Malaysia Set to Achieve High-Income Status Due to High FDI

According to the ASEAN+3 Macroeconomic Research Office (AMRO), Malaysia is poised to ascend to high-income status by the end of the decade, boosted by substantial foreign direct investments (FDIs) and a flourishing manufacturing sector, particularly in semiconductors.

Chief economist Hoe Ee Khor highlighted the significant surge in FDI inflows witnessed by Malaysia in 2021 and 2022, indicating a promising trend for actual investments in the coming years. He expressed optimism that, with sustained fiscal and monetary discipline, these new investments would contribute to accelerating growth rates and achieving high-income status.

Malaysia, often referred to as the “Silicon Valley of the East,” is expected to attract more semiconductor industries in the future, positioning itself as a major beneficiary of the ongoing upswing in the semiconductor cycle, projected to reach its peak by the year’s end.

AMRO group head Allen Ng suggested that Malaysia is likely to surpass the World Bank’s benchmark for nominal gross domestic product (GDP) of approximately US$13,000 for a high-income economy. However, he cautioned that Malaysia, like other countries in the region, still faces structural challenges such as demographic concerns, productivity growth, and workforce skill levels, which require attention.

The positive outlook for Malaysia’s economic trajectory underscores the country’s potential to achieve significant milestones in its development journey, driven by strategic investments and a conducive business environment.