Malaysia’s competitiveness is rising. But will it reach everyone?

In a global field where every country is racing to attract capital and talent, Malaysia’s ascent from 34th to 23rd in the IMD World Competitiveness Ranking is no small feat. Unveiled in June 2025, the improvement signals more than statistical movement—it reflects genuine traction across economic, institutional, and regulatory fronts. The most striking detail? Malaysia now holds the fourth spot worldwide for economic performance, a category that includes trade, employment, and macroeconomic fundamentals.

That’s not accidental. The past two years have seen an administrative push to strip away bottlenecks, coordinate across agencies, and polish Malaysia’s appeal to investors. Leading this charge are entities like the National Competitiveness Council (JKDSN), working closely with the finance and trade ministries. It’s a long overdue effort—and one that seems to be working.

Still, the question isn’t whether Malaysia is scoring better on paper. It’s whether these gains are reaching people in ways that matter: better jobs, wider opportunities, stronger institutions. And that, as always, is where progress becomes harder to measure.

The IMD ranking is built around four pillars: economic performance, government efficiency, business efficiency, and infrastructure. Malaysia has posted gains across all four, a rare alignment that points to systemic—not superficial—improvement. One standout is bureaucratic efficiency. Programs like PEMUDAH and the Red Tape Reform initiative have chipped away at slow approvals and license delays, allowing businesses to spend more time building and less time waiting.

Coordination has also improved. Previously, many reforms lived in silos, championed by one ministry while ignored by another. Today, through JKDSN, policy initiatives have clearer ownership and timelines. This isn’t just about optics—it builds confidence among investors, especially those wary of administrative unpredictability.

There’s visible evidence, too. In Penang, high-tech manufacturing is thriving, drawing in both multinational electronics firms and local vendors. Johor and Kedah are gaining industrial momentum. Even Sabah, often overlooked in national investment flows, is attracting interest in logistics and services. For once, the Klang Valley isn’t the sole beneficiary. And yet, for all the buzz, one truth remains: the rising tide doesn’t always lift all boats.

A bump in rankings doesn’t ensure that prosperity is being distributed. If competitiveness stays concentrated in urban corridors or high-growth sectors, it risks creating a two-speed economy—fast for some, stalled for others. That’s a dangerous imbalance, especially in a multiracial, geographically diverse country like Malaysia.

Look at the digital divide. Cities like Kuala Lumpur and Penang enjoy blazing-fast internet and smart infrastructure. But drive a few hours inland, and basic connectivity becomes patchy. That’s not just a tech issue—it’s a productivity limiter. Entrepreneurs in Sarawak or Kelantan can’t compete if their access to digital tools and online funding portals is throttled by bandwidth.

The financial playing field also remains uneven. Outside the Klang Valley, small and medium enterprises (SMEs) often struggle to tap into credit lines or pitch to accelerators. Without localized funding schemes or regional incubators, promising ideas can die on the vine.

And then there’s education. A globally competitive economy needs a workforce that can adapt to automation, AI, and advanced manufacturing. But access to quality vocational training remains inconsistent. If reskilling doesn’t reach those displaced by change, Malaysia could win in the rankings while losing in the labor market.

Beneath Malaysia’s reform push lies a subtler dynamic: political necessity. The unity government needs to show results after years of turmoil, corruption fatigue, and leadership changes. Reform, in this context, isn’t just policy—it’s narrative management. That explains the uptick in KPI dashboards, public benchmarking, and inter-agency scorecards.

But metrics without accountability are theatre. If Parliament isn’t auditing results, if civil society can’t interrogate outcomes, then performance becomes performance art. To make reform stick, Malaysia must go further: institutionalizing transparency, encouraging whistleblower protection, and making budget usage legible to the public.

There’s also a messaging gap. Too often, economic reforms are rolled out with technocratic jargon that alienates the very public they aim to serve. A farmer in Kedah or a gig worker in Johor shouldn’t need a policy degree to understand what national competitiveness means for them. If reforms aren’t translated into everyday language and relevance, they risk becoming elite projects—seen but not felt.

What’s needed is a cultural reset around reform. Not just one-off initiatives or investor roadshows, but an embedded habit of course correction, responsiveness, and shared ownership. Only then will momentum become movement.

Malaysia is aiming high: it wants to crack the top 12 in global competitiveness by 2033. That’s bold. It’s also achievable—if reform deepens and broadens. But hitting that goal will require a shift from narrowly focused business facilitation toward a more expansive idea of national competitiveness: one built on people, regions, and resilience.

So what needs to happen next?

• Reimagine education as economic infrastructure. Modernize public schools, scale technical training, and support early childhood access—not just in cities, but in underserved districts.
• Unleash regional SMEs. Make financing portable and adaptable. Create incentive pathways that link large corporations with local suppliers. Level the compliance playing field.
• Normalize data transparency. Require ministries to publish live dashboards showing budget use, project progress, and impact metrics. Accountability starts with visibility.
• Close the urban-rural gap deliberately. Treat broadband as essential infrastructure. Build logistics hubs in secondary towns. Deploy mobile service units to cut travel burdens.
• Make growth less punishing for the vulnerable. Introduce flexible, portable safety nets—like gig worker insurance, minimum income floors, and conditional cash transfers that adapt with the economy.

Competitiveness is dynamic. It isn’t won once—it must be earned continuously. Every budget, every trade deal, every school built or road paved plays into the next ranking cycle. But the ultimate scorecard isn’t global—it’s domestic. Do Malaysians feel safer, smarter, better equipped for tomorrow?

Malaysia’s leap in global competitiveness is more than a feather in the government’s cap—it’s a signpost pointing toward real progress. But momentum is not the same as mission. If we treat rankings as the end goal, we risk overlooking the messy, human parts of reform: the lagging regions, the small business struggling to digitize, the worker who can’t afford a reskilling course. Now is the time to dig deeper, not coast. Because a competitive nation isn’t just efficient—it’s fair, future-ready, and felt by everyone.