JANUARY 3 — Serving in government for close to six years has been a deeply rewarding and humbling
journey.
Holding responsibility across both the finance and trade portfolios has offered me a rare vantage point into the realities of economic policymaking — where ambition must constantly be balanced against constraint, and long-term reform often competes with short-term pressures.
My baptism of fire during the Covid-19 crisis reinforced a simple truth: economic management is never conducted under ideal conditions.
Policymakers operate within fiscal limits, social realities, and external shocks beyond their control.
Decisions are rarely about perfect outcomes; more often, they involve trade-offs, sequencing, and sustaining confidence during uncertainty. Crises, I learned, do not reward noise. They reward delivery.
A consequential Asean Year
In 2025, these realities became clear. Malaysia’s Asean Chairmanship unfolded amid rising geopolitical tensions, renewed protectionism, and a fragmented trading system shaped by unilateral reciprocal tariffs from the United States.
I witnessed first-hand how Prime Minister Datuk Seri Anwar Ibrahim steered Asean through this difficult period with steadiness and clarity, balancing diplomacy, economic priorities, and regional cohesion at a time when multilateralism was under strain. His leadership helped safeguard Asean’s relevance.
I also led Asean’s economic pillar during this turbulent period. The introduction of reciprocal tariffs carried real consequences for trade flows, investor confidence, and export-oriented economies such as Malaysia. Navigating this required pragmatism, regional coordination, and constant awareness of domestic impact.
Against this backdrop, Malaysia moved decisively to conclude the Agreement on Reciprocal Trade —restoring predictability for businesses, securing better tariff treatment, and giving investors confidence in an increasingly fragmented global economy.
For these reasons, 2025 was a consequential year for Asean and for Malaysia’s role within it. But positioning is not the final objective; the real test is how these gains translate into tangible benefits for Malaysians.
Macroeconomic strength, everyday pressures
From a macroeconomic perspective, Malaysia performed steadily in 2025. Growth is estimated at the upper end of the 4–5 per cent range, inflation moderated to around 2.5 per cent, and unemployment remained contained at roughly 3 per cent.
Trade exceeded RM2.8 trillion, driven by electrical and electronics, advanced manufacturing, logistics, and services. Approved investments reached a record RM285.2 billion in the first nine months of the year, bucking global trends.
These figures reflect confidence in Malaysia’s fundamentals and in our positioning within Asean. But numbers alone do not tell the full story.
For many Malaysians, especially in urban areas, macroeconomic stability coexists with rising day-to-day pressure. Middle-income households, particularly young families, are facing higher housing costs, childcare expenses, and transport burdens. While inflation has moderated, prices have not fallen. Wage growth has lagged behind the cost of living.
These households work hard, contribute taxes, and form the backbone of our economy. Yet many feel they are “running on the spot” just to get by, instead of advancing. When the middle class feels squeezed, consumption weakens, entrepreneurship declines, and long-term growth potential erodes. Underemployment, especially among graduates, further compounds the issue. A strong middle class is therefore not merely a social aspiration, it is an economic building block, and a necessity.
Making openness work for Malaysians
This is why, in my current role as Chairman of MIDA, the emphasis remains on attracting quality investments with real domestic spillovers. Approvals alone are not enough.
They must translate into real projects, real jobs, skills transfer, stronger local supply chains, and ultimately, wage growth. It must have direct impact on the people’s economy, people’s pockets.
As economist Dani Rodrik argues, the real challenge for countries is not choosing between markets and governments but combining them in ways that reflect domestic realities and sustain social consent. Openness only endures when it delivers visible benefits to society.
For Malaysia, this means that global integration must go hand in hand with domestic capability-building. Supporting the middle class is not about huge subsidies. It is about expanding opportunity, from lowering barriers to entrepreneurship, aligning skills with industry needs, to ensuring that wage growth becomes a policy outcome rather than an assumption.
Reform, discipline, and trust
Fiscal discipline remains essential. Malaysia’s deficit has narrowed from pandemic levels to 3.8 per cent of GDP but remains elevated, making continued prudence unavoidable. Structural reforms, including subsidy rationalisation, must continue.
But reform succeeds only when it is properly executed. Good execution plus straightforward communication equal political trust. A lot can be achieved if this simple equation is adhered to by those in power.
For households already under pressure, reform cannot feel like a steady erosion of purchasing power without credible pathways to better incomes.
Trust also depends on strong institutions. Recent court judgments in high-profile cases have reaffirmed the independence of Malaysia’s judiciary. While not every decision will satisfy all quarters, respect for due process and the rule of law is fundamental.
From positioning to performance
If 2025 was about positioning Malaysia in a shifting global landscape, then 2026 must be about conversion, i.e., turning capital inflows into exports, investment approvals into productive capacity, and growth into sustained income gains for the rakyat.
The Madani Government enters this phase with clarity of purpose. Budget 2026 and the 13th Malaysia Plan provide a coherent framework for strengthening household resilience, improving competitiveness, and raising investment quality. What matters now is execution.
Most Malaysians that bear existential challenges daily expect honesty, empathy, and practical solutions — not condescending lectures, more slogans or spin from leaders.
So, what is our way forward? Malaysia enters 2026 from a position of relative strength: a diversified economy, improving macroeconomic stability, and stronger regional standing. With discipline, policy consistency, and focus, growth can be sustained and made more meaningful.
At the same time, it must be recognised that recent gains were made possible by political stability under the Unity Government. That stability must be preserved. While political contestation is natural, especially with state elections ahead, the federal priority must remain delivery — maintaining cohesion, resisting distractions, and staying focused on outcomes, especially for the masses and SMEs.
Ultimately, growth alone is not the goal. What matters is growth that raises living standards, strengthens businesses, and restores confidence in economic mobility.
If Malaysia succeeds in converting stability into sustained performance and reform into real results, then 2026 can mark a genuine turning point: a year when progress is measured not just by numbers, but by tangible improvements in opportunity, security, and enhanced prosperity for all Malaysians.
* Datuk Seri Tengku Zafrul Abdul Aziz is chairman of Malaysian Investment Development Authority (MIDA)
** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
