(Jan 9): Malaysia’s growth is set to sustain last year’s pace and exceed 5% in 2025, driven by foreign investments and government initiatives that can help shield the economy from global risks, two key cabinet ministers said in separate interviews.

The country is already on a positive track, with last year’s budget deficit likely below the target cap of 4.3% of gross domestic product (GDP), Second Finance Minister Datuk Seri Amir Hamzah Azizan told Bloomberg Television’s Haslinda Amin in the administrative capital of Putrajaya late Wednesday. The government plans to narrow the gap further to 3.8% of GDP in 2025.

On the sidelines of a forum in Kuala Lumpur, Economy Minister Rafizi Ramli told Bloomberg Television’s Amin that a special economic zone Malaysia will co-develop with Singapore will help sustain the country’s growth momentum. He tempered his optimism over faster GDP growth with caution on how the policies of the incoming Trump administration will affect the nation.

Amir Hamzah, for his part, said he’s confident that the nation’s diversified economy will withstand the threat of Trump’s tariffs and trade wars that has rattled developing-nation assets. “Despite the choppiness in the global market, where we are today, I think we’ve got enough resilience to ride it through,” Amir Hamzah said.

Restoring fiscal health is key for Malaysia to retain emerging Southeast Asia’s highest credit score as Prime Minister Datuk Seri Anwar Ibrahim’s government restores political stability and drives the nation’s economic resurgence. Officials previously said they expect GDP to grow by about 4.5% to 5.5% this year, largely exceeding the 4.7% expansion predicted by analysts surveyed by Bloomberg.

The strength of the Malaysian economy and foreign direct investments will continue to support the ringgit, which Rafizi described to be “undervalued”. The ringgit should be trading around 4.10-4.15 against the dollar, based on forecast from the second half of 2024, the economy minister said in the interview.

The Malaysian currency was the best performer across emerging markets in 2024, rising by 2.7% and ending three consecutive years of declines. It traded little changed at 4.50 at 2.16pm local time.

“The momentum of the growth trajectory will be able to balance it out in the medium and long run,” Rafizi said. “While we know that ringgit, in our opinion, is undervalued, but I think there’s a lot of light at the end of the tunnel if we stay focused on our growth projects.”

Investments coming through the joint economic zone with Singapore will fuel the next phase of growth for the country. He hopes to announce the first wave of global investments into the joint economic zone as early as within six to seven months.

During the economic forum, Rafizi said that the government is at the final stage of streamlining fuel subsidy by excluding the nation’s wealthiest 15% from benefiting.

Malaysian goverment-linked investment companies (GLICs), which manage almost RM2 trillion in assets combined, have also boosted their direct investments in the economy, Amir Hamzah said. That’s helping to fuel growth, he added.

“Traditionally GLICs will invest, plus or minus, nearly half a trillion ringgit over a five-year period,” he said. “They’re boosting it up by another 120 billion over a five-year period. So that’s a fairly significant step up.”

Higher salaries for civil servants, as well as plans to increase the minimum wage in the private sector, are also poised to boost domestic demand.

“We have a good base because foreign direct investments remain strong and a lot of activity that’s generated is now playing out through the economy,” Amir Hamzah said. “We are confident that we’ll have a good year.”

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