Malaysia's economic reforms boost investment inflow

Malaysia has attracted substantial foreign investments, reaching MYR 22.2 billion ($5.16 billion) in the third quarter of 2024, the highest level for the same period since 2012, according to the UOB's Global Markets and Economics report.

Foreign reserves also surged to $119.7 billion in October, marking the highest level since November 2014.

Prof. Yeah Kim Leng from Sunway University credited the government's fiscal reforms for reducing the deficit and boosting investor confidence. These reforms have positively impacted key markets like stocks, bonds, and real estate in Malaysia.

Economist Datuk Dr. Nungsari Ahmad Radhi emphasized the significance of the Public Finance and Fiscal Responsibility Act 2023 in ensuring financial transparency. The Act requires the government to report debts and implement controls over the Finance Ministry.

To address the fiscal deficit, Malaysia introduced new tax measures, including an increase in the Service Tax and a Capital Gains Tax. These are expected to generate an additional MYR3.1 billion in revenue, which will help reduce reliance on debt and fund public services and infrastructure.

Subsidy reforms, particularly targeted subsidies for diesel, are also projected to save MYR4 billion annually. Prof. Yeah highlighted that these savings could be reallocated to essential sectors like health care, education, and social welfare.

However, both experts stressed the importance of continued investment in human capital. Nungsari pointed out the shortage of skilled engineers in key industries like electronics, calling for educational reforms to meet future workforce needs. Although Malaysia still faces challenges, the government's reforms have strengthened the economy and improved investor confidence