Rafizi Ramli

Ministry of Economy

Malaysia has significant potential for economic growth, driven by a skilled workforce, strategic geography, and a business-friendly government. How would you introduce Malaysia to global audiences?

Malaysia has been a success story in the 20th century, experiencing among the fastest annual growth globally between the 1970s and 2000, averaging 9% during that period. However, with rapid growth comes the need to refocus efforts, and since 2000, Malaysia has been upgrading its industries.

Over the last 20-30 years, Malaysia has built a reputation as a trading nation, with 50% of worldwide chips passing through the country for packaging and testing. The economy has evolved from a strong commodity base, being the former largest palm oil producer globally. Currently, Malaysia is the second-largest, with significant exports of oil, gas, and petrochemicals.

The current focus is on pivoting the economy towards high-tech, high-value industries. A recent review of the five-year plan outlines key areas for the next decade: industries based on energy transition, digital and tech economies, repositioning chips and semiconductors industries, sustainable modern farming, and exploring the potential of significant deposits of rare earth materials. These sectors are expected to attract global interest.

It sounds like a comprehensive strategy. Could you elaborate on the specific sectors Malaysia aims to lead in the coming years?

Certainly. The five key sectors include industries based on energy transition, digital and tech economies, repositioning chips and semiconductors industries to the next level of value with a focus on front end and chip design, becoming a leader in sustainable modern farming, and exploring the potential of significant deposits of rare earth materials. These sectors are expected to attract global interest.

Why do you think Malaysia is a good place for foreign businesses to locate their operations in Asia?

First and foremost, our education, administrative, and economic systems are very familiar to the Western world. Everything is based on the legacy of British systems. Malaysia boasts one of the best education systems in the region, offering high-quality training and expertise at a cost-effective rate, making it more affordable compared to places like Singapore.

Malaysia has always been a trading nation that is very investor-friendly. Over the last three to four decades, we’ve attracted the presence of major world corporations, including giants like Intel and key players in the oil and gas industry. Our strategic focus on specific sectors in recent years has been aggressive, drawing in global giants.

The balance between being the gateway to the 600 million Southeast Asian market, coupled with our expertise, high-level education, and well-trained workforce at competitive pricing, makes Malaysia an attractive destination for foreign businesses.

Malaysia is a melting pot of multiculturalism that resembles the entire Asian continent. We have native Malays sharing cultural and historical heritage with Indonesians, significant Chinese and Indian minorities connecting us to China and India, and a majority of Malaysians who are Muslims, linking us with the Muslim world. This diversity, coupled with a Western-style education and administrative system, offers a level of flexibility not easily found elsewhere.

For an American or Western investor, Malaysia is a perfect country where they don’t have to transition too much in terms of systems because everything is already in place. Yet, from the launchpad of Malaysia, it’s very easy to enter any market in the region.

The approach we’re using is ‘friend of all.’

Malaysia is betting very strongly on high-value, high-growth areas of economic activity. What are the main economic objectives of Malaysia going forward?

We hope to join the elite club of high-income nations within the next two or three years. If we can consistently grow at 5% in the next three to four years, we aim to achieve high-income status between 2026 and 2028. Our strategic geographical location in the economically vibrant Southeast Asian region, with a population of 600 million, positions Malaysia as a key player.

Not only is it a place of 600 million population, but it is also a region with consistently high economic growth. With Malaysia at the heart of it and the leadership of Anwar Ibrahim as a senior statesman, we believe we can capitalize on Malaysia’s existing strengths and allow investors to take advantage.

 

What is Malaysia doing to achieve these economic objectives?

In the past, the previous administration’s view on sustainability was somewhat weak. We are positioning Malaysia for regional leadership in economic transitions, aiming to prove that an economy like Malaysia can undergo a just and sustainable transition towards green energy. We have committed to achieving net-zero emissions by 2015, with specific details mapped out.

We plan to double our contribution within 20 years, phase out our dependency on coal completely, and demonstrate a variety of sustainable energy mixes, including solar, biomass, and hydrogen. Despite being an oil and gas-producing country, we are committed to a rapid transition to renewable energy.

We’re committed to a plan and investments, and we hope to work with partners worldwide, especially from the Western world, as Malaysia serves as a gateway to proving that sustainable energy transition can happen even in developing or middle-income countries.

We want to prove that you can achieve both economic growth and energy transition. If we can pull it off, Malaysia can be a role model for developing countries around the world, demonstrating that energy transition and net-zero commitments are not just talk but proven actions.

 

The industrial master plan and the energy transition roadmap embody this plan. What is the power of quick policy pivots, and where do opportunities for Western businesses lie?

In the area of energy transition, for example, to achieve this ambition, it requires us to invest heavily in our energy infrastructure, not only domestically but also by networking the whole Southeast Asian region with a regional grid. Malaysia is spearheading this effort with existing interconnectivity between Malaysia, Singapore, and Indonesia via Borneo. However, there’s a need to expand this on a larger scale, connecting Thailand to Malaysia, strengthening connectivity to Singapore, and building connections between the peninsula of Malaysia and Borneo. The goal is to eventually establish main lines connecting the entire archipelago, requiring significant investments.

We’re also looking at hydrogen as an alternative energy. In Borneo, we have three major dams providing abundant electricity, allowing us to build hydrogen plants. With our experience in LNG supply chains, Malaysia is well-positioned for blue hydrogen. We also have geographical formations from abandoned oil fields suitable for carbon capture, utilization, and storage, which we plan to incorporate into our energy transition projects.

These projects are ongoing, with the first expected to be operational in about two years. Malaysia, with its history, existing strengths, and geographical advantages, is well-equipped for these international-scale projects. Partners from the West, including the US and Europe, can participate as financiers, technology providers, or consumers in these ventures.

Is there a role for foreign direct investment (FDI) in advancing Malaysia’s infrastructure?

Yes, indeed. Foreign direct investment plays a crucial role in advancing Malaysia’s infrastructure. The projects we’ve outlined, especially in energy transition and infrastructure development, are of international scale. Many countries may not have the capabilities to adapt to such projects, and Malaysia, with its history, existing strengths, and geographical advantages, is well-positioned to lead. We welcome partners from the West, including the US and Europe, to contribute as financiers, technology providers, or even consumers in these ambitious endeavors.

Malaysia’s skilled workforce and the country’s high levels of English proficiency are an asset. What can you tell us about Malaysia’s workforce?

Malaysia has an international quality workforce, having become part of the global chain of MNCs over five decades. Our education system, ranking second only to Singapore in the region, focuses on technical skills. The cost of manpower in Malaysia is relatively affordable compared to other parts of the world. We are implementing regulations and legislation to ensure fair compensation, and from an investor’s perspective, Malaysia offers one of the most affordable high-skilled workforces in the region.

Now that you mentioned technology, let’s tap into the digital economy. How are you working to position Kuala Lumpur as the Silicon Valley of Malaysia, and can you share some key projects leading to that positioning?

Our focus in the next few months is on a digital blueprint to position Kuala Lumpur in the top 20 startup ecosystems globally. We’re launching the KL20 blueprint to cement the city as a center for artificial intelligence development. We’ve initiated executive digital leadership programs in partnership with Microsoft, Google, Amazon, IBM, and Sea Group. This unique program, involving Southeast Asia’s unicorn, Shopee, is equipping top civil servants with digital skills to align public policies with the needs of the digital economy. We’re also launching a national boot camp program to train 10,000 coders and software engineers each year, fostering a vibrant market for tech talents in the private sector.

 

Can you conclude the interview with a final message about what makes Malaysia interesting for foreign investors and the different tools and support mechanisms they can find, for example, with MyDIGITAL and other agencies?

The Malaysian government has dedicated agencies for each of the high-growth, high-value sectors we are focusing on. In the case of the digital economy, the agency entrusted with overseas implementation is called MyDIGITAL, under the Ministry of Economy. MyDIGITAL coordinates efforts with other government agencies, facilitating an easy interface between government policies and the needs of investors. Various agencies focus on different components, but there’s a central coordinating agency, much like a project management agency, ensuring swift implementation of blueprints.

We are launching a GovTech initiative, not just to digitize government services but to build public sector services and interface around tech. As a country with around 30 million people, Malaysia seeks to expedite digital adoption through public sector digitalization. Malaysia already ranks high in GovTech readiness, around 80% according to the World Bank’s assessment, but we intend to reform the whole public service around a centralized database, forming the backbone of digital public service delivery in the next few years.

We have a subsection dedicated to education, and on-the-job skilling is going to be one of the main topics. Can you conclude the interview with a final message about what makes Malaysia interesting for foreign investors and the different tools and support mechanisms they can find, for example, with My Digital and other agencies?

The Malaysian government has dedicated agencies for each of the high-growth, high-value sectors we are focusing on. In the case of the digital economy, the agency entrusted with overseas implementation is called My Digital, under my ministry. My Digital coordinates efforts with other government agencies, facilitating an easy interface between government policies and the needs of investors. Various agencies focus on different components, but there’s a central coordinating agency, much like a project management agency, ensuring swift implementation of blueprints.

There’s one thing that I didn’t mention about the digital economy and tech—we are launching a GovTech initiative, not just to digitize government services but to build public sector services and interface around tech. As a country with around 30 million people, Malaysia seeks to expedite digital adoption through public sector digitalization. Malaysia already ranks high in GovTech readiness, around 80% according to the World Bank’s assessment, but we intend to reform the whole public service around a centralized database, forming the backbone of digital public service delivery in the next few years.