Malaysia rises to 23rd in 2025 World Competitiveness Rank
KUALA LUMPUR: Malaysia has jumped 11 spots in the World Competitiveness Ranking (WCR) 2025 to 23rd place -- its best ranking since 2020 -- reflecting the progressive momentum in the country's economic recovery and reform agenda.
The Ministry of Investment, Trade and Industry (MITI) said the latest ranking, up from 34th last year, also reaffirmed the nation's trajectory towards becoming one of the world's top 12 most competitive economies by 2033 as targeted under the MADANI Economy framework.
'Economic performance, government efficiency and business efficiency factors drove Malaysia's overall competitiveness performance,' it said in a statement today.
Malaysia ranked fourth globally in economic performance, improving four spots from eighth place last year. Both government efficiency and business efficiency factors improved by eight positions.
MITI said the international trade sub-factor increased 11 places to sixth, as strong export growth in goods and services, diversified markets, and rising tourism receipts strengthened Malaysia's trade surplus.
The ministry also expressed confidence that with strong governance, continuous commitment from the federal and state governments and close cooperation with the private sector, Malaysia is on the right path to position itself among the world's 12 most competitive economies by 2033.
Commenting on the WCR 2025 ranking, MITI Minister Tengku Datuk Seri Zafrul Abdul Aziz said the government's whole-of-government approach under the MADANI framework demonstrated its commitment to holistic structural reforms.
'Malaysia's move up the rankings by 11 positions to 23rd from 34th last year reflects how bureaucracy-related reforms are closely intertwined with facilitating robust investment and industrial growth, both critical for enhancing Malaysia's attractiveness as a preferred investment destination,' he said.
MITI, through the National Competitiveness Committee (JKDSN) – co-chaired with Finance Minister II Datuk Seri Amir Hamzah Azizan – coordinates the strategic direction across ministries to enhance Malaysia's competitiveness.
At the operational level, the Special Taskforce on Agency Reform (STAR), led by the Chief Secretary Tan Sri Shamsul Azri Abu Bakar, ensures effective implementation of competitiveness initiatives, including over 1,000 Reformasi Kerenah Birokrasi (RKB) projects aligned to the Public Service Reform Agenda (ARPA).
The WCR is published annually by the Institute for Management Development based in Switzerland.
It is a comprehensive report that evaluates countries based on their ability to create and maintain a business-friendly environment that fosters long-term prosperity.
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Leaping ahead to lead with conviction
Malaysia's remarkable 11-spot jump in the IMD World Competitiveness Ranking (WCR) —from 34th position in 2024 to 23rd in 2025—is more than just a statistical victory. It is a powerful testament to the effective implementation of the MADANI Government's economic reforms, including fiscal, industrial and social. For context, the WCR assesses the ability of economies to foster an environment that supports business competitiveness, productivity and economic growth, across four main categories: economic performance, government efficiency, business efficiency and infrastructure. Malaysia's marked improvement in three out of four areas, especially the leap to fourth among 69 economies in economic performance, is no small feat. MITI is especially pleased that our industrial reforms implemented under the New Industrial Masterplan 2030 have contributed to the jump in the rankings in terms of sub-factors such as domestic economy (+20); international trade (+11); international investment (+2); employment (+8); institutional framework (+11); business legislation (+4); productivity and efficiency (+19) and the labour market (+11). While there is still much room for improvement, this dramatic increase in the rankings is a strong validation that Malaysia's economy is on the right track and we are steadily regaining our competitive edge on the global stage. This surge in competitiveness is not accidental. It is the result of intentional, coordinated, and at times, politically difficult reforms. It reflects a responsible governance approach under Datuk Seri Anwar Ibrahim's Madani Economy framework, and the deft execution by the relevant economic ministries and agencies including MITI, which has led the implementation of Malaysia's revamped trade, investment, and industrial strategies. MITI's agency, the MPC, has led the coordination work on improving the WCR sub-factors across various ministries and agencies. At the heart of this leap is a more aggressive posture on bureaucratic reform and investment facilitation. MITI's leadership of the National Competitiveness Council (JKDSN) together with the Finance Ministry has driven whole-of-government efforts to streamline investment approvals, reduce regulatory burdens, ease investors' journey and modernise economic policy frameworks. Moreover, the establishment of the Special Taskforce on Agency Reform (STAR) led by Chief Secretary to the Government (KSN) — part of the wider Public Service Reform Agenda (2024-2030) and involving over 1,000 reform initiatives at federal and state levels — has helped dismantle bottlenecks that previously discouraged investors. The improvement in the international trade sub-factor—rising 11 spots to 6th globally—is also clear evidence of targeted policy outcomes under MITI's purview. This includes enhanced investment strategies by the Malaysian Investment Development Authority (MIDA), and improved trade promotion by the Malaysia External Trade Development Corporation (MATRADE). Our efforts in advancing regional agreements and accelerating participation in digital economy frameworks have also contributed to improvement in the rankings. Concurrently, in a world marked by rising protectionism, geopolitical realignments and economic fragmentation, Malaysia's steady hand in policy continuity is increasingly appreciated by global investors. This competitiveness boost is also a strong endorsement of the NIMP 2030 along with its supporting policies such as the National Semiconductor Strategy and Green Investment Strategy – all of which prioritise high-value industries such as semiconductors, green technology, and digital economy as future growth pillars. Their implementation has already created stronger linkages between industrial policy and talent development, innovation incentives and sustainability goals. Rankings, of course, are not policy goals in themselves—but they do matter. They serve as confidence benchmarks to global markets, foreign investors, and multilateral institutions. A leap of 11 positions makes Malaysia more attractive as a business destination, especially for multinationals seeking resilient and progressive emerging markets in Asia. It also reflects how our institutions – empowered with the political will, mandate and right leadership – are perfectly capable of executing coherent reform agendas for the nation. The Road Ahead: Maintain the Momentum This milestone is cause for celebration, but not for complacency. If anything, the real work begins now. While economic performance and trade efficiency have improved, there remain areas where Malaysia still lags—particularly in innovation capability, workforce productivity, digital transformation, management practices and workforce attitudes. There may be a need to complement structural reforms with human capital upgrades and culture shifts. Global digital and green transitions will require Malaysia to not only adopt new technologies but also to nurture a new generation of skilled, future-ready workers. Here, too, MITI's role will be pivotal. The Ministry will continue working closely with education and human resource agencies to ensure that industrial strategies are matched by robust talent development and pipelines. Initiatives like Academy in Industry programme by MPC, K-Youth under Khazanah Nasional, and upskilling programmes under HRD Corp, must be scaled and better integrated into the national competitiveness agenda. To sustain and further elevate Malaysia's position, it is worthwhile to draw inspiration from international best practices. For instance, Denmark's emphasis on workforce adaptability and lifelong learning ensures that its economy remains resilient and responsive to technological shifts. Meanwhile, South Korea's aggressive investments in R&D and innovation ecosystems have positioned it as a global leader in advanced manufacturing and semiconductors. Malaysia should consider incorporating these elements—such as agile regulatory sandboxes, performancebased innovation grants, and a national work-integrated and lifelong learning agenda—as part of its next phase of competitiveness reforms. More importantly, Malaysia must shift from a primarily input-driven model to one rooted in productivity and innovation-led growth. This means significantly boosting investments in R&D, creating stronger linkages between academia and industry, and nurturing a vibrant startup ecosystem. Malaysia should also emulate countries that rank highly in competitiveness, such as Switzerland, South Korea and Sweden, who lead in patents, intellectual property, and cutting-edge innovation globally. We can try to achieve this in strategic sectors such as advanced electronics, AI, clean energy, and biotech. Incentivising privatesector innovation, reforming procurement to favour innovative solutions, and enhancing funding mechanisms for techpreneurs will be crucial steps forward. Innovation must be made the 'engine' of our long-term economic resilience and prosperity. It is imperative that we maintain this trajectory. The Government has set a goal for Malaysia to be among the Top 12 most competitive economies by 2033. This is ambitious, but now, demonstrably achievable. It must be stressed that improved economic competitiveness means increased chances of attracting high impact investments which will create more job opportunities with higher wages. This latest ranking shows that Malaysia is not just playing catch-up, but also clearly positioning itself to lead especially in today's complex geoeconomic landscape. Our message to the world has been clear and consistent: Malaysia is serious about economic reforms, open for business and ready for the challenges ahead. Ultimately, Malaysia's improved competitiveness is a function of political will and determined leadership. It shows what can be achieved when a government dares to reform and focus on making tough but necessary decisions for Malaysia's future prosperity.
