According to the ASEAN+3 Macroeconomic Research Agency (Amro), Malaysia could achieve high-income status by the tip of this decade. Chief Economist Hoe Ee Khor said the country’s driving force is powerful foreign direct investment (FDI) inflows and a powerful manufacturing sector, particularly within the semiconductor industry. Khor also highlighted that Malaysia has seen a major increase in FDI in 2021 and 2022, which is predicted to spice up economic growth in the long run.
Data from the Malaysian Investment Development Authority shows that FDI in Malaysia reached an all-time high of RM208.6 billion in 2021, followed by RM163.3 billion in 2022 and RM125.7 billion in 2023.
Khor said Malaysia is predicted to draw more semiconductor industries in the long run because of this of the expected revival of the semiconductor cycle, which is predicted to peak by the tip of the 12 months as a result of its nickname of the Silicon Valley of the East. He added that Malaysia is committed to breaking out of the middle-income trap and aspires to turn into a high-income economy by the tip of the last decade, stressing that there isn’t a reason why this goal can’t be achieved.
Meanwhile, Allen Ng, head of Amro Group, mentioned that it is cheap to expect Malaysia to cross the nominal GDP threshold of around $13,000 set by the World Bank for high-income economies. He noted that Malaysia’s current nominal GDP per capita is between “$11,000 and $12,000”, indicating a spot that should be bridged from the “$13,000” benchmark set by the World Bank.
In particular, it notes that Malaysia’s GDP per capita can be $11,141 in 2023, while the high-income threshold set by the World Bank is $13,845.
He also warned that Malaysia, like other countries within the region, faces common long-term challenges affecting its economic prospects. He stressed the necessity to manage an aging population, increase productivity and improve the talents of the workforce.
