Malaysia is an upper-middle income, highly open economy. Malaysia was one of 13 countries identified by the Commission on Growth and Development in its 2008 Growth Report to have recorded average growth of more than 7 percent per year for 25 years or more. Malaysia achieved this spectacular performance from 1967 to 1997. Malaysia has also succeeded in reducing poverty: the share of households living below the national poverty line (USD 8.50 per day in 2012) fell from over 50 percent in the 1960s to less than 2 percent currently.
USD 312.5 billion (2013)
GDP per capita
USD 10,500 (2013)
83 percent (2013)
Doing Business 2014 Ranking
6th (out of 189 economies)
Poverty Rate (share of households below the national poverty line)
1.7 percent (2012)
Gini coefficient (income)
3.0 percent (December 2013)
The sustainability of Malaysia’s favorable near-term economic outlook over the medium-term hinges on the implementation of structural reforms. The accelerated implementation of productivity-enhancing reforms to boost human capabilities and competition in the economy will be key for long-term growth and for Malaysia to secure its passage to the ranks of high-income economies. Malaysia has been working to address these challenges. In 2010, Malaysia launched the New Economic Model (NEM), which aims for the country to reach high income status by 2020 while ensuring that growth is also sustainable and inclusive. The NEM includes a number of reforms to achieve economic growth that is primarily driven by the private sector and moves the Malaysian economy into higher value-added activities in both industry and services. Malaysia has progressed from being a producer of raw materials, such as tin and rubber, in the 1970s to being a diversified economy and a leading exporter of electrical appliances, electronic parts and components, palm oil, and natural gas. The Malaysian economy grew on average 7.3 percent between 1985 and 1995. After the Asian financial crisis of 1997-1998, Malaysia continued to post solid growth rates, averaging 5.5 percent per year from 2000 – 2008. Growth was accompanied by a dramatic reduction in poverty from 49.3 percent in 1970 to 1.7 percent in 2012. However, pockets of poverty exist and income inequality remains high relative to the developed countries Malaysia aspires to emulate: the Gini coefficient of income inequality stood at 0.43 in Malaysia in 2012, compared with 0.31 and 0.34 in the Rep. of Korea and Japan (both as of 2010), for example. Real income of the bottom 40 percent of households increased by an average 6.3 percent per year between 2009 and 2012, compared to 5.2 percent for the average household, suggesting the benefits from growth were being shared.
The World Bank Group’s current partnership with Malaysia is focused on knowledge-sharing and is centered around support for Malaysia’s vision to join the ranks of high income economies through inclusive and sustainable growth. Malaysia has not borrowed from the Bank since 1999, and reimburses the Bank for the advisory services provided. In 2012, the government and the World Bank extended their Framework Agreement for advisory services through 2014. The Bank has provided advisory services in areas such as minimum wage policy, a master plan to develop Small and Medium Enterprises, improving the effectiveness of public expenditures, and accounting and auditing standards. It is currently working with the government in conducting studies on improving the targeting of social assistance programs, HIV/AIDS prevention, and boosting growth by leveraging its cities.
IFC views Malaysia as a platform for increasing South-South investments as Malaysian companies deepen their investments and presence in emerging markets. As part of this strategy, IFC recently invested in IHH Healthcare, a Malaysia-based healthcare and medical education company with operations in eight countries. In addition, IFC is also looking to increase mobilization volumes for both debt and equity transactions and is exploring the possibility of implementing risk sharing and advisory services programs to address specific needs within Malaysia.