Malaysia’s Once-in-a-Generation Opportunity in a World in Transition

Against the backdrop of a world in transition, on July 27, 2023, Prime Minister Datuk Seri Anwar Ibrahim launched the Madani Economy Framework, and in quick succession, the New Industrial Master Plan 2030 and the National Energy Transition Roadmap. Together they constitute the core ideas of the economic blueprint of the administration.

The world is in a transition at least in the following ways:

• Geopolitically, from a US-dominated world order to multipolarity, in which while the great powers are still strong, the middle powers could impact outcomes if they are organised.

• As far as the supply chain is concerned, it is no longer about “just in time” but “just in case”, and the shift from the pursuit of efficiency to the pursuit of resilience. China dominated the global supply chain during the previous era, from the time it joined the World Trade Organization (WTO) in 2001 until the Covid-19 pandemic in 2020, but diversification is the name of the game in this new phase of global history.

• Unbridled free trade and the assumption that free trade would naturally bring prosperity for all are no longer the flavour of the month. And with the middle class in the US shrinking, it is doubtful that they will remain as the consumer of last resort for the world’s export-oriented industry nations for long.

• From a fuel-based economy to new energy as evident in the greater electrification of transport and use of new energy. The Iran war and the crisis in the Strait of Hormuz is just going to hasten the pace of transition.

• A once-in-a-generation technological transformation in the form of artificial intelligence (AI). The last time the world experienced such a transition was the advent of the internet 30-plus years ago.

Clearly, the world is not the same as it was just a few years ago. We in Malaysia must not look at these changes and try to adapt in a linear, piecemeal or gradual manner. These once-in-a-generation transformations come at lighting speed, and often all at once. Often, in just a few months’ time, the entire landscape is altered.

Thus, we must be mentally prepared to leapfrog. At the same time, we should also be optimistic that Malaysia may bene­fit from these global forces of change and do everything possible to effect the once-in-a-generation leap for the Malaysian economy, Malaysian companies and workers, and our people.

Malaysia has turned the page

After the Asian financial crisis in 1997, Malaysians have grown cynical about everything. To a certain extent, they are correct, as successive administrations have been mired in corruption scandals and run in circles, and the nation has been trapped. In fact, when the World Bank started talking about the middle income trap about 20 years ago, Malaysia became the best case study of what had gone wrong.

In fact, a year after the financial crisis, Anwar who was then deputy prime minister was sacked and jailed. And more importantly, in 2001, China joined the WTO and effectively eliminated Malaysia’s advantages in the global supply chain. Malaysia was not cheaper than China, and did not have the scale and the state-driven industrial policy of China.

But as the world is in transition, Malaysia’s geopolitical positioning as “enemy to none and friend to all”, as well as being an aspiring middle power, makes us an attractive platform for investors and trading partners. The pursuit of supply chain diversification and resilience benefits Malaysia, and will continue to be an advantage as long as we keep strengthening the resilience of our supply chain and ecosystem.

As free trade wanes, Malaysia, which is almost reaching the high-income threshold, does have a sizable middle class that can serve as the bulwark of domestic demand. Asean could also be a sizable market if it gets richer, and we do have many trade partners to diversify our exports as well. As an oil producing nation, Malaysia has substantial energy security, yet the potential for new energy is tremendous as well.

And as far as the transition to AI goes, Malaysia has both the semiconductor sector and the data centres; what we need to do is to get more out of these investments. To have both sides of the AI wave — the chips and the data centres — is indeed very rare.

The Madani Economy Framework addresses the twin challenges of how to grow faster and at the same time grow more equitably, raising the ceiling and raising the floor. At every turn when a decision has to be made, you can see that the government circles back to this balancing act.

Not everyone in the business community likes the idea that the government cares deeply about how to raise the floor. However, they should know that when more Malaysians are richer and better off, the domestic market available to their products will be bigger. From the point of resilience, a strong society with a larger middle class is insurance against the populism that the world is having to deal with, from the US and Europe to many other places.

The fuel subsidy

Let me give you an example. First, there were many economists including from the World Bank who argued that the petrol subsidy should be removed at once, the price be floated to the market rate and replaced with cash transfers. It took the government more than two years to deliberate, and eventually launch the Budi system in September 2025.

Anwar had seen chaos arising from sudden fuel price shocks previously, including the fall of Indonesia’s president Suharto in 1998. Pressured by the International Monetary Fund, Suharto raised fuel prices by 70% on May 4, 1998, and the military strongman who led his country for 32 years fell less than three weeks later on May 21. If the Budi system were not here to act as a shock absorber, many Malaysians would have suffered in March and April, at the height of the Iran war when both prices and supplies were uncertain.

Of course, in the long run, we should electrify our transport as much as possible and sprawl our cities less so that more people can live in the inner city and walk or take public transport to work. But guided by the Madani spirit, we put in place a shock absorber that was tested and prevailed in the crisis we just faced.

We are all nation builders

I share this with you because I hope the business community will see themselves as nation builders, too. Together, we must think about how to build Malaysia into the next 30 years, and create a robust and resilient advanced economy and society when our nation turns 100.

Further, Malaysia has been a full-fledged democracy since 2018. We have seen changes of government that were safe and without bloodshed, and put in place some very serious reforms to ensure there is no more a dominant prime minister and a dominant ruling party. We are going to limit the tenure of the prime minister and separate the roles of the attorney general and the public prosecutor. Upholding Malaysia’s institutional reputation and credibility is one of the government’s most important agendas.

Our efforts over the past three years have been recognised globally. Malaysia was among the faster climbers of the World Competitiveness Ranking over the past two years — it ranked 34th in 2024, 23rd in 2025 and 15th in 2026.

It’s not due to luck. It is the Madani Economy Framework that puts the resilience of our supply chain, our economy, our people and our institutions at the heart of our economic policy.

I would like to draw your attention to the opening note by Arturo Bris, director of the IMD World Competitiveness Center, in the IMD World Competitiveness Booklet 2026: “Every year I am asked the same question: what makes an economy competitive? And every year, the honest answer drifts a little further from the textbook one.

“Costs matter. Scale matters. Talent, technology, infrastructure, and market access all matter. And yet, none of them explain why — in a world that is visibly fragmenting — capital, people and trust keep gravitating towards the same handful of places. They aren’t always the cheapest, largest, or most technologically advanced of places, but they are places where people believe in the rules.

“All that may sound a little schoolmasterly. But a major finding of the 2026 IMD World Competitiveness Ranking (WCR) is that many of the economies at the top of the table are not the most developed economies, nor the largest exporters, nor the biggest markets. So, what are they? Economies that uphold the rule of law most consistently.

“Economic competitiveness in 2026 is no longer mainly a contest of cost or scale, or even of innovation. It is a contest of institutional credibility. The more fragmented the world becomes, the more valuable predictable rules, enforceable commitments, and legitimate state capacity become.”

I hope this could help all of us to capture the spirit of our time, which is very different from the textbook idea of competitiveness, which is to make things cheap and sell them cheap. Competitiveness is about the resilience of our supply chains, our companies, our workers and our people.

While many may still be cynical about the nation, and despite having many problems like any other countries, Malaysia is at its best moment since the 1997 crisis. The Madani government has put an end to the lost decades; Malaysia has turned the page.

What I would like to impress upon you is that we do need a bit more optimism, dynamism and ambition. As the less successful years are behind us, it is time for Malaysia to aim higher, to be prepared to take up the challenge of growing faster and more equitably, and to be a technology nation that owns technologies, and not just a trading nation.

Building a secure and resilient Malaysia

Malaysia will celebrate the 70th year of Merdeka in 2027. We should envisage what the country will be in 2057. We now know what 30 years means, as we are familiar with the struggles we have gone through since 1997.

To build a prosperous Malaysia in the next 30 years, Malaysians need to have a bit more faith in our companies and our people. To make Malaysia great (again) is to believe in what we as a nation can achieve together.

Here are the paradigm shifts to transform the country:

First, we must stop seeing Malaysian companies as inferior to foreign ones. Having seen the transformation of technology companies in Japan since World War II, and South Korea and Taiwan in the last 50 years, as well as China since the early 2000s, we should have more thorough debates about industrial policy to nurture Malaysian companies. The Malaysia Investment Development Corporation (Mida), the Treasury and all other agencies, as well as private banks, will have to be clear that attracting foreign investment is not an end in itself but a means to develop local large companies and future Malaysian multinationals.

I sometimes get quite frustrated when Malaysian government agencies or business leaders think of our own companies as “small and medium enterprises” (SMEs) and only worthy of serving foreign investors as suppliers and not as technology partners. No one is born knowing how to run the next day. We must nurture our businesses to be future technology owners and multinational corporations in their own right, and not just as “SMEs” per se.

Second, the capital market must have a nation-building agenda to get more Malaysian technology owners to list and to make tech a significant part of Bursa Malaysia. As much as possible, the government-linked investment companies (GLICs) and government-linked companies (GLCs) should gradually move away from playing the role of housing developers to focus more on grooming Malaysian technologies. One day, when the GLICs and GLCs are no longer spending too much time on land deals and housing development, and instead focusing solely on technology, we will be a very strong nation.

In short, Malaysia should aim to be a mini South Korea or mini Taiwan in technology by bringing capital, workers and companies together to build a nation that owns and innovates technologies over the next decade to two, which I am confident we are capable of.

The role of business chambers

The government will need to play a role in ensuring that there is a level playing field for Malaysian companies. We understand that there is a deep concern about the influx of products from other countries, which could harm local services and local manufacturers.

Recently, I was tasked by Finance Minister II Datuk Seri Amir Hamzah Azizan to look into the matter with Treasury Secretary General Tan Sri Johan Mahmood Merican.

For the immediate future, we will look at ensuring that:

• There is a level playing field for Malaysian businesses and our rules do not favour foreign businesses at the expense of domestic businesses;

• All foreign entities comply with Malaysian laws and regulations; and

• All foreign services and products comply with Malaysian standards, especially in food, electric goods and construction material.

I appeal to the business chambers to come together to provide the government with more analysis, and even intelligence and tip-offs. I hope the chambers can do more to advancre the nation. I hope to see more chambers and business associations employing policy research staff, and to work with the government at the granular level of policy formulation. While we need a more open government in which officials and ministers are ready to engage and discuss policy details before they are cast in stone, we also need businesses to come up with innovative and new ideas.

Of course, at the core of the matter, we need to build trust across society so that we know we can trust each other’s judgement and expertise, and we know the leaders from the government are working for the nation and not themselves. Likewise, we know that when business leaders lobby for policy changes, they do not speak for their companies alone but for the benefit of the nation.

This trust will not be easy to build, but I hope the business chambers will rise to the occasion.

To conclude, three years after the Madani Economic Framework was rolled out, I would like you to have faith in the future of Malaysia, to know that we are on the right track, and to build trust so that we can build a strong and resilient Malaysia into the next 30 years.

This article first appeared in Forum, The Edge Malaysia Weekly on July 20, 2026 – July 26, 2026