Malaysia is poised to reach high-income status by the end of this decade, according to the Asean + 3 Macroeconomic Research Agency (Amro). Chief Economist Hoe Ee Khor said the country is being driven by a strong inflow of foreign direct investment (FDI) and a robust manufacturing sector, particularly in the semiconductor industry. Khor also highlighted that Malaysia has seen a significant increase in FDI in 2021 and 2022, which is expected to boost economic growth in the future.
Data from the Malaysian Investment Development Authority shows that FDI in Malaysia reached an all-time high of RM208.6 billion in 2021, followed by RM163.3 billion in 2022 and RM125.7 billion in 2023.
Khor stated that Malaysia is expected to attract more semiconductor industries in the future as a result of the expected upturn in the semiconductor cycle, which is expected to peak towards the end of the year, given its nickname as the Silicon Valley of the East. He added that Malaysia aims to escape the middle-income trap and aspire to become a high-income economy by the end of the decade, stressing that there is no reason why this goal cannot be achieved.
Meanwhile, Allen Ng, Head of Amro Group, mentioned that it is reasonable to expect Malaysia to surpass the nominal GDP threshold of around US$13,000 set by the World Bank for high-income economies. He noted that Malaysia's current nominal GDP per capita is between "US$11,000 and US$12,000", indicating a gap that needs to be bridged from the "US$13,000" benchmark set by the World Bank.
Specifically, it notes that Malaysia's GDP per capita will reach US$11,141 in 2023, while the high-income threshold set by the World Bank is US$13,845.
He also warned that Malaysia, like other countries in the region, faces common long-term challenges to its economic prospects. He highlighted the need to manage an aging population, increase productivity, and improve the skills of the workforce.
