In the 2025 edition of the annual World Competitiveness Ranking), Malaysia surged from 34th to 23rd place, marking its strongest performance since 2020. – File Photo/AFP
KUALA LUMPUR (June 24): Malaysia is making waves on the world stage, achieving a remarkable leap up the rankings that reflects purpose, progress, and promise.
In the 2025 edition of the annual World Competitiveness Ranking (WCR) published by the Institute for Management Development (IMD), Malaysia surged from 34th to 23rd place, a jump of 11 spots, marking its strongest performance since 2020.
This leap is propelled not only by economic growth but also driven by cohesive policy reforms, investor-friendly governance and a reinvigorated commitment to inclusive development.
Malaysia now ranks just ahead of Belgium and Czechia and no longer trails Thailand at 30th. Many celebrated this milestone as a testament to the country’s revitalized competitiveness.
The Malaysian Investment Development Authority (MIDA) credited the rise to a dynamic, pro-business ecosystem, underscoring recent reforms and the investment optimism they have inspired.
To bring these macro reforms into sharper focus, The Borneo Post took a deep dive with Dr. Nivakan Sritharan, lecturer from the Faculty of Business, Design and Arts, Swinburne University of Technology Sarawak, on how the leap in rankings aligns with real-world prosperity.
Nivakan Sritharan
Malaysia posted a GDP growth rate of 5.1 percent in 2024, with inflation holding steady at 1.8 percent and unemployment near pre-pandemic levels at just 3.3 percent.
These figures reflect not just recovery, but sustained economic resilience. According to Dr. Nivakan, “Malaysia ranked fourth globally in economic performance. That kind of leap doesn’t happen without coordinated reforms.”
Notably, its standing in economic performance alone catapulted from eighth to fourth in just one year which signifies a clear sign of accelerating momentum.
Government and business efficiency also registered impressive gains, both improving by eight positions compared to the previous year.
A closer examination reveals that international trade terms, often considered a harbinger of competitiveness, saw Malaysia rise by 11 places to sixth globally.
This jump reflects robust export growth, diversification into new trade markets, and stronger tourism receipts contributing to a healthier trade surplus.
Fiscal discipline has been central to this resurgence. Malaysia’s budget deficit has narrowed to approximately 4.1 percent of GDP which is a significant improvement over previous years.
At the same time, the current account surplus has strengthened, supported by a dual export strategy focusing on high-value manufactured goods and commodities.
The ringgit too has found greater balance, further enhancing export competitiveness.
Dr. Nivakan emphasized the role of the Fiscal Responsibility Act, a landmark policy aimed at mainstreaming budget discipline and reducing public debt.
He praised the government’s move to transition from blanket fuel subsidies to targeted schemes, an approach that annually frees up approximately RM8 billion.
These savings are being channelled into digital infrastructure, green energy, and upskilling initiatives where all of which inject long-term value into the economy.
Another plank of the reform agenda is revenue modernization. The introduction of e-invoicing and expanded Sales and Service Tax (SST), alongside a modest dividend tax on higher-income brackets, reflect Malaysia’s evolving fiscal architecture.
Coupled with strategic expenditure including support for electric vehicle infrastructure where the result has been a more efficient and future-ready public finances framework, signaling clarity and consistency for investors.
Malaysia has achieved tangible progress where in 2024, RM378.5 billion in investments were approved, creating more than 207,000 new jobs.
The labour force participation rate climbed to 70.2 percent, and median wages increased by 5 per cent, reaching RM3,045 per month.
Dr. Nivakan explained that education and workforce development are central to this improvement.
Apprenticeships, vocational training under the TVET initiative, and the Talent Roadmap 2024–2030 are equipping Malaysians with the skills demanded by both emerging and established industries.
He noted that wage-indexing mechanisms linked to productivity are helping ensure equitable income growth.
Malaysia’s upward trajectory is also attracting international attention.
In 2024, foreign direct investment (FDI) formed about 45 per cent of the total RM378.5 billion in approved projects, driven largely by investors from the US, China, Germany, and Singapore.
“Improved rankings and clearer regulation are giving investors the confidence to commit especially in high-growth sectors like semiconductors, green tech, and digital finance,” said Dr. Nivakan.
Indeed, a virtuous cycle appears to be emerging: reform leads to performance, performance attracts investment, investment creates jobs, and improved livelihoods reinforce resilience and confidence.
Consumer sentiment is on the rise, and business outlook signifies the heartbeat of long-term growth is strengthening, particularly among SMEs nationwide.
Looking ahead, the government’s ambition is clear, which is to break into the top 12 most competitive countries by 2033.
Achieving this milestone will require sustained momentum, especially in ensuring inclusivity. Infrastructure and opportunities must reach beyond the Klang Valley into rural and smaller urban centres.
Educational attainment must be uplifted, incomes aligned with productivity gains, and targeted support maintained for B40 and M40 households.
As Dr. Nivakan explained: “The challenge now is to climb further up the ladder, but without leaving anyone behind. Ultimately, Malaysia’s 11‑spot climb in WCR 2025 reflects collective purpose.”
It demonstrates how macroeconomic stability, fiscal realism, regulatory clarity, and inclusive policies can align to elevate a nation’s standing and the wellbeing of its people. This is about building a foundation on which Malaysia can confidently thrive in the global economy.