Estudios Económicos


Population 32.7 million
GDP 11,408 US$
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major macro economic indicators

  2020 2021 2022 2023 (e) 2024 (f)
GDP growth (%) -5.5 3.1 8.7 4.0 4.5
Inflation (yearly average, %) -1.1 2.5 3.4 2.6 2.3
Budget balance (% GDP) -4.9 -5.8 -5.9 -4.6 -4.5
Current account balance (% GDP) 4.2 3.8 2.6 2.7 2.7
Public debt (% GDP) 67.9 69.3 65.7 66.2 66.3

(e): Estimate (f): Forecast *Excluding 1MDB and state-owned enterprises


  • Large domestic demand mitigates external headwinds
  • Robust services sector (retail, transport and storage, restaurant industry, communication)
  • Large-scale R&D
  • Party to several regional agreements (ASEAN, CPTPP, etc.)
  • Investment supported by the expansion of the local financial market and access to FDIs
  • Exchange rate flexibility
  • High per capita income
  • Travel hub
  • Sound banking sector


  • Budget income highly dependent on performances in the oil and gas sector (23% of revenues in 2023)
  • Low fiscal revenues (15-16% of GDP), lack of transparency in budget spending
  • Very high household debt levels (81.9% of GDP in June 2023)
  • Erosion of price competitiveness due to increasing labour costs
  • High dependency on food imports (60% of food consumed is imported)
  • Persistent regional disparities
  • Ethnic and religious disputes
  • Political uncertainties and instability
  • Stagnant per capita GDP in the last decade
  • Sticky underemployment rate


Domestic demand to remain the main growth driver

Following a sharp deceleration in 2023, the Malaysian economy is set to slightly pick up in 2024. This will be explained by a resilient private demand. Household consumption (58% of GDP) will remain robust amid a stable and low unemployment rate (3.3% in January 2024) and public measures to offset the effect of inflation on low and middle-income consumers, who are more price sensitive. Households will also enjoy stable monetary policy, with Bank Negara Malaysia expected to keep its policy rate at 3%, a level close to albeit below its pre-pandemic average (2015-19). The central bank is unlikely to make further rate hikes as the export-dependent economy is still facing fragile foreign demand, and depreciation pressures on the Malaysian ringgit will decrease amid monetary policy easing in the main advanced economies. However, the bank may decide not to cut its policy rate in light of rising inflation. Robust private consumption, the planned transition from blanket to targeted subsidies (notably on fuel) and the removal of the egg price cap, as well as the rise in the service tax rate (from 6% to 8% from March 2024 for most services) should drive inflation. That said, the extent of faster inflation is, however, difficult to assess given uncertainty surrounding these fiscal measures, notably the targeted fuel subsidies (amount and timing). Meanwhile, private investment should also prove to be robust as suggested by the rise in approved private sector investment in 2023 (+23% from 2022). Exports, which narrowed by 8% in 2023, might benefit from signs of recovery in the technology industry (40% of exports), although they would remain marred by slowing economic growth in China (14% exports). Services exports are set to perform better than goods thanks to the continued recovery in tourism (11.7% of GDP in 2019 vs. approximately 8% in 2023). The country has offered visa-free entry to different nationalities since December 2023, including to the Chinese. China’s citizens accounted for 11.9% of international tourists in Malaysia in 2019, the third-largest source after Singaporeans and Indonesians. Public investment will continue to support economic activity. The transportation sector will benefit from this with higher expenditure for transport infrastructures including the ongoing building of the Pan Borneo Highway and the East Coast Rail Link train line.

Consolidating fiscal policy

The fiscal consolidation initiated in 2023 will continue in 2024. In its budget, the government expects the fiscal deficit to narrow. Despite faster economic growth, tax rates hikes (service tax and excise duties on sugar-sweetened beverages), as well as the introduction of new taxes including those on luxury goods and capital gains, a lower dividend from national petroleum company Petronas (which generates most of the petroleum-related public revenue) will result in an only slight increase in revenue. Meanwhile, marginal public expenditure cuts are likely (-0.8% from 2023) with lower subsidy allocation on back of the implementation of targeted subsidies and the absence of debt obligations related to state fund 1Malaysia Development Berhad (1MDB). Fiscal consolidation is expected to stabilise the public debt load, which is almost exclusively denominated in local currency (97%) and long term in nature.
Private indebtedness, including that of Malaysian households, is more worrisome. That said, banking-sector risks would appear limited. The country’s banks post adequate liquidity buffers and capitalisation rates. In addition, the share of household loans with deteriorating credit risk declined from 6.7% in December 2022 to 4.6% in June 2023.
The current account surplus narrowed in 2023 due to a reduced balance of goods surplus, after reaching an all-time high in 2022. The current account surplus is expected to increase in 2024. The balance of goods is set to improve with the recovery – albeit limited – in exports. However, despite a higher number of foreign visitors resulting in the travel service balance returning to surplus in 2023 (0.9% of GDP), the overall deficit of services could increase with higher transportation costs due to expanding foreign trade and costlier sea freight due to trade disruptions in the Red Sea and the Gulf of Aden. In addition, a larger primary account deficit on back of profit repatriation amid dynamic foreign investment inflows will continue to weigh on the current account surplus. The latter, alongside foreign direct investment, will keep fuelling international reserves and should therefore remain adequate, covering 5.4 months of imports, which is sufficient to repay short-term external debt (42% of total external debt) as of February 2024. Although the external debt, which is overwhelmingly private, increased from an already hefty level of 63.9% of GDP in 2022 to 68.2% in 2023, it still remains manageable as it is mainly denominated in Malaysian ringgit and accounts for a limited share (3.8%) of 2023 FDI inflows.


Anwar treads a fine line

After the 2022 general elections, which led to a highly fragmented Parliament, the two coalitions Pakatan Harapan (PH) and Barisan Nasional (BN) agreed to form a government at the previous king’s insistence. PH’s leader and long-time leader of the opposition, Anwar Ibrahim, was appointed as Prime Minister (PM). This alliance enables him to secure half of the lower house of Parliament’s seats (111 out of 122). Other smaller coalitions and parties subsequently joined the coalition, enabling Anwar to win a vote of confidence in December 2022. The opposition is composed of the Islamic Party (PAS) and some members of the nationalist BERSATU party. However, such a disparate group (in terms of political ideology and ethnicity) may thwart Anwar’s ability to instigate reforms and jeopardise his chances of remaining Prime Minister. In addition, his commitment to fighting corruption has been questioned following two judicial measures relating to corruption convictions imposed on two prominent members of UMNO, the main party of the BN coalition, with which he governs. Former PM Najib Razak’s prison sentence was halved, while the High Court issued a "discharge not amounting to acquittal" to the former deputy PM Ahmad Zahid Hamidi in September 2023. One year after he assumed office, his approval rating dipped to 50% in November 2023, from 68% in December of the previous year.
On the external front, the country has remained neutral regarding US-China rivalry given both countries’ importance to its economy (trade and investment). Malaysia is one of the countries benefitting from the tensions, attracting investment from China and the West in its technology sector. Meanwhile, the country’s relationships with the EU have further cooled since the introduction of the European Union’s Deforestation Regulation in April 2023, which aims to prevent goods sold in the EU that have resulted from deforestation. By threatening Malaysia’s palm oil exports, its main agricultural commodity – and for which the EU is the second export market – the country considered the rule to be discriminatory. In 2021, Malaysia filed a complaint with the WTO against the EU relating to different measures concerning palm oil and palm oil-based biofuels. While the international trade body found faults with the EU’s rules, it backed the Union’s decision to impose rules against using palm oil as a biofuel due to emissions risks.
As more than 60% of its population is Muslim, Malaysia does not have diplomatic ties with Israel and advocates a two-state solution to the Israel-Palestine conflict. As a response to the war in Gaza, Malaysia announced in December 2023 that Israel-flagged cargo ships would banned from docking in its ports.


Last updated: April 2024


Bank transfers, cash, and cheques are all popular means of payment in Malaysia. The well-developed banking network allows for online payments. Letters of Credit are also commonly used. As of 2017, the Central Bank requires that 75% of payments in foreign currencies are converted into the Malaysian ringgit (MYR) automatically upon receipt. Payments for transactions within Malaysia are required to be made in ringgit.

Debt collection

Amicable phase

It is common for disputes and or debt to be settled amiably after negotiations. If there is no response from the buyer, a site visit and online searches are conducted to ascertain the operating status and legal status of the buyer. If the buyer continues to ignore and or neglect to settle the matter amicably, the supplier may begin legal proceedings to recover payments for goods sold and delivered. However, due diligence should be done to ensure that the buyer has sufficient assets to satisfy the debt before proceedings are initiated.


Legal Proceedings

The Malaysian legal system is based upon the English common law system. The hierarchy of courts in Malaysia starts with the Magistrates’ Court at the first level, followed by the Sessions Court, High Court, Court of Appeal and the Federal Court of Malaysia. The High Court, Court of Appeal and the Federal Court are superior courts, while the Magistrates’ Court and the Sessions Courts are subordinate courts. There are also various other courts outside of this hierarchy, e.g. Employment Admiralty, Shariah or Muslim matters.

Claims in Magistrates’ court are limited up to MYR 100,000, whilst a Sessions Court may hear any civil matters where the amount in dispute does not exceed MYR 1,000,000. Where the amount claimed does not exceed MYR 5,000, a claim should be filed with the small claims division of the Magistrates’ Court. However, legal representation is not permitted. The High Court has the jurisdiction to try all civil matters and monetary claims exceeding MYR 1 million.

An unpaid debt normally has a six-year statute of limitation period. The creditor commences a writ action and serves the writ on the debtor within six months from the issue of the writ. When defendants are served with a writ, they have 14 days after service of the writ (or 21 days if the writ was served outside Malaysia) to file a Memorandum of Appearance with the court to indicate their intention to appear in court and defend the suit.

Before a writ can be issued, it must be endorsed with a statement of claim or, with a general endorsement consisting of a concise statement of the nature of the claim made and the requisite relief or remedy. When the writ only has a general endorsement, the statement of claim must be served before the expiration of 14 days after the defendant enters an appearance.

When the defendant has entered appearance, he is required to file and serve his defence on the plaintiff 14 days after the time limit for entering an appearance, or after service of the statement of claim, whichever is later. A defendant may make a counterclaim in the same action brought by the plaintiff. A plaintiff must serve on the defendant his reply and defence to a counterclaim, if any, within 14 days after the defence (and counterclaim) has been served on him.

Proceedings may be resolved and/or otherwise summarily terminated and/or determined and/or disposed of at an early stage before the trial of the action.


Fast-track proceedings

Failure to enter an appearance may result in a plaintiff proceeding to enter a judgment-in-default against a defendant. Ordinarily, when a defendant has filed an appearance and also a statement of defence subsequent to other procedures of filing of documents in support, the matter would be set for trial. If the defendant has entered an appearance and filed a defence, but it is clear that the defendant has no real defence to the claim, the plaintiff may apply to court for summary judgment against the defendant. To avoid summary judgment being entered, the defendant has to show that the dispute concerns a triable issue or that there is some other reason for trial. 

Enforcement of a court decision

Writ of Seizure and Sale (WSS)

A WSS may be enforced against both movable and immovable property as well as against securities. When the property to be seized consists of immovable property or any registered interest, the seizure shall be made by an order prohibiting the judgment debtor from transferring, charging or leasing the property.


Garnishee Proceedings

A Judgment Creditor may garnish monies a Judgment Debtor is supposed to receive from a third party. If the garnishee does not attend court, then the order is made absolute. If the garnishee does attend, the court can either decide the matter summarily or fix the matter for trial.


Judgment Debtor Summons

The objective of this summons is to give the judgment debtor an opportunity to pay the judgment debt in instalments to commensurate his means. Debtors themselves can apply for such a procedure. Alternatively, under Order 14 the defendant can admit the plaintiff’s claim and propose to pay by instalments, which the court can subsequently order if the plaintiff accepts the proposal.


Bankruptcy Proceedings

If the total judgment of debt exceeds MYR 30,000, bankruptcy proceedings can be triggered if the judgment debtor has not complied with the judgment or order made against him. Once a debtor has been adjudged bankrupt, other creditors are also entitled to file the Proof of Debt form and Proxy in order to be entitled to share in any distribution from the estate of the bankrupt. The distribution of the estate is according to the priority of the creditors’ claim.


Foreign Judgements

Any decision rendered by a foreign country must be recognized as a domestic judgment in order to become enforceable through an exequatur procedure. Malaysia has reciprocal Recognition and Enforcement Agreements with some countries, including Hong Kong, India, and New Zealand. 

Insolvency proceedings

There are several insolvency and restructuring procedures available. Under the Companies Act, the available insolvency proceedings include:

  • compulsory and voluntary winding-up of companies;
  • appointment of receivers and managers;
  • restructuring mechanisms.

In a compulsory winding-up, the court can wind up a company on a number of grounds under the Companies Act. The most common of these is the company’s inability to pay its debts. The creditor initiates this process by filing a winding-up petition with the court. If an order is made, the court will appoint a liquidator to oversee the liquidation process.

Court-appointed receivers will either manage the company’s operations as normal, or take custody and possession of the assets of the company. Alternatively, receivers appointed by debenture holders based on the terms of the debenture agreement (privately-appointed receivers), may take possession of the company’s assets subject to the floating charge that has since crystallized in the debenture.

Restructuring mechanisms include:

  • scheme of arrangement: a company can enter into a scheme of arrangement with the approval of 75% of the creditors in value and a simple majority. After creditors approve the scheme, the court must sanction it before it can be implemented. Debtors can apply for an order restraining all proceedings against it while it develops its scheme;
  • special administration: it involves the appointment of a special administrator. The appointment must serve the public interest;
  • conservatorship: the Malaysia Deposit Insurance Corporation takes control of a non-viable financial institution or acquires and takes control of non-performing loans that are outstanding between the financial institution, borrowers and security providers.
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