Why Malaysia
Malaysia maintains its position as a diverse and open economy. As at end-December 2023, it reported an overall capital market valuation of RM3.8 trillion (end-December 2022:RM3.6 trillion), recording a 5.6% growth driven largely by a vibrant bond market. Despite the highly volatile global markets, economic challenges, high core inflation, divergent monetary policies and the movement of the Malaysian ringgit, the nation’s capital markets were underpinned by resilient domestic private sector activities. Malaysia’s GDP normalised to a growth of 3.7% in 2023 from 8.7% in 2022 (2021: 3.1%) on the back of sturdy domestic demand, showing promising signs of growth.
Based on the International Monetary Fund (IMF)’s index of financial development, Malaysia has been charting consistent progress, especially in terms of depth, access and efficiency. The IMF’s methodology indicates that Malaysia’s overall financial sector demonstrated significant growth between 1993 and 2016. According to data from the Securities Commission Malaysia (SC), Malaysia has been performing commendably on the whole, surpassing its peers in the emerging markets and, in some respects, even the advanced financial markets.
In recent years, Malaysia has actively strengthened its macroeconomic and regulatory frameworks to uphold market integrity and boost the economy. The outcome of the efforts has resulted in a track record of fiscal prudence, credible monetary policy frameworks and structural reform. The nation’s efforts to build a vibrant capital market supports policy actions that are guided by the MADANI Economy Framework. These efforts are expected to accelerate investment activity and uplift Malaysia as a preferred investment destination. These include the Capital Market Master Plan 3 (2021–2025), 12th Malaysia Plan 2021-2025, the New Industrial Master Plan (NIMP) 2030, the National Energy Transition Roadmap (NETR), and the Catalysing MSME and MTC Access to the Capital Market 5-year Roadmap amongst others.
The SC has also been strengthening the access to capital and growth pathway to facilitate economy activity, especially the growth of businesses and retail access to investments. From startups, micro to small and medium sized enterprises (MSMEs), to our public listed companies (PLCs), SC has been working to cater to the shift towards private fund raising and investment in the conventional and digital markets access. These efforts have resulted in Malaysia becoming the first jurisdiction to regulate equity crowdfunding (ECF). Through the setting up of the Malaysian Venture Capital and Private Equity Development Council and registration requirement since 2015, efforts are under way to spur the domestic venture capital (VC) and private equity (PE) industry in Malaysia.
In 2023, growth of the Malaysian economy remained resilient. Post-pandemic, growth rates moderated and remained well-supported by domestic private sector activities despite a challenging global socioeconomic environment. In terms of economic activity, the services sector led growth amid higher tourism activities and robust consumer spending. While headline inflation moderated, core inflation remained high, reflecting continued underlying price pressures. Against this backdrop, the Malaysian capital market remained orderly, while continuing to serve its fundamental role in financing domestic economic activity and mobilising savings effectively. The proactive measures by the authorities have also played a role in maintaining an orderly market whilst ensuring limited disruptions to the overall capital market.
The domestic corporate bond and equity markets remained resilient as total funds raised moderated to RM127.7 billion in 2023, compared to the record high of RM179.4 billion in 2022, which surpassed the five-year (2018-2022) average of RM135.9 billion. The corporate bond and sukuk market accounted for RM118.3 billion (2022: RM153.3 billion) of these new issuances.
Amid lower corporate activities in 2023, the equity market contributed RM9.4 billion (2022: RM26.0 billion). Of that, RM3.6 billion (2022: RM3.5 billion) was raised through 32 initial public offerings (IPOs) and RM5.8 billion via secondary fundraising activities. Despite persistent headwinds, the overall market capitalisation of Bursa Malaysia ended higher at RM1.8 trillion in 2023 (2022: RM1.74 trillion).


Besides the traditional methods, alternative fundraising avenues have been gaining traction, especially in ECF and P2P financing, with a steady increase in total funds raised, ending the year at RM2.2 billion (2022: RM1.7 billion). Overall, the size of the entire capital market increased 5.6% to RM3.8 trillion.
Amid improvement in market valuation and greater asset allocation in developed markets, the fund management industry expanded in 2023. The total assets under management (AUM) registered a 7.6% growth, rising to a record high of RM975.5billion (2022:RM906.5 billion). The unit trust segment remained the primary source of funds contributing 51.3% of the total AUM or an equivalent of RM500 billion in total net asset value (NAV) in 2023.
Sustainable development is a global imperative that Malaysia has fully embraced. As companies seek to align themselves with the United Nations’ Sustainable Development Goals (SDGs), a well-developed financial sector is essential to supporting their requirements. In this regard, Malaysia’s capital market is uniquely poised to respond to the sustainable finance needs for long-term economic growth. The establishment of the facilitative regulatory framework to support Sustainable and Responsible Investment (SRI) and green financing in 2014 further demonstrates the SC’s foresight in establishing the prerequisites to develop sustainable finance as it aligns closely with the underlying principles of Malaysia’s Islamic or Shariah finance principles and values. In addition, the SC issued the SRI Guide for Private Markets to incorporate sustainability in the investment process of the private markets last year.
To address the demand for reliable and comparable sustainability information, the SC also established an inter-agency Advisory Committee on Sustainability Reporting (ACSR) develop the National Sustainability Reporting Framework to ensure corporate Malaysia provides consistent, comparable and reliable sustainability information to enhance Malaysia’s competitiveness and attractiveness to investors. In the same year, the Simplified ESG Disclosure Guide for SMEs in supply chains (SEDG) was also released to simplify the many complex global and local ESG-related frameworks to improve the availability of ESG data and information by SMEs.
Malaysia has built up its reputation as the global leader in Islamic finance. Underscored by its mature Islamic finance ecosystem, advantageous market size and diverse demographics, Malaysia also stands among the world’s leading Islamic fintech hubs, housing various Islamic fintech start-ups. Against this backdrop, Islamic fintech – which focuses on the use of technology to deliver Shariah compliant financial solutions, products, services and investments – has been flourishing in recent years.
In the meantime, Malaysia has also been able to diversify its market-based funding avenues by developing its Islamic capital market (ICM), particularly sukuk. The domestic ICM’s performance has been laudable, expanding from just RM294 billion as at end-December 2000 to RM2.4 trillion (or 63.73% of the entire domestic capital market) as at end-December 2023 (2022: RM2,322.30 billion).

According to the State of the Global Islamic Economy Report 2023, Malaysia retained its leadership on the Global Islamic Economy Indicator (GIEI) for the 10th consecutive year. The GIEI assesses the leading national ecosystems of 81 countries which can best support the development of Islamic economic and business activities relative to their sizes. The same report also states that Malaysia accounted for USD650 billion or 16.4% of an estimated USD3.96 trillion of global Islamic finance assets in 2021/2022 – placing it third behind Iran (USD1,235 billion / 31.2%) and Saudi Arabia (USD896 billion) / 22.6%). All said, Islamic finance has been well leveraged in Malaysia to fund sustainable economic activities and the collaborative efforts of governments, businesses and civil society in building the ecosystem for sustainable finance.