Malaysia's Competitiveness Ranking Surge Signals Stronger Economic Fundamentals - Economists
By Rosemarie Khoo
KUALA LUMPUR, June 19 (Bernama) -- Malaysia's improved standing in the International Institute for Management Development (IMD) 2026 World Competitiveness Ranking reflects the country’s strengthening economic fundamentals.
This has been supported by robust trade competitiveness, gains in government and business efficiency, as well as growing opportunities in the technology sector, economists said.
SPI Asset Management managing partner Stephen Innes said Malaysia's rise to 15th place among 70 economies in 2026, from 23rd previously, was an encouraging signal, as it reflected more than just a short-term growth rebound.
"The artificial intelligence (AI) and semiconductor boom is clearly an important tailwind. Malaysia is well-positioned across the electrical and electronics supply chain, as well as in advanced packaging and data-centre investment, which makes it a natural beneficiary of global supply-chain diversification," he told Bernama.
Innes said the tourism sector was also supporting the country's competitiveness through stronger visitor arrivals and higher services receipts, while political stability and a more predictable policy environment should further strengthen investor confidence. "The broader message is that Malaysia is becoming a more credible regional platform for technology investment, manufacturing and services," he added.
He noted that a key challenge would be translating the current momentum into sustained productivity gains, stronger innovation, improved skills development and higher-value domestic investment, rather than relying solely on the favourable global semiconductor cycle.
Juwai IQI global chief economist Shan Saeed described Malaysia's improved ranking as one of the most remarkable competitiveness gains among major economies globally. He noted that the country's ability to combine rising competitiveness with macroeconomic stability remains one of its most underappreciated strengths within ASEAN, despite an increasingly fragmented global environment.
He said Malaysia's upward trajectory reflected an economy steadily enhancing its productive capacity, strengthening investor confidence and increasing its strategic relevance within the global economy.
"The foundations underpinning this progress are substantial. Malaysia's economy now exceeds RM2 trillion, while its capital market has reached a record RM4.3 trillion, equivalent to 210 per cent of gross domestic product (GDP), making it one of the deepest and most sophisticated capital markets in the emerging world," said Shan.
Malaysia's leadership in Islamic finance, resilient banking system, world-class infrastructure and strong integration into global value chains spanning semiconductors, electronics, advanced manufacturing and high-value services also represented enduring structural strengths that continue to support long-term investment and economic resilience, he added.
Besides that, Malaysia's strategic location within ASEAN enhances its attractiveness as multinational companies diversify their supply chains and increase investments in AI, semiconductors, digital infrastructure, advanced manufacturing and the energy transition.
On Thursday, Prime Minister Datuk Seri Anwar Ibrahim said Malaysia’s IMD ranking this year is proof that efforts to strengthen efficiency and improve execution continue to pay off. Malaysia continues to make progress in global competitiveness rankings, and the achievement shows the government’s focus on improving efficiency and commitment is on the right track, he added.
The IMD ranking is based on four main pillars: economic performance, government efficiency, business efficiency and infrastructure. According to the IMD, the strengthening across all these pillars was the main factor driving Malaysia’s improved standing this year.
Malaysia ranks fourth globally for economic performance, while government efficiency rose 11 places to 14th. Business efficiency also jumped 16 places to 16th, and infrastructure improved two places to 33rd.
Malaysia has steadily improved its competitiveness ranking over the past three years, climbing from 34th in 2024 to 23rd in 2025 and 15th this year.
-- BERNAMA