As Malaysia gears up for 2025, the need for robust reforms to bolster its position as a leading business hub in Southeast Asia is more pressing than ever. Members of the Institute of Chartered Accountants in England and Wales (ICAEW) Kevin Foo, Elliot Chaw, Anitha Poopalasingam, Dr. Lim Kim-Hwa, and Dato’ Megat Iskandar Shah highlighted key initiatives which could significantly enhance Malaysia’s global competitiveness while ensuring sustainable economic growth.
Enhancing the Business Environment
The recently tabled Budget 2025 aims to enhance Malaysia’s global competitiveness by improving the “Ease of Doing Business” and catalysing the areas of emphasis for the New Industrial Master Plan (NIMP) 2030 to attract new businesses and expand existing investments.
Kevin Foo, Partner at KPMG in Malaysia and Past Chairman of the ICAEW Members’ Society Malaysian Chapter emphasises Malaysia’s strategic advantages as a thriving hub for investment, underscored by its dynamic economy and diverse, multilingual population. However, he cautions that as global markets evolve and competition intensifies, Malaysia must refine its business environment to retain its appeal to multinational corporations. Budget 2025 marks a pivotal opportunity to enact these reforms, advocating for a more streamlined approach to facilitate business growth.
Elliot Chaw, Associate Director of Corporate Tax Advisory at KPMG in Malaysia adds that one of the standout initiatives is the launch of the Forest City Special Financial Zone, introducing Malaysia’s first family office framework outside Labuan. This initiative aims to attract high-net-worth individuals through a well-structured legal and tax framework, fostering confidence and reinvestment in the national economy. Such a framework could serve as a sandbox for innovative financial solutions, encouraging families to manage their wealth while contributing to Malaysia’s economic growth.
Clarity and Consistency in Regulations
The importance of having a stable and transparent regulatory system cannot be overstated. Both Foo and Chaw agree that any inconsistencies in the regulations and practices across states could hinder foreign investments, especially in large-scale developments. They suggest that harmonising processes for licensing, environmental approvals, and land-use permits in a digital, single window platform would reduce delays and create a more favourable investment climate. A stable environment with clear “rules of the game” will bolster investor confidence and attract long-term commitments from both domestic and foreign investors.
Immigration Reforms: Attracting Global Talent
Reforming Malaysia’s immigration policies is vital for staying competitive in the global race for talent. Foo and Chaw assert that “Simplifying and expediting work visa and residency programme, particularly for investors and specialised talent, will strengthen Malaysia’s appeal as a business hub.” Drawing parallels with Singapore’s Tech Pass, they suggest a fast-track residency programme for skilled foreign workers, investors, and entrepreneurs which could significantly enhance Malaysia’s competitiveness.
Streamlining the Investment Processes
Anitha Poopalasingam, former Senior Director of Group Internal Audit at Maybank stresses the importance of streamlining the investment approval process and establishing a new investment fund to attract foreign direct investment. “Reducing approval times will enhance efficiency, making it easier for investors to navigate regulatory requirements,” she explains. A clear and efficient investment framework will not only boost investor confidence but also drive job creation and economic growth.
Poopalasingam highlights that targeted investment funds can focus on specific sectors aligned with national priorities, such as technology and renewable energy, creating a diverse business ecosystem. “By promoting sector-specific investments, we can drive growth in key areas and support local SMEs which are vital to Malaysia’s economy,” she states.
Promoting Sustainability and Green Growth
In line with the Ekonomi MADANI framework, the Ministry of Finance is spearheading initiatives to synergise efforts across government-linked entities to catalyse growth in key economic sectors. Poopalasingam notes, “The focus on renewable energy helps diversify Malaysia’s economy, making it more resilient to global market fluctuations.” Investments in renewable energy not only address immediate environmental concerns but also ensure long-term economic viability.
Digital Infrastructure Investment
As outlined in Mission 2 of NIMP 2030, Budget 2025 also proposes to augment local innovation and technology to enable effective competition on both the regional and global fronts. This involves leveraging automation, artificial intelligence and machine learning to boost productivity, streamline costs and foster sustainable growth across sectors.
CEO of Cammillion and Fellow in Finance at Cambridge University Dr Lim Kim-Hwa emphasises the importance of staying at the forefront of the digital revolution. “While hardware investment is essential, the application of digital technology is equally important. We must focus on how the digital economy can enhance competitiveness as well as disintermediate and thus reduce time and distance to market,” he explains. Improving digital connectivity, especially in rural areas is crucial for promoting inclusiveness and allowing all sectors of society to benefit from the global digital economy.
To effectively connect rural areas, Dr Lim advocates for adapting education and training programmes to deliver the required upskilling. “Integrating digital education into the curriculum will prepare the workforce for emerging opportunities in the digital landscape,” he adds.
Empowering SMEs through Ekonomi MADANI
Dato’ Megat Iskandar Shah, Partner and Deputy Assurance Leader at Ernst & Young Malaysia, highlights the crucial role that SMEs play under the Ekonomi MADANI framework. “SMEs are the backbone of Malaysia’s economy, representing 97% of businesses and nearly half of the workforce. Ensuring their growth and sustainability is vital to the nation’s economic trajectory, particularly in accessing financing and expanding export readiness.”
Megat stresses that while existing government initiatives provide support, more innovative financing solutions are needed to bridge current gaps. “Alternative financing options like digital lending platforms and venture capital can better cater to the unique needs of SMEs, helping them access funds more efficiently and participate in high-value sectors aligned with NIMP 2030.”
On enhancing export readiness, Megat stresses the need to equip SMEs with the right tools and training to compete globally. “Expanding trade facilitation services, improving digital infrastructure, and investing in workforce development, particularly in digital skills, are critical to boosting international competitiveness and driving innovation. By preparing SMEs for the demands of the digital economy, we can unlock new growth opportunities and enhance productivity across sectors.”
He concludes by emphasising the need for stronger collaboration between SMEs, government agencies, and financial institutions to drive long-term growth. By working together, these entities can ensure that SMEs fully capitalise on the opportunities presented by the Ekonomi MADANI framework, contributing significantly to Malaysia’s future economic success.
A Call for Decisive Action
In conclusion, Budget 2025 presents an opportunity for Malaysia to enact crucial reforms that will strengthen its global competitiveness. By simplifying business operations, enhancing regulatory frameworks, and investing in digital infrastructure and sustainability, Malaysia can attract foreign investment, generate jobs, and foster innovation. As the country navigates an increasingly interconnected world, now is the time for decisive action to secure Malaysia’s future as a thriving, competitive economy. ICAEW believes that chartered accountancy can be a force for positive change. By sharing insight, expertise and understanding, the professional organisation hopes to continue helping create sustainable economies and a better future for all.
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