Country risk

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.

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 the government effectiveness dimension of governance. It ranks in the second percentile for control of corruption, rule of law and regulatory quality. The government remains committed to cracking down on corruption, particularly in the awarding of government contracts. Malaysia scores lower on political stability and absence of violence as well as voice and accountability indicators.

The risk of expropriation in Malaysia is low, in line with low political risk. The government’s stated policy is that all investors, both foreign and domestic, are entitled to fair compensation in the event that their private property is required for public purposes. The judicial system is generally regarded as free from political interference.