Significant Gains in Key Performance Areas
Malaysia’s overall performance was driven by notable improvements across several indicators. The country now ranks 4th globally in economic performance, up from 8th place last year. Meanwhile, government efficiency and business efficiency each climbed eight spots, reflecting enhanced institutional effectiveness and a more conducive business environment. These gains underscore Malaysia’s efforts to get its economic fundamentals back on track and restore international confidence.
Room for Regional Improvement
Despite this progress, Malaysia still ranks 10th out of 14 economies in the Asia-Pacific region — behind neighbours such as Indonesia and Thailand. This highlights that while momentum has returned, further efforts are required to close the competitiveness gap with regional peers and maintain upward mobility in the rankings.
Beyond Rankings: A Call for Structural Transformation
While the improved ranking is a positive signal, FMM cautions that it should not be viewed as an end in itself. Rather, it must serve as a springboard for deeper structural reforms. Malaysia must transition from its traditional input-driven growth model — which relies on labour, capital, and natural resources — to a more sustainable one driven by productivity, innovation, and high-value sectors. This shift is essential to remain relevant in an increasingly fast-paced global economy.
Urgent Need to Strengthen R&D and Industry Collaboration
One of the priority areas FMM identifies is investment in research and development (R&D). While increasing R&D funding is crucial, aligning research activities with national priorities and industry demand is equally important. A stronger academia-industry linkage will ensure that innovations are commercialised and translated into impactful outcomes that fuel long-term growth.
Empowering the Start-up Ecosystem
FMM also highlights the significant potential within Malaysia’s start-up ecosystem, particularly in the digital, green technology, and deep-tech sectors. With appropriate support measures — such as simplified regulatory frameworks, better funding access, and robust mentorship networks — local entrepreneurs can emerge as vital drivers of the country’s economic transformation.
Advancing Toward Malaysia’s 2033 Competitiveness Goal
This year’s leap in the global ranking also aligns with the national ambition under the Madani Economic Framework — to place Malaysia among the top 12 most competitive economies by 2033. Achieving this long-term objective will demand unwavering commitment to reforms, strong policy consistency, and effective collaboration between government, industry, and civil society.
Conclusion: Maintain Focus on Productivity and Innovation
FMM applauds the government’s achievement in lifting Malaysia’s global competitiveness profile. However, it emphasizes that sustained success will require continuous focus on raising productivity, accelerating innovation, and building enduring competitiveness. With the right policies and execution, Malaysia is well-positioned to emerge as a future-ready economy in the decade ahead.
