the region. These all bodes well for FDI inflows into Malaysia,” Shan said.

At the same time, he said Malaysia continues to compete in FDIs with neighboring Asean countries like Indonesia, Vietnam, Singapore and the Philippines. In terms of regional competitiveness, Malaysia is fairly competitive, thanks to its four key variables to attract FDIs – political stability, productive labor force, modern infrastructure, and consistent economic policies and development outlook.

MARC Ratings Bhd chief economist Ray Choy said the global trade environment is expected to become increasingly complex this year compared to 2024, potentially dampening business sentiment and transaction velocity.

“Despite this, FDI typically operates on multi-year planning horizons, indicating that Malaysia is likely to continue benefiting from a robust long-term economic strategy.

“This strategy includes actively pursuing a diversified portfolio of investors and trade partners, pertinent examples are the Johor-Singapore SEZ and renewable energy investments in collaboration with South Korean companies in Sarawak, which exemplifies Malaysia’s approach to diversifying business partners within Asia amidst global trade challenges,” he said.

Choy said in recent years, Malaysia has experienced a surge in FDI inflows beyond long-term average levels since 2021, driven by national economic blueprints focused on increasing GDP contributions from higher value-added sectors and ongoing economic transformation.

As a leader in semiconductor manufacturing, which is currently a high growth sector, Malaysia would continue to benefit from policies such as the National Semiconductor Strategy, he said. Other sectors would also contribute significantly, driven by the New Industrial Master Plan 2030, National Energy Transition Roadmap, and goals towards the upcoming 13th Malaysia Plan.

“our baseline scenario suggests Malaysia will continue to benefit from trade diversion, as US tariff policies remain primarily targeted at China, with potential for renegotiation if China adopts a less assertive geopolitical stance.

“While the United States has begun with a 10% tariff, this measured approach remains subject to review and depends on China’s diplomatic strategy,” Choy noted.

As to what Malaysia should do to further attract FDIs, he said the country has made considerable progress in enhancing tangible aspects that support (FDI), including improvements in transportation infrastructure, competitive rental rates, and well-connected utilities.

However, Choy said there is an urgent need to address several intangible factors that could further enhance FDI inflows. A critical area of focus is the development of skilled human capital, which is essential for attracting high-value investments, particularly in the technology sector. Additionally, he said there needs to be a greater emphasis on research and development (R&D) to foster innovation and drive economic growth.

“Nonetheless, it is important that basic sectors are not neglected in the pursuit of high-growth, high-value sectors, particularly for the purpose of agricultural security as Malaysia’s ecological abundance is a natural strength that should be capitalised upon.

“When assessing FDI, it is essential for a strategic focus on sectors that create spillover effects across the economy and generate employment opportunities. Consequently, attracting FDI must go beyond mere value creation.

“It should be targeted on a deal-by-deal basis to ensure that sustainable economic impacts are achieved. Given the commercial aspects of attracting FDI, dynamic regulatory and policy flexibilities should be tailored to each investment deal,” Choy said.

Juwai’s Shan said to further step up FDI, the government can navigate the new tariff regime from the Trump administration by exploring new markets in the Gulf Cooperation Council (GCC) countries, Africa and Asia, especially Asean to spearhead economic growth and achieve higher income.

“FDI, trade and commerce move in countries where economic growth momentum is strong, political stability is solid, has the ability to consume goods and services to bolster the GDP growth, and strategic geography.

“I foresee Malaysia’s GDP growth outlook to meander around 5 to 6% in 2025, and the country will continue to stay on global investors radar as it is the 26th largest economy of the world, 11th in Asia and third in ASEAN. Malaysia has also been running the trade surplus for the last 27 years,” Shan said.

RAM’s Nadia said Malaysia remains an attractive FDI destination given its unique strengths such as having a skilled workforce, robust infrastructure, and a business-friendly environment as showcased by our 12 th ranking in the World Bank’s ease of doing business index.

“Furthermore, Malaysia’s ability to attract FDI is clearly demonstrated in sectors where it holds a competitive advantage, such as E&E, as well as data centre developments, which have received significant government attention and support.

“However, increasing regional competition from peers could make it a challenge to sustain Malaysia’s investment competitiveness. In particular, Vietnam has been a top alternative to China for firms while Indonesia’s pull factor includes its large labour and market size,” she said.

Source: The Star

FDI forecast to remain robust

The Johor-Singapore Special Economic Zone (SEZ) will encourage the industry diversification needed for the state to shield itself from global trade uncertainties, said Chief Minister Datuk Onn Hafiz Ghazi.

In an interview with Channel News Asia, he said the SEZ, which was formalised in January, spans 3,571 sq km and covers 11 key sectors, including manufacturing, logistics, financial services, and the digital economy.

With rising geopolitical tensions such as those arising from Donald Trump returning as the US presidency as disruptions in the artificial intelligence space from the release of China’s DeepSeek model, doubt has befallen Johor’s data centre gold rush.

Global technology giants Nvidia, Microsoft, and GDS International have already established data centres in southern Johor, the release of the DeepSeek model has led the technology sector to rethink if the previous projections for data centre requirements remained accurate.

“At the moment, the demand (for) data centres in Johor is huge, there are requests from US, China, Australia and quite frankly, this demand is getting higher,” Onn Hafiz was quoted as saying.

“Right now, it’s not a major concern, but we will monitor as it goes.”

Onn Hafiz explained that the JS-SEZ would help mitigate this as the zone covers 11 disparate sectors that considered “global demand and Johor’s strength”.

The 11 are manufacturing, logistics, food security, tourism, energy, the digital economy, the green economy, financial services, business services, education, and health.

The state was also pushing for travel infrastructure development to complement the Johor Baru-Singapore RTS Link that is expected to come online next year, such as by expanding the MyBorderPass QR-code clearance system to improve cross-border connectivity.

Onn Hafiz said the state was also working to ensure the growth and development would be both sustainable and equitable, by ensuring that some of the revenue is channelled back to ensuring the quality of life for state residents.

These include prioritising affordable housing and food security to balance economic expansion with local quality of life improvements.

Source: Malay Mail

With Singapore SEZ, CM says Johor will be more than just data centres

The Johor-Singapore Special Economic Zone (SEZ) is well-positioned to handle uncertainties stemming from the ongoing US-China trade tensions, thanks to its diverse industries and strong workforce.

“I think if you look at the sectors, there is a clear show that we are diversifying into lots of industries, I think that should help manage the uncertainties that’s happening in the world,” said Johor Menteri Besar Datuk Onn Hafiz Ghazi to Channel News Asia today.

Onn Hafiz said that Johor’s top priority now is to implement SEZ policies and attract investors to ensure the zone complements the economic strengths of Singapore and Malaysia’s Klang Valley.

“And at the same time, we are putting a lot of effort when it comes to (developing) our talents.

“I think by having a resilient workforce, by giving them proper training and education, we should be able to embrace (the challenges of a global trade war) quite well,” he added.

Onn Hafiz highlighted the 11 different sectors outlined in the Johor-Singapore SEZ agreement, adding that they reflect “global demand and Johor’s strength”, making the economic zone resilient despite geopolitical uncertainties.

He expressed confidence in Johor’s growing data centre industry, citing strong demand from international firms.

“At the moment, the demand (to build more) data centres in Johor is huge, there are requests from US, China, and Australia, and quite frankly, this demand is getting higher” he said.

Onn Hafiz also reaffirmed Johor’s ambition to become Malaysia’s most developed state by 2030.

Yesterday (Jan 8), Onn Hafiz said investors in the JS-SEZ will enjoy new tax incentive packages announced by the Johor state government and Finance Ministry.

The tax incentive package that took effect on Jan 1 aims to position Johor as a premier destination for high-value investments and bolster economic ties with Singapore.

Investors in JS-SEZ are eligible for suite incentives that include a special corporate tax rate of five per cent for up to 15 years for companies investing in advanced sectors such as Artificial Intelligence (AI), quantum computing, medical devices, aerospace manufacturing, and global services hubs.

Source: NST

Johor-Singapore SEZ’s industrial diversity resilient against trade tensions – Onn Hafiz

Johor is the top contributor to the country’s agricultural sector, says Johor Mentri Besar Datuk Onn Hafiz Ghazi.

Onn Hafiz said the state recorded a Gross Domestic Product (GDP) value of RM17.21bil or 17.1% of the national GDP in the agriculture sector.

“Johor continues to be the leader and the largest contributor to the country’s agricultural sector.

“The state government is committed to strengthening Johor’s position as the country’s food basket and a key supplier for regional and international markets.

“This will be achieved by increasing agro-food production and boosting agricultural exports to global markets,” he said in a statement on Facebook on Saturday (Feb 8).

Onn Hafiz made the remarks following a meeting with Deputy Agriculture and Food Security Minister Datuk Arthur Joseph Kurup to discuss agricultural development and food security in Johor.

“To ensure continued growth in production, we will also collaborate with the ministry to focus on research and development (R&D), particularly for pineapple, coconut, durian, banana, and papaya cultivation.

“The state government has also allocated RM18.48mil for various agricultural development initiatives this year,” he added.

He also thanked the Federal government for allocating over RM21mil to intensify efforts and programs related to food security in Johor under Budget 2025.

“We are confident that with the ministry’s cooperation and support, these efforts will not only establish Johor as a major agro-food production hub but also increase farmers’ and entrepreneurs’ incomes while ensuring better food security for Bangsa Johor,” he said.

Source: The Star

Johor contributes 17.1% of Malaysia’s GDP, says Onn Hafiz

All Uzbek and Malaysian companies are urged to forge new collaborations to reap the synergistic opportunities offered by both countries, said Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz. 

He said earlier today that business-to-business (B2B) and government-to-business (G2B) sessions facilitated discussions on key industries, paving the way for new strategic partnerships.

“There were also several memorandum of understanding (MoUs) signed between our entities for promising projects, including in electronics and semiconductors, automotive industry, hydropower and solar energy, chemical industry, food industry and pharmaceuticals, that will facilitate the development and growth of both our economies and industries,” he said at the Malaysia-Uzbekistan Business Forum here today.

Also present at the event were Prime Minister Datuk Seri Anwar Ibrahim and Uzbekistan’s President Shavkat Mirziyoyev.

Tengku Zafrul highlighted that Malaysia, as a dynamic hub for manufacturing and services, boasts excellent infrastructure, strong connectivity, and a highly skilled talent pool across various fields.

He also expressed satisfaction with the participation of representatives from Malaysia’s small and medium enterprises (SMEs) in today’s forum, acknowledging their crucial role as the backbone of the Malaysian economy.

Over the years, Malaysian SMEs have strengthened their capabilities, allowing them to become increasingly integrated into global supply chains, he said.

“They offer a wide range of products and services, spanning manufacturing, technology, agriculture, and logistics while showcasing innovation, resilience and adaptability.

“The highly competitive and capable Malaysian SMEs will make reliable partners for Uzbekistan companies in enhancing their own supply chain operations, whether for materials sourcing or expanding distribution networks in the region,” he said.

 Meanwhile, Tengku Zafrul is encouraged by the strong interest from Uzbekistan in fostering closer ties with Malaysia across multiple sectors, primarily to learn from Malaysian experience and expertise and to build partnerships for industrial development. 

“As one of the youngest and fastest growing countries in the world, with a gross domestic product growth rate of between 5.5 and 5.8 per cent forecast for the next three years, and a series of comprehensive reforms aimed at modernising the economy and improving governance, Uzbekistan’s economy is on a positive trajectory and is poised to maintain a robust expansion,” he added.

Source: Bernama

Malaysian, Uzbek companies must forge new collaborations – Tengku Zafrul

Malaysia and Uzbekistan should enhance bilateral trade and investment in sectors like food technology, agriculture, semiconductors, green energy, and electric vehicles, said Prime Minister Datuk Seri Anwar Ibrahim.

He said both countries should also strengthen collaboration in the halal industry, education, artificial intelligence, digital and energy.

Trade and investment across all fields should be expanded, with a focus on halal industries and education, particularly higher education, he said in his speech at the Malaysia-Uzbekistan Business Forum here today.

“There must be a report coming every month to us (on this). This can only happen when we trust one another. This can only happen when we see both countries having the strength and respect for one another,“ he said.

Anwar said that Uzbekistan has also invited Petroliam Nasional Bhd (Petronas) to participate in its oil and gas activities.

Hence, he called on Petronas to facilitate this arrangement as it would benefit both nations.

He said that Malaysia and Uzbekistan should complement each other to overcome limitations and look at the economic fundamentals in order to protect the interest of the peoples of both countries and their welfare.

“No one person, country or entity can claim to have the sole expertise. Thus, why can’t we work together and benefit from (our strengths)?

“The point is, all ministries and major companies, both government-linked companies and the private sector, can listen directly to us (the leaders of both countries). We have given a clear commitment and a clear roadmap,” he said.

Source: Bernama

Malaysia, Uzbekistan should enhance bilateral trade, investment – PM Anwar

It is too early to determine whether the tariffs imposed by the United States on Canada, Mexico and China will harm or benefit Malaysia, said Minister of Investment, Trade and Industry Tengku Datuk Seri Zafrul Abdul Aziz.

He said that even though Malaysia had benefitted before, it would not mean the same benefits would be achieved.

“For an open trade country like Malaysia (where the ratio of trade to gross domestic product is 130 per cent), long term stability in the global trade market is very important. We also do not know what the United States will do next to Malaysia and our neighbouring countries,“ he told Bernama TV in an interview today.

He said this in response to the US’s move to impose a 25 per cent tariff on imports from Canada and Mexico and a 10 per cent tariff on imports from China. The tariffs on China took effect on Feb 4 but the tariffs on Canada and Mexico have been delayed for a month.

According to Tengku Zafrul, although the trade war between the US and China is seen to be increasingly tense and may affect certain sectors, Malaysia might receive positive spillovers in the short term.

He said the trade tension had actually started during the administration of Donald Trump 1.0 and was continued by Joe Biden, and now Trump 2.0 is expanding it.

“The trade war has led to a shift in the global supply chain, with investors looking for a more stable alternative location… the realignment is (headed) to countries that are neutral like Malaysia, like ASEAN and some other countries or economic blocs.

“Neutral countries such as Malaysia and ASEAN members have become preferred destinations because we offer a strong ecosystem and a conducive investment climate… and due to this shift, our country has recorded an increase in export value. Malaysia is chosen because of its political stability, open economy and neutral status in the geopolitical arena,“ he noted.

Last year, Malaysia’s exports reached a record high, driven by the electrical and electronics (E&E) and semiconductor sectors.

Malaysian remains neutral, focus on investments

Amid the global geopolitical tensions, Malaysia maintains a neutral stance and continues to attract quality investments, said Tengku Zafrul.

In 2023, the country posted approved record investments worth more than RM330 billion.

He said Malaysia is also active in strengthening investment policies, including through the New Industrial Policy (NIMP), the National Energy Transition Roadmap (NETR) and the National Semiconductor Strategy.

“Investment is not only of high value but should provide economic spillover to local companies, especially small and medium enterprises (SMEs). With the continued trade tensions, global companies tend to choose countries with stable ecosystems, economic openness, and strong free trade agreements (FTAs),“ he explained.

He noted that Malaysia has the advantage of having signed 16 FTAs, including the latest one with the United Arab Emirates (UAE) and that “we are also renegotiating the FTA with the European Union and South Korea.”

Challenges and opportunities

However, Tengku Zafrul warned that in the long term, the slowdown in global growth could affect demand and supply chains, emphasising the importance of ASEAN in strengthening internal trade and not being too dependent on the world’s big economies.

“ASEAN is the world’s fifth largest economic bloc with a GDP of US$3.8 trillion, but intra-ASEAN trade is still less than 25 per cent … we need to increase regional economic integration. Malaysia is also trying to diversify its export markets to other regions such as Africa and South America to reduce dependence on major economic powers,“ he added.

Addressing the US concern about technology security, Tengku Zafrul stressed that Malaysia is committed to complying with international regulations. “We need to ensure continued enforcement and discussions with the US and China to convince them that Malaysia remains a responsible trading partner. Malaysia will continue to monitor global developments and be ready to respond to any major trade policy changes….and we must be ready to take advantage of the opportunities that emerge from these challenges,“ he added.

Source: Bernama

Malaysia remains careful of US tariffs, ready to take advantage of geopolitical opportunities – Tengku Zafrul

Malaysia is on track to meet its 2025 gross domestic product (GDP) growth target despite the US-China trade war on the back of drivers that include chip demand supporting medium to long-term prospects, said Economy Minister Datuk Seri Rafizi Ramli.

He noted that key hypotheses that have driven interest in the Malaysian economy over the past year remain unchanged.

“The projection that the world is going to be more digital and AI is going to be mainstream has not changed. That means the demand for chips will go up, which will bolster Malaysia’s trade. Malaysia’s long-term plan to ensure that Malaysia plays a pivotal role in the global supply chain has not changed either,” he told reporters after the launch of the joint report by the World Bank and the Ministry of Economy titled “A Fresh Take on Reducing Inequality and Enhancing Mobility in Malaysia” today.

Rafizi said the stronger ringgit over the last week indicates that investors and market participants have a positive outlook on Malaysia’s economy. “It’s (the strengthening ringgit) very much the function of the market because of the evolving and developing nature of the trade war that is happening now,” he said.

He explained that market expectations, speculation and projections will inevitably impact the ringgit’s movement.

“So, I think we have to navigate some changes and volatility. I hope it is not going to be extreme,” Rafizi said, adding that the government is monitoring the situation closely, with the Ministry of Investment, Trade and Industry (Miti) tasked with evaluating the trade war’s potential impact.

“We will take guidance from Miti on our official stance. As of now, there is no discussion on revising Malaysia’s economic growth outlook. Typically, the government’s growth forecast is finalised and shared closer to the budget unless there are drastic developments,” Rafizi said.

He opined that adjustments and volatility will be a permanent feature of the global economy as more economies become influential in the overall global supply chain.

“We will have to go through some adjustments and volatility. The question is whether it will be short- or medium-term. Eventually, the market will price in everything, provided that our fundamental growth narrative remains strong. And at the moment, I believe we still have a very strong value proposition for the world,” he said.

Meanwhile, Rafizi said the Carbon Capture, Utilisation and Storage Bill is expected to be tabled in Parliament by early March, pending final drafting and stakeholder consultations.

“The target is to be tabled in this Parliament sitting. We are going through some final drafting. We’re going through some improvements based on feedback from stakeholders. The target is to finalise and bring the Bill to Parliament in this session.”

The joint report highlights the importance of building on progress to ensure that everyone benefits. Strengthening access to quality education, healthcare and employment opportunities will be key to ensuring that economic prosperity is shared by all.

“To address inequality, we have to adopt a holistic assessment, early intervention on opportunity gaps, and commit to creating a dynamic labour market,” said Rafizi.

Source: The Sun

Malaysia on track to meet 2025 GDP growth target despite US-China trade war: Rafizi

Malaysia’s proactive approach in establishing ties with all countries, in line with the government’s neutral and independent stance, will help to create investment opportunities while boosting exports.

Prime Minister Datuk Seri Anwar Ibrahim said although the nation’s investment ties are seen to lean towards China, Brazil, South Africa, Canada and Mexico, its trade relations with the United States (US) continue as usual.

“The US remains an important trading partner. Trade with the US stands at 11 per cent, which is quite high, and Malaysia’s exports to the US are still close to 13 per cent,” he said during the Minister’s Question Time in the Dewan Rakyat today.

He said this in reply to a question from Lim Guan Eng (PH-Bagan) on Malaysia’s stance regarding the global trade war sparked by the US President’s tariff policies.

Lim also asked whether Malaysia would align itself with China, Canada, and Mexico, as well as financial and fiscal measures that would be taken to protect the Malaysian economy and its people from the impact of these tariffs.

“We cannot act too hastily as there are uncertainties in some of the decisions announced by the US President Donald Trump.

“For instance, there was a policy change just yesterday when he decided to delay the implementation of tariffs on Canada and Mexico. So, within a month, further policy shifts could happen, or the decision may be maintained,” Anwar said.

Aside from expanding its trade network, the Prime Minister stressed that the government must also ensure domestic growth initiatives are strengthened, in line with policies that have been announced, including the industrial, energy transition, and digital transformation plans.

The commitment of government-linked investment companies (GLICs) to inject RM120 billion into national development projects over five years is also expected to help drive economic growth.

“This will be complemented by several fiscal measures, including subsidy rationalisation, which will ensure sustainable growth and keep inflation under control,” he added.

Source: Bernama

Malaysia’s global ties to boost investments, exports – PM Anwar

The overall progress of the East Coast Rail Link (ECRL) project, spanning four states — Pahang, Kelantan, Terengganu and Selangor — has reached 78.5% as of last month, said Second Finance Minister Datuk Seri Amir Hamzah Azizan.

He said this promising progress aligns with the scheduled completion of the first phase of the ECRL, running from Kota Bharu, Kelantan, to the Gombak Integrated Terminal, Selangor, by December 2026, with operations expected to begin in January 2027.

Amir Hamzah added that the second phase, connecting Gombak to Port Klang, is set to be completed by December 2027 and fully operational by January 2028, based on the project’s current developments.

“Alhamdulillah, this is no small project — it is a major endeavour involving many stakeholders working together. I congratulate MRL [Malaysia Rail Link Sdn Bhd] and CCC-ECRL [China Communications Construction] for their collaboration in achieving the current progress.

“This project will boost the economy of the East Coast, acting as a catalyst to attract more investments to the region while creating numerous job opportunities in Kelantan, Terengganu and Pahang,” he said.

He was speaking at a press conference after launching the SDG Sukuk Impact Reporting for the ECRL project at the Section 10 ECRL project site on Tuesday. Also present was MRL chief executive officer Datuk Seri Darwis Abdul Razak.

Regarding the Sukuk report, Amir Hamzah highlighted in his speech that it serves as proof of MRL’s commitment to ensuring sustainable, high-impact infrastructure development for long-term benefits.

By leveraging the Sukuk SDG Impact Report, he said the ECRL project not only enhances connectivity but also aligns with the United Nations’ Sustainable Development Goals (SDGs), advancing environmental, social and economic objectives for the country.

“The report highlights the significant progress made and the measurable impacts of this landmark initiative. In April 2024, MRL achieved a historic milestone by becoming the first Ministry of Finance [MOF] company and the first in the transport industry to establish an SDG Sukuk programme.

“This groundbreaking effort raised RM4.5 billion in 2024 to fund the ECRL, a transformative project connecting Kelantan, Terengganu and Pahang to the Greater Klang Valley as well as enhancing connectivity and unlocking vast economic opportunities across these regions,” he said.

He said the SDG Sukuk issuance attracted overwhelming interest from investors and achieved the tightest spread for a government-guaranteed Sukuk in Malaysia’s history.

“This success earned prestigious accolades, including Best Islamic Finance Deal in Southeast Asia and Best Green Sukuk 2024 by Alpha Southeast Asia, further reinforcing Malaysia’s global leadership in Islamic finance and sustainable development,” he added.

Meanwhile, Darwis stated that the ECRL project is on track for completion as scheduled, with construction progressing smoothly across 361 active work sites involving more than 18,000 personnel along the ECRL route.

“With this highly encouraging construction momentum, MRL is optimistic about commencing ECRL operations in two years, aligning with the aspirations of the public and the business community in providing seamless transportation for passengers and cargo.

“As such, East Coast residents living in the Klang Valley will only need to wait for two more Syawals before they can take the ECRL home to celebrate Hari Raya Aidilfitri in 2027,” he said.

Source: Bernama

ECRL progress surpasses 78%, first phase to start operations in 2027

Malaysia’s export diversification is crucial as its manufacturing sector continues to face headwinds from subdued global growth prospects, geopolitical tensions and trade policy risks, economists said. 

TA Securities, in a note, cautioned that any slowdown in China’s trade flows could have indirect repercussions for Malaysia, given that China is one of its largest export destinations.

Moreover, the ongoing shift in global supply chains, coupled with geopolitical uncertainties, may introduce further volatility in trade performance, the house said. 

“Against this backdrop, Malaysia’s ability to diversify its export markets and enhance trade resilience will be crucial in sustaining economic growth targets for the year,” it added. 

The seasonally adjusted S&P Global Malaysia manufacturing purchasing managers index (PMI) edged up slightly month-on-month to 48.7 in January 2025, compared with 48.6 in December 2024, but marked the eighth consecutive month of output contraction on a year-on-year basis.

PublicInvest Research noted that subdued global growth prospects and escalating geopolitical tensions could weigh on export-oriented industries. Additionally, heightened uncertainty surrounding global trade policies — particularly in light of US President Donald Trump’s policy stance — may further pressure industrial activity.

“Despite these challenges, steady domestic consumption, fiscal measures supporting investment, and a gradual recovery in key trading partners may help mitigate external headwinds,” the house said in a note.

BIMB Securities, meanwhile, highlighted that Trump’s renewed trade war — especially tariffs on Mexico, Canada, and China — could negatively impact Malaysia’s export-driven industries, particularly those deeply integrated into China-centric supply chains. 

Sectors such as electronics, automotive components, and machinery, which rely heavily on cross-border supply networks, are especially vulnerable, the house said.

Nevertheless, it said Malaysia could benefit from the “China+1” strategy, as companies seek to diversify their production bases away from China. This could drive investment inflows into the country, strengthening its manufacturing capabilities and trade competitiveness, said the research house. 

“Despite ongoing challenges, Malaysia’s manufacturing sector has the potential for stabilisation in 2025, supported by sustained electronics exports and increased foreign direct investment under the China+1 strategy. Additionally, domestic policy support under Budget 2025 is expected to stimulate demand and provide a buffer against external headwinds,” said BIMB. 

Source: The Edge Malaysia

Export diversification crucial for Malaysian manufacturers as US tariffs, China slowdown weigh, say economists