It has been a good 2024 for Malaysia’s economy despite doom-and-gloom reports by some.
A video by a news portal on the drop of Malaysia’s global competitiveness in an Institute for Management Development (IMD) survey went viral recently. Certainly, it was a damper.
The report wasn’t wrong as the IMD 2024 survey did indeed show that Malaysia did not perform well. The headlines six months ago claimed that the country’s competitiveness was slipping. Malaysia slipped to 34th position, down from 27th place in 2023, in a survey of 67 countries in the latest survey.
But what was not said was that the findings were based on data collected from 2023 and before.
That’s how surveys are carried out as findings are collected and then processed, which takes time, especially when it is a global survey. Back then, the ringgit was much weaker and there were perceived political uncertainties.
However, 2024 has actually been a good year for the national economy. We can hold our heads high again as our ringgit has been the best performer in the region, hitting a 30-month high against the US dollar. At one point this year, it was momentarily the best-performing currency in the world.
There has also been record-breaking foreign direct investment (FDI) with RM160bil flowing into Malaysia in the first half of 2024.
This includes Microsoft’s US$2.2bil (RM9.8bil) investment for cloud and artificial intelligence (AI) infrastructure over the next four years, Google’s US$2bil (RM8.92bil) investment to house its first data centre and Google Cloud region, as well as Amazon Web Services’ (AWS) US$6.2bil (RM27.65bil) investment as part of its long-term commitment through to 2038.
Other notable foreign investments were German semiconductor giant Infineon Technologies AG’s additional €5bil (RM24bil) in Kulim, Kedah, and Enovix Corp’s proposed US$1.2bil (RM5.35bil) investment over the next 15 years, according to Bernama.
Malaysia is the world’s sixth largest exporter of semiconductors and is certainly expected to gain significantly.
Our labour demands continue to increase, with the number of jobs growing by 1.2% year-on-year to 9.01 million jobs in the third quarter of 2024, the highest number of jobs created in six years, according to the Statistics Department.
It said the number of jobless persons slipped 0.3% to 563,700, from 565,300 in June, with the unemployment rate remaining steady at 3.3%.
We have seen huge investments entering Malaysia, especially for the setting up of data centres, semiconductor production and cloud computing, with more than 200,000 jobs created since January 2023, which is the highest cumulative since 2018.
Bernama has rightly described Malaysia as having proven to be a beacon of stability and progress in South-East Asia as its gross domestic product (GDP) beat expectations over the first three quarters of this year in an era of technological advancements, despite global uncertainties and fierce competition.
“With GDP growing by 4.2%, 5.9% and 5.3% in the three quarters respectively, surpassing earlier forecasts, it is attracting foreign investors to invest in varied sectors, including semiconductors and data centres in the country.
“No less important in the economy’s good showing was brisk domestic spending, strong investment activity and continued improvement in exports.
“Its other credentials included a surplus in the current account of the balance of payments of RM2.2bil or 0.4% of GDP during the third quarter,” it reported.
Among the nation’s major earners, petroleum revenue is estimated to be lower at RM64bil or 3.2% of GDP, as Malaysia continues its reliance on oil and gas revenue.
Export revenue, meanwhile, from palm oil and palm-oil based products, is set to reach RM110bil due to higher export demand, especially from China.
In leading the charge for a better economy, Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim attributed Malaysia’s ability to navigate turbulent waters to its robust economic fundamentals.
Malaysia’s resilience shone despite US-China trade friction, the Russia-Ukraine war, intense competition for investments and protectionism as evidenced by the higher tariffs imposed by the United States, for example on solar panels.
Anwar’s assertion that the Madani Economy framework was instrumental in fostering higher value-added activities via digitalisation and technology that raised Malaysia’s competitiveness was highly justified.
Against such a backdrop, he expressed optimism that the country’s GDP growth will hover between 4.8% and 5.3% for 2024, which will set the stage for a 4.5% to 5.5% growth next year.
Let’s not forget that Malaysia’s trade posted the highest periodic value ever, expanding 9.3% to RM2.383 trillion in the first 10 months of 2024 over the same period in 2023.
Bernama reported the Malaysia External Trade Development Corp (Matrade) as saying that the country chalked up a trade surplus of RM102.77bil during the period, with exports up 4.8% to RM1.243 trillion and imports increasing by 14.6% to RM1.140 trillion.
For the whole year, trade is projected to grow by 9.4%, with exports and imports increasing by 5.6% and 13.8% respectively.
The country attracted RM160bil in approved investments in the first six months of this year, up 18% from RM135.6bil in last year’s first half.
Domestic investments accounted for 53.4% or RM85.4bil while foreign investments contributed 46.6% or RM74.6bil, representing a double-digit year-on-year growth of 19.1% and 16.7% respectively.
The services and manufacturing sectors attracted the bulk of investments, from the real estate services to information and communications subsectors, along with electrical and electronics (E&E) manufacturing.
But, of course, while we remain optimistic for 2025, we are also aware of the uncertainties ahead.
Top of the list will be how US president-elect Donald Trump conducts his administration, which will have a massive global impact.
“There is deep concern now following Trump’s warning that Washington will impose tariffs on BRICS countries.
“The US has already imposed tariffs on solar panels from Malaysia to protect its own solar panel market,” Bernama reported.
Geopolitical tensions will continue, with supply chain disruptions, volatility in financial markets and varying growth prospects across its trading partners especially China, possibly affecting its own economy.
China has been Malaysia’s largest trading partner for decades and certainly it will impact us.
What can Malaysia expect in 2025?
While Malaysia must remain vigilant throughout the next year amid the uncertainties, it will not stop us from positioning Malaysia also as a sustainable AI and data centre destination in South-East Asia to reinforce its position as a leading global investment destination.
One reason why Malaysia has gained attraction is our political stability.
The fact that Anwar can take many overseas trips serves a point that is often overlooked – no one is going to topple the government.
His political opponents continue to make up stories that the Madani government is on the edge but after two years, the Opposition has not been able to muster enough numbers to challenge him in Parliament.
There has been criticism levelled against Anwar at the slow progress of political reforms but as far as the economy is concerned, he has the record to show that he has done well.
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Wong Chun Wai
Wong Chun Wai began his career as a journalist in Penang, and has served The Star for over 35 years in various capacities and roles. He is now group editorial and corporate affairs adviser to the group, after having served as group managing director/chief executive officer. On The Beat made its debut on Feb 23 1997 and Chun Wai has penned the column weekly without a break, except for the occasional press holiday when the paper was not published. In May 2011, a compilation of selected articles of On The Beat was published as a book and launched in conjunction with his 50th birthday. Chun Wai also comments on current issues in The Star.
