MALAYSIA’S series of “bold” and at times “unpopular” fiscal reforms, particularly the shift to targeted subsidies, have drawn praise from the international investment community, according to Bank Negara Malaysia governor Datuk Seri Abdul Rasheed Ghaffour.
He said positive feedback was received during engagement sessions with global investors abroad, foreign fund managers and international ratings agencies, many of whom expressed admiration for the government’s reform agenda.
Among the most striking achievements, he noted, was the smooth transition from broad-based to targeted subsidies, especially involving electricity and water tariffs, as well as diesel and RON95 fuel. The implementation proceeded without significant backlash, which he described as a commendable milestone.
“They see that we are truly undertaking reforms. They are genuinely attracted to Malaysia’s growth story. This is evident in the inflow of (foreign) funds into the domestic market — they are buying bonds and equities, and foreign direct investment (FDI) is also increasing,” he said in an exclusive interview.
He added that the inflow of investment has invigorated domestic markets and supported the strengthening of the ringgit.
According to Abdul Rasheed, the global investor community’s growing confidence stems from the government’s ability to deliver on planned reforms despite a challenging global environment. The firm commitment shown by the administration, coupled with encouraging economic growth prospects, has heightened Malaysia’s appeal as an investment destination.
He also highlighted the importance of Prime Minister Datuk Seri Anwar Ibrahim’s overseas visits in promoting Malaysia’s economic narrative to the international community. Through these engagements, foreign investors have become more aware of the country’s substantial investment opportunities.
International ratings agencies, he said, have likewise responded positively to the fiscal discipline demonstrated by the government. Malaysia’s structured long-term plans — including the 13th Malaysia Plan, the New Industrial Master Plan 2030, the National Semiconductor Strategy and the National Energy Transition Roadmap — have reinforced perceptions of policy coherence and forward planning.
“Investors see that the government is serious about implementing coordinated and well-planned strategies, not merely paying lip service. This directly contributes to positive investment sentiment and capital inflows into the domestic market,” he said.
Abdul Rasheed observed that investors are no longer preoccupied with fundamental concerns about Malaysia’s economic stability. Instead, discussions have shifted towards the country’s future trajectory and how it intends to sustain growth momentum.
“Investors are also beginning to ask about Malaysia’s long-term vision to become a high-income nation. They are keen to hear about labour market reforms and social protection measures being designed for the future,” he said.
He noted that incoming FDI is no longer limited to conventional assembly operations but increasingly involves high-technology sectors such as artificial intelligence.
This qualitative shift in investment reflects sustained confidence in consistent government policies, while monetary policy stability and the credibility of Bank Negara Malaysia provide additional certainty for investors.
The rapid expansion of data centres, he said, illustrates investor confidence in Malaysia’s infrastructure and policy environment. The country’s strategic location, competitive operating costs and supportive digital ecosystem have made it a preferred destination.
“We have a conducive environment, including stable electricity and water supply. This demonstrates that utility reforms have also contributed to the country’s long-term competitiveness,” he said.
Beyond reducing imports of information and communications technology services, data centres are also contributing to the export of ICT services. Over time, the industry has the potential to strengthen Malaysia’s position as a regional technology hub.
While acknowledging the risks and concerns associated with the rapid growth of data centres, Abdul Rasheed said the government is taking appropriate steps to ensure the sector develops sustainably.
He stressed that both the government and the central bank would continue to focus on delivering reforms, allowing outcomes to speak for themselves. The priority, he said, remains safeguarding strong economic fundamentals and sustaining reforms for the country’s long-term benefit. - February 15, 2025
