Why Malaysia

Malaysia has found success in moving up the value chain and is now a key destination in Asia for foreign investment in electrical and electronic (E&E) products, as well as medical devices and solar panels. Malaysia is also growing its presence as a regional services hub and the services sector has become a key driver of economic growth. The country’s success has been built on well-established ICT infrastructure, large Englishspeaking population and its geographic location that provides easy access to other Asian countries.

The government has announced a New Industrial Master Plan 2030 to guide future economic growth. The strategy has six main goals, including the creation of high-value jobs, the development of new and existing economic clusters, and enhancement of environmental, social and governance (ESG) practices which are designed to help the country transition to a high-income economy. The New Industrial Master Plan is underpinned by the MADANI Economy framework, with the aim to increase economic growth and improve the quality of life for Malaysians. Both plans are also linked to the National Energy Transition Roadmap, which aims to help the country achieve net-zero emissions by 2050.

Australia and Malaysia enjoy solid bilateral economic and political relations. In 2023-24, Malaysia was Australia’s second largest trading partner among ASEAN Member States and tenth largest partner overall. Total two-way trade was valued at AUD 33 billion . The relationship is bolstered by the 2013 Malaysia-Australia Free Trade Agreement (MAFTA). The two countries are also party to a range of regional trade agreements that provide Australian firms with increased access to the country.

Malaysia has been identified as a key market for two-way trade and investment in the Australian Government’s Southeast Asia Economic Strategy to 2040. More information on the bilateral relationship is available in Section 5.1 and from the Department of Foreign Affairs and Trade’s Malaysia Country Brief.

Comparing key indicators: Malaysia and Australia

The Malaysian economy has transformed over the past four decades. Once dependent on commodity exports and low-value-added manufacturing, it is now integrated into many global value chains. Resources remain important to growth, but reliance has diminished over time. In 2024, 40 per cent of the country’s exports were electrical and electronic products. E&E exports rose by 4.5% to AUD 210 billion, marking the highest value ever recorded for the sector. Growth in the services and tourism sectors have also made for a more resilient economy.

Malaysia’s real GDP is forecast to grow at an average of 4 per cent per year to 2030, outpacing the world average. This is based on growing domestic demand, an ongoing recovery in the tourism sector, moderation of inflation and macroeconomic reforms to the economy, including fiscal consolidation.

Figure 1: Real GDP Growth – Malaysia and world average (2016 – 2026f), %

Robust economic ties combined with Malaysia’s strong expected economic performance offers significant opportunities for Australian investment and trade, particularly in the nation’s priority sectors for economic growth. This section provides a short overview of prospective sectors.

Education

Malaysia’s population is young and tech savvy, with 70 per cent aged between 15 and 64. Developing skills for a competitive workforce is a priority for the Malaysian Government. A 2024 Memorandum of Understanding (MoU) pledged cooperation between Australia and Malaysia in the fields of higher education, technical vocational education and training and research. The partnership with Australia will be important for the growth of Malaysia’s digital economy.

Australian international education is highly regarded in Malaysia. Four Australian universities have campuses in Malaysia and over 500,000 Malaysians are alumni of Australian educational institutions. Demand for high quality education is expected to remain strong as industries across the country embrace digital transformation. In addition to formal degree programs, Austrade has identified opportunities in short and online courses, delivered through various transnational education models, as future opportunities.

Food and agribusiness

Australia has a long history of exporting high-quality products such as beef, dairy and wheat to Malaysia. Trade between the two countries benefits from a number of working groups dedicated to improving food safety and security, as well as trade agreements which foster mutually beneficial conditions. The Malaysian Government aims to improve processing capacity for its primary products as part of its New Industrial Master Plan 2030, providing opportunity for Australian companies to contribute to the development of this infrastructure through knowledge sharing and capital investment. A MoU between Austrade and Malaysia’s Halal Development Corporation also provides improved market access for Australian halal-certified goods. Austrade identifies meat, dairy, packaged foods, horticulture, seafood and the halal market as key focal areas for Australian companies looking to enter the Malaysian market.

Health and medical

Malaysia has a modern, two-tier healthcare system, with state-run public services offered alongside private offerings. Malaysia is also a top destination for medical tourism and imports over AUD 1 billion of medical devices annually. Devices certified through the government’s Halal certification program have a market advantage. The Malaysian Ministry of Health is actively working to improve the healthcare system by enabling innovation. This includes expanding its service delivery by upgrading ageing infrastructure, deploying innovative treatments and investing in digitisation. Economic liberalisation rules now allow 100 per cent foreign equity involvement in most private healthcare businesses, making this an attractive market for Australian businesses. Austrade has identified digital health services as a focal market for Australian businesses.

Green economy

Malaysia’s energy transition plans are laid out in the country’s National Energy Transition Roadmap, which encompasses projects and investment in energy efficiency, renewables, green mobility and carbon storage and utilisation. The Roadmap is designed to stimulate growth in key sectors while providing affordable energy to the entire Malaysian population, creating job opportunities and involving companies of all sizes. The government has also released a Hydrogen economy and Technology Roadmap to develop hydrogen as a cornerstone of Malaysia’s new economy. To achieve net-zero, the government is investing in battery storage technology, efficiency improvements, smart grid technology, green hydrogen; carbon capture, use and storage; renewable energy production and monitoring equipment. Opportunities exist in the market for Australian businesses that can scale these technologies and support Malaysia’s economy through the energy transition.

Infrastructure, transportation and cities

Malaysia has adopted a smart city framework to promote responsible urbanisation, adapt to global development trends, improve the digital economy and create competitive global cities. Through this framework, the government is prioritising infrastructure upgrades, Internet of Things (IoT) development and integration, infrastructure accreditation systems for smart technologies, improved transit, and programs to encourage sustainable development. These priorities present growing opportunities for Australian companies. A number of initiatives, such as Partnerships for Infrastructure, support Australian and Malaysian cooperation on infrastructure and transport.

Technology

Malaysia is emerging as one of the most active hubs for technology development and collaboration in the region. The digital economy is expected to contributed 23.5 per cent of Malaysia's GDP in 2023. The government target is for that figure to reach 25.5 per cent by 2025. Key areas for foreign investment are in critical digital infrastructure, semiconductors, cloud services, hyperscale data centres and the start-up economy. The 2020 AustraliaMalaysia Tech Exchange agreement aims to improve digital collaboration, enable digital trade and promote an open trading economy for technology between the two nations. Australia and Malaysia also announced an agreement to encourage collaboration between Australian and Malaysian technology companies in 2024, which will further boost two-way investment. Austrade has identified a number of key priority areas in the critical and enabling technology sector including digital health, cybersecurity, fintech, and software as a service (SaaS).

Professional and financial services

Foreign investment in the services sector accounts for almost half of Malaysia’s total Foreign Direct Investment (FDI), largely attributable to financial and wholesale activities. Malaysia is one of Australia’s largest providers of professional services in Southeast Asia and is also a leader in Islamic finance, ranking first on many Islamic financial indices. While many professional and financial services are subject to regulation, Malaysia’s 2023 establishment of a Special Financial Zone provides added incentives and benefits to skilled service workers and the companies that employ them. There are opportunities for Australian companies across fintech areas such as digital lending, payments, blockchain and digital wealth management. Professional service providers should be aware of restrictions on architectural and engineering services which require foreigners to work in conjunction with a Malaysian business.

Mining equipment, technology and services (METS)

The mining and quarrying sector receives 10.3 per cent of all FDI in Malaysia. Malaysia is home to a modest share of rare earth elements (REEs), and the government is prioritising growth in the processing sector by banning the export of unrefined elements. The country is rapidly increasing its processing capacity for both domestic and foreign-sourced raw materials and supporting the development of downstream processing technologies for REEs to strengthen its export position in the global market. Australia and Malaysia share a long-standing relationship in traditional hydrocarbons technology, services, and engineering. This foundation positions Australian businesses well to support Malaysia’s decarbonisation efforts, including carbon capture, storage, and utilisation (CCSU), and to contribute to its energy transition through advanced equipment, engineering expertise, and skills development. As Malaysia progresses its transition to net-zero, Austrade sees opportunities for Australian businesses in sustainable mining services and technologies that support hydrogen and renewables.

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