Malaysia is an upper-middle income economy according to the World Bank. Its 2023 GDP of $399 billion accounts for 10.5% of the regional GDP of Southeast Asia. With a population of 35 million, Malaysia’s GDP per capita is $11,379, the third-highest in the region.
From 2015 to 2023, 5,548 aid and development projects were implemented in Malaysia by 59 development partners, totalling $11.6 billion in official development finance (ODF).
Key trends
ODF disbursements including grants, loans, and other forms of assistance to Malaysia have grown modestly since 2015, reaching a new high in 2023 of $1.8 billion.
ODF has fluctuated slightly relative to Malaysia’s economy but remained consistently below 1% of GDP. The region’s sixth-largest economy, Malaysia’s ODF to GDP ratio is the fourth-lowest in the region. ODF is usually provided to Malaysia on a non-concessional basis, with non-concessional loans making up 91% of the total.
Looking ahead, new commitments to Malaysia have fallen dramatically from a peak in 2016. The drop into negative commitments in 2019 reflects the downsizing of a previous multi-billion-dollar commitment from China.
- Spent
- Committed
Development partners
Malaysia’s primary development partner is China, accounting for 82% of ODF received from 2015 to 2023. South Korea was Malaysia’s top partner in 2015, but its support has since dwindled.
China’s assistance, totalling $9.5 billion from 2015–23, is underpinned by one infrastructure megaproject, which has so far attracted $5.7 billion in disbursements. Accordingly, the transport and storage sector is the top destination for China’s ODF to Malaysia. The energy and industry, mining, and construction sectors were also significant beneficiaries, although neither has attracted any disbursements since 2020. China’s ODF to Malaysia is delivered largely through non-concessional loans.
South Korea’s decline from Malaysia’s top development partner appears largely due to a major contraction in non-concessional loans. South Korea’s ODF has been targeted to the energy and industry, mining, and construction sectors, especially in the early years of the data period. By 2023 however, its approach had changed, with the education, government and civil society, and health sectors topping the list.
Behind China and South Korea, Malaysia’s second tier of partners includes Japan, Germany, the United Kingdom, and the United States.
Sectors
Malaysia receives far more ODF, as a proportion of total ODF spent, in the transport and storage sector than the regional average (50% compared to 18%). It also receives more than double the regional average in the industry, mining, and construction sector.
The transport and storage sector in Malaysia is dominated by disbursements for railway projects, most notably the multi-billion-dollar East Coast Rail Link project financed through a non-concessional loan from China.
The industry, mining, and construction sector is much less significant than in earlier years of the data period, attracting just 2% in 2023 of the ODF it received in 2015. The sector has been driven by disbursements for basic metal industries, including iron and steel production.
In recent years, the growth in the education sector has been targeted to higher and tertiary education. And in the government and civil society sector, the sub-sector of labour rights has been a point of acceleration for Malaysia’s ODF.
As is typical of an upper-middle income economy, Malaysia receives far below the regional average for spending on health, humanitarian aid, and agriculture, forestry, and fishing.
- Malaysia
- Regional average
Policy goals
The Southeast Asia Aid Map tracks ODF with integrated policy goals across three policy domains or cross-cutting themes (as distinct from sectors): climate action, gender equality, and disability inclusion.
Over 2015–23, Malaysia received below average proportions of ODF targeting all three policy areas. Of total ODF, 0% went towards integrated disability inclusion, compared to a regional average of 9%; 1% went to integrated gender equality, compared to a regional average of 25%; and 12% went to integrated climate action, compared to a regional average of 31%.
Provision of intra-regional ODF
Malaysia is a very minor provider of intra-regional ODF relative to its income status. It provided an average of $108,000 annually in support to its neighbours, almost entirely on a multilateral basis and exclusively for humanitarian aid. Two bilateral transactions were recorded to Laos in 2018 and 2020.