Economic studies


Population 32.4 million
GDP per capita 11,072 US$
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major macro economic indicators

  2017 2018 2019 (e) 2020 (f)
GDP growth (%) 5.9 4.7 4.5 -2.0
Inflation (yearly average, %) 3.8 1.0 1.0 2.1
Budget balance (% GDP) -3.0 -3.7 -3.4 -3.2
Current account balance (% GDP) 2.8 2.1 3.1 1.9
Public debt (% GDP) 54.4 55.6 56.5 56.0

(e): Estimate. (f): Forecast.


  • Diversified exports
  • Growing domestic demand mitigating external headwinds
  • Dynamic services sector
  • High R&D
  • Investment supported by expansion of local financial market and access to FDIs
  • Exchange rate flexibility
  • High per capita income
  • Travel hub


  • Budget income highly dependent on performances in the gas and oil sector
  • Very high private debt levels (80% of GDP)
  • Low fiscal revenues (14% of GDP), lack of transparency in budget spending
  • Erosion of price competitiveness due to increasing labour costs
  • Persistent regional disparities
  • Ethnic and religious disputes


Growth will remain strong despite external headwinds, driven by private consumption

Growth will remain resilient to global trade downturn as the economy is gradually rebalancing from an originally export-driven growth towards a domestic consumption (58% of GDP) one, which reduces the impact of external headwinds. Though household debt remains high at 83.2% of GDP, consumption is set to remain strong underpinned by high disposable income and low unemployment rate while inflation is expected to remain low. This partly offsets the sluggish export performance due to lower global demand for electronics and electrical components, especially from its main trading partners China and the United States. That said, Malaysia might see trade opportunities through free trade agreements in the region, which would partially buffer slowing exports. The ASEAN Economic Community facilitates regional integration with free flows of products, investment and productivity gains. In that sense, exports to ASEAN (28% of total exports) from Malaysia would likely to increase on the back of lower tariff barriers decline, but might not be enough to offset the US-China conflicts. Moreover, the government has yet decided to ratify the CPTPP agreement that entered into force in 2019. In addition, palm oil export, which accounts for 2.8% of GDP in 2018 would accelerate this year in the back of stronger demand from main export trade partners such India along with a pick-up in palm oil prices. Service industry contributes more to growth (55% of GDP in 2019) than manufacturing and is expected to remain strong, as domestic consumption would create more demand for services. Investment will contribute positively (albeit moderate) to growth this year, notably with a rise in public investment through large infrastructure projects Construction will perform well this year and is expected to see a 3.7% growth as the East Coast Rail Link project resumed after renegotiation of the terms with China, including bringing costs down. That said, the government unveiled an expansionary stance to boost domestic demand in order to achieve the official target growth of 4.8% which is challenged the global economic downturn .The banking industry is well capitalized and liquid, which is credit supportive. Household debt is high but NPLs are contained at this stage (1.4%).


Challenging fiscal consolidation and high external debt

The government unveiled a tighter budget for 2020 due to a fall in revenues collection. The government replaced the GST (a form of VAT) by the SST (Sales and Services Taxes), which tightened the tax base and generated a revenue shortfall estimated approximatively to 10% of the expected revenue. In this regard, the fiscal deficit is expected to widen to 3.2% from the original target of 3% which would challenge government’s fiscal consolidation efforts (targeting deficit at 2% GDP in the medium term). Public debt is set to remain high though manageable with a large share denominated in local currency, including for the part detained by non-residents, which helps to mitigate risk.

Despite pressure from the slowing global demand along with trade disputes between the US and China, the current account, although declining in result of a shift from export-led growth to domestic demand, is set to remain in surplus in line with the trade balance. The income balance deficit is expected to increase in result of higher repatriation of funds by foreign companies. External debt (61% of GDP at Q3 2019, with 77% of the total owed by private sector) is high but manageable since one-third is denominated in local currency and half has medium to long-term maturity. International reserves, fed by the current account surplus and foreign investment, remain adequate covering 7.3 months of imports and sufficient to cover total short-term debt (1.1 times).


Mahatir’s New Malaysia challenged by scandals

The centre-left four-party Pakatan Harapan (Alliance of Hope) coalition led by former Prime Minister Mahatir Mohamad (1981-2003) came again to power in 2018 on high expectations. Though policy initiatives have been proposed, it struggles to deliver on the election promises which led to a sharp fall in public approval rates. Further to this, the coalition’s unity is challenged by a recent sex scandal within its largest component Parti Keadilan Rakyat (PKR, 50/129 seats of the coalition) involving Malaysia’s Economic Affairs Minister Azmin Ali. Even though Anwar Ibrahim (PKR) is expected to succeed Mahatir Mohamad as Prime Minister, this scandal exacerbates the political divide within the party – one side supporting Anwar for Mahatir’s succession and the other backing Azmin. As the country is facing internal hostility, the government reiterated its non-aligned status through the Foreign Policy Framework of New Malaysia, especially when dealing with China and the United States. The administration recently renegotiated the terms for the East coast rail link, a part of the Belt and Road Initiative with China, and construction resumed. Closer bilateral defense relationship with the United States would provide support to the country in the South China Sea where it is confronted with China.


Last update : February 2020


Bank transfers, cash, and cheques are all popular means of payment in Malaysia. The well-developed banking network allows for online payments. Letters of Credit are also commonly used. As of 2017, the Central Bank requires that 75% of payments in foreign currencies are converted into the Malaysian ringgit (MYR) automatically upon receipt. Payments for transactions within Malaysia are required to be made in ringgit.


Debt collection

Amicable phase

It is common for disputes and or debt to be settled amiably after negotiations. If there is no response from the buyer, a site visit and online searches are conducted to ascertain the operating status and legal status of the buyer. If the buyer continues to ignore and or neglect to settle the matter amicably, the supplier may begin legal proceedings to recover payments for goods sold and delivered. However, due diligence should be done to ensure that the buyer has sufficient assets to satisfy the debt before proceedings are initiated.


Legal Proceedings

The Malaysian legal system is based upon the English common law system. The hierarchy of courts in Malaysia starts with the Magistrates’ Court at the first level, followed by the Sessions Court, High Court, Court of Appeal and the Federal Court of Malaysia. The High Court, Court of Appeal and the Federal Court are superior courts, while the Magistrates’ Court and the Sessions Courts are subordinate courts. There are also various other courts outside of this hierarchy, e.g. Employment Admiralty, Shariah or Muslim matters.

Claims in Magistrates’ court are limited up to MYR 100,000, whilst a Sessions Court may hear any civil matters where the amount in dispute does not exceed MYR 1,000,000. Where the amount claimed does not exceed MYR 5,000, a claim should be filed with the small claims division of the Magistrates’ Court. However, legal representation is not permitted. The High Court has the jurisdiction to try all civil matters and monetary claims exceeding MYR 1 million.

An unpaid debt normally has a six-year statute of limitation period. The creditor commences a writ action and serves the writ on the debtor within six months from the issue of the writ. When defendants are served with a writ, they have 14 days after service of the writ (or 21 days if the writ was served outside Malaysia) to file a Memorandum of Appearance with the court to indicate their intention to appear in court and defend the suit.

Before a writ can be issued, it must be endorsed with a statement of claim or, with a general endorsement consisting of a concise statement of the nature of the claim made and the requisite relief or remedy. When the writ only has a general endorsement, the statement of claim must be served before the expiration of 14 days after the defendant enters an appearance.

When the defendant has entered appearance, he is required to file and serve his defence on the plaintiff 14 days after the time limit for entering an appearance, or after service of the statement of claim, whichever is later. A defendant may make a counterclaim in the same action brought by the plaintiff. A plaintiff must serve on the defendant his reply and defence to a counterclaim, if any, within 14 days after the defence (and counterclaim) has been served on him.

Proceedings may be resolved and/or otherwise summarily terminated and/or determined and/or disposed of at an early stage before the trial of the action.


Fast-track proceedings

Failure to enter an appearance may result in a plaintiff proceeding to enter a judgment-in-default against a defendant. Ordinarily, when a defendant has filed an appearance and also a statement of defence subsequent to other procedures of filing of documents in support, the matter would be set for trial. If the defendant has entered an appearance and filed a defence, but it is clear that the defendant has no real defence to the claim, the plaintiff may apply to court for summary judgment against the defendant. To avoid summary judgment being entered, the defendant has to show that the dispute concerns a triable issue or that there is some other reason for trial.


Enforcement of a court decision

Writ of Seizure and Sale (WSS)

A WSS may be enforced against both movable and immovable property as well as against securities. When the property to be seized consists of immovable property or any registered interest, the seizure shall be made by an order prohibiting the judgment debtor from transferring, charging or leasing the property.


Garnishee Proceedings

A Judgment Creditor may garnish monies a Judgment Debtor is supposed to receive from a third party. If the garnishee does not attend court, then the order is made absolute. If the garnishee does attend, the court can either decide the matter summarily or fix the matter for trial.


Judgment Debtor Summons

The objective of this summons is to give the judgment debtor an opportunity to pay the judgment debt in instalments to commensurate his means. Debtors themselves can apply for such a procedure. Alternatively, under Order 14 the defendant can admit the plaintiff’s claim and propose to pay by instalments, which the court can subsequently order if the plaintiff accepts the proposal.


Bankruptcy Proceedings

If the total judgment of debt exceeds MYR 30,000, bankruptcy proceedings can be triggered if the judgment debtor has not complied with the judgment or order made against him. Once a debtor has been adjudged bankrupt, other creditors are also entitled to file the Proof of Debt form and Proxy in order to be entitled to share in any distribution from the estate of the bankrupt. The distribution of the estate is according to the priority of the creditors’ claim.


Foreign Judgements

Any decision rendered by a foreign country must be recognized as a domestic judgment in order to become enforceable through an exequatur procedure. Malaysia has reciprocal Recognition and Enforcement Agreements with some countries, including Hong Kong, India, and New Zealand.


Insolvency proceedings

There are several insolvency and restructuring procedures available. Under the Companies Act, the available insolvency proceedings include:

  • compulsory and voluntary winding-up of companies;
  • appointment of receivers and managers;
  • restructuring mechanisms.

In a compulsory winding-up, the court can wind up a company on a number of grounds under the Companies Act. The most common of these is the company’s inability to pay its debts. The creditor initiates this process by filing a winding-up petition with the court. If an order is made, the court will appoint a liquidator to oversee the liquidation process.

Court-appointed receivers will either manage the company’s operations as normal, or take custody and possession of the assets of the company. Alternatively, receivers appointed by debenture holders based on the terms of the debenture agreement (privately-appointed receivers), may take possession of the company’s assets subject to the floating charge that has since crystallized in the debenture.

Restructuring mechanisms include:

  • scheme of arrangement: a company can enter into a scheme of arrangement with the approval of 75% of the creditors in value and a simple majority. After creditors approve the scheme, the court must sanction it before it can be implemented. Debtors can apply for an order restraining all proceedings against it while it develops its scheme;
  • special administration: it involves the appointment of a special administrator. The appointment must serve the public interest;
  • conservatorship: the Malaysia Deposit Insurance Corporation takes control of a non-viable financial institution or acquires and takes control of non-performing loans that are outstanding between the financial institution, borrowers and security providers.