Citing data from CEIC Data, Idham Razak of UiTM Melaka said foreign direct investments (FDI) increased by almost RM7.4 billion (US$1.6 billion) in September 2023, surpassing the growth of RM5.13 billion (US$1.1 billion) observed in the previous year.
“This shows increased investor confidence in Malaysia’s economic prospects, owing to the framework’s strong emphasis on long-term growth plans and budgetary management,” he told FMT.
“By concentrating on long-term goals like research and development as well as infrastructure development, companies are able to innovate and build a stable environment, in which they may make long-term plans and investments.”
On July 27, Prime Minister Anwar Ibrahim launched his vision of a new “Madani economy” aimed at restoring Malaysia as an economic leader in the Southeast Asian region.
The plan aims to achieve seven key targets within 10 years, including making the education system more demand-driven, especially in strengthening cooperation with industries and employers.
Goh Lim Thye of Universiti Malaya also affirmed the effectiveness of the Madani economic policy in attracting investments, saying that net FDI for the third quarter of 2023 more than doubled from the preceding quarter to RM7.2 billion.
Goh said this could be because the policy had clear and strategic goals, such as elevating Malaysia into the top 30 global economies and enhancing its Global Competitiveness Index ranking, thereby fostering a conducive investment environment.
However, he said it was important not to view any investment growth as a temporary spike, adding that there must be ongoing efforts to sustain it.
“This involves consistently updating policies, fostering a skilled workforce, securing political and economic stability, and keeping pace with evolving global economic trends,” Goh said.
Meanwhile, Ahmed Razman Abdul Latif of Putra Business School said another indicator of the Madani policy’s success was the positive quarterly GDP growth recorded.
The country’s GDP in the third quarter of this year rose 3.3% despite slowing down in the second quarter at 2.9%. The first quarter, however, recorded an expansion of 5.6%.
Ahmed also attributed the government’s current economic success to its ability to execute and ensure that existing policies meet intended outcomes.
“Higher accountability, transparency, and having the right people leading ministries are crucial factors in this regard,” he said.
The Madani economic framework also involves the rationalisation of subsidies. In 2023, subsidy spending was projected to surpass RM81 billion.
Anwar has said subsidy rationalisation is aimed at ensuring that subsidies for essentials only benefit those in need while maintaining fiscal sustainability.
Savings from the rationalised subsidies will be channelled towards targeted programmes like Sumbangan Tunai Rahmah, where the maximum rate has been raised from RM3,100 to RM3,700.
The Sumbangan Asas Rahmah cash aid has also been increased from RM600 to RM1,200 annually.