Country risk in Malaysia is low. Malaysia has an investment grade sovereign credit rating from the three private global rating agencies and an OECD country credit grade of 2. This indicates a relatively low likelihood that it will be unable or unwilling to meet its external debt obligations. That said, individual private and sub-sovereign debtors can and do default. Elevated household debt, in particular, remains a prominent risk to economic stability.
The World Bank’s ease of doing business gauge—which measures regulation and red tape relevant to a domestic small to mid-sized firm—ranks the Malaysian business climate 12th out of 190 economies. Malaysia significantly outperforms regional peers on almost all measures and ranks within the top 10 countries in the world for getting electricity, protecting investors and dealing with construction permits. But starting a business is somewhat harder in Malaysia.
The World Bank ranks Malaysia in the top quartile for government effectiveness. It ranks in the second percentile for control of corruption, rule of law, regulatory quality and political stability and absence of violence. The government aims to crackdown on corruption, particularly in the awarding of government contracts. Malaysia’s score on voice and accountability is low, albeit slightly higher than the average for emerging and developing Asia.
The risk of expropriation in Malaysia is low, in line with low political risk.