Malaysia Country Risk Rating

Overall risk for Malaysia remains medium-low despite a political landscape that has been defined by growing tensions within the ruling alliance. Prime Minister Anwar Ibrahim’s government consists of his Pakatan Harapan bloc, the Barisan Nasional alliance and several other regional parties, since the May 2023 election resulted in a divided political landscape. General elections are scheduled for February 2028, however, PM Anwar Ibrahim’s recent meeting with Malaysia's King, Sultan Ibrahim, has intensified pressure on him to call an early election amid internal divisions within the government. PM Anwar Ibrahim is considering a potential snap election if divisions continue to widen. Political interference and legal & regulatory risk have both maintained a medium-low rating, while political violence remains medium, as protests occur frequently in Kuala Lumpur but are usually well-organized and peaceful. In terms of international relations, Malaysia is determined to balance its ties with the U.S., China and Japan. Meanwhile, energy disruptions caused by the Iran war have prompted countries such as Thailand to actively seek additional LNG supplies from neighboring Malaysia. The IMF’s April forecast indicates that Malaysia’s economy is expected to remain resilient, growing at 4.7% in 2026 and 4.3% in 2027. Strong domestic demand and robust electronic exports have driven the economy, while the mining sector had seen a 1.1% decline in Q1 of 2026 mostly due to a fall in production in crude oil and natural gas. Inflationary pressures have so far been contained, as of April 2026, following the IMF’S 1.9% forecast for 2026 and 2% forecast for 2027. Therefore, the risk of doing business remains medium-low. Government debt to GDP is expected to fall marginally to approximately 69% over the next two years. Malaysia’s elevated public debt has been stabilized following the government’s cut of the country’s fiscal deficit. Both Sovereign non-payment risk and exchange transfer risk have maintained a medium rating.