MALAYSIA has risen two places to rank 35th out of 165 jurisdictions in the latest Economic Freedom of the World 2025 report, released last week by Canada’s Fraser Institute.
The report measures the degree to which people are able to make their own economic choices, using the most recent data from 2023.
The Center for Market Education (CME), which represents the Fraser Institute in Malaysia and Indonesia, welcomed the country’s upward movement, with CEO Dr Carmelo Ferlito calling the results “a bittersweet symphony”.
Malaysia’s overall score improved to 7.56 out of 10 in 2023, compared to 7.46 in the previous year. The country now sits behind several regional and global leaders, including Hong Kong, Singapore, New Zealand, Switzerland, the United States and Ireland, all of which ranked in the global top ten.
While Malaysia posted strong results in areas such as monetary policy and regulation, structural challenges persist — particularly in government intervention, judicial independence, and restrictions on capital movement.
“It is a bittersweet symphony for Malaysia,” said Dr Ferlito. “The report sends clear signals about the areas requiring reform: the government’s significant stake in the economy, capital controls, judicial independence, labour market regulation, and regulatory burdens.”
In terms of strengths, Malaysia ranked 10th globally for “Sound Money”, with a score of 9.33, reflecting low inflation and controlled money supply growth. The country also performed well in “Regulation”, where it rose to 13th place with a score of 7.66, supported by relatively liberal product and credit markets.
However, the report highlighted serious concerns in several other dimensions. Malaysia ranked only 54th for “Size of Government”, citing the continued dominance of state-linked entities.
In “Legal System and Property Rights”, the country placed 62nd, despite modest improvement from the previous year. Malaysia’s ranking for “Freedom to Trade Internationally” remained flat at 63rd, limited by capital controls and restrictions on the movement of people and funds.
Dr Ferlito praised the central bank’s stewardship in monetary policy: “Bank Negara deserves special praise for its commitment to keeping inflation low by controlling money supply. For this achievement to be sustained, fiscal policy must remain aligned with the central bank’s prudence.
This means keeping government spending under control and, as highlighted in the report, working to liberalise markets still dominated by government-linked companies.”
The Economic Freedom of the World index has tracked the state of economic liberty globally for decades. While the latest edition confirms a long-term rise in global economic freedom since 2000, the report notes that much of this progress was reversed in the wake of the COVID-19 pandemic, which led to increased state control across many economies. - October 4, 2025
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