Among Asean countries, only Malaysia and Singapore featured in the top 10 of the Baseline Profitability Index (BPI).
Indonesia was ranked 12th, Vietnam (23), Philippines (30) and Thailand in 38th position.
The ranking, which covered 110 countries across six continents, reaffirms that Malaysia is an attractive profit centre in this region for investors.
The BPI, introduced by an adjunct professor of New York Universitys Stern School of Business, uses a holistic approach based on eight factors that will affect the ultimate success of a foreign investment.
These factors cover economic growth, financial stability, physical security, corruption, expropriation by government, exploitation by local partners, capital controls, and exchange rates.
The BPI calculation also incorporates changes made by the World Bank in its measurement of GDP such as the revised method to compare living standards across countries.
Malaysian Investment Development Authority chief executive Datuk Azman Mahmud said this endorsement dissolves lingering misperceptions and attests the countrys improving economic fundamentals and the Government's prudent, proactive and pragmatic policies to diversify the economy.
The Index sends a clear message that Malaysia provides a friendly business environment that makes it an attractive place to invest. This ranking is based not only on historical conditions but also on expectations about conditions prevailing over the next five years.
"The ranking is a reflection of the continuous improvement in the delivery of public services and overall efficiency of the government machinery.
"Recently, Mida was awarded one of the Top Investment Promotion Agency of 2015 in the Asia-Pacific National category by the US-based Site Selection magazine.
"The award recognises Mida and the Malaysian government's commitment to excellence in attracting capital investment projects.
"These international recognitions will boost our efforts in bringing in high-quality and high-value-added investments," he said. - Bernama