## RESILIENCE THROUGH OPENNESS

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**Canonical URL:** [RESILIENCE THROUGH OPENNESS](https://www.imf.org/-/media/files/publications/fandd/article/2026/09/trenches.pdf)

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### Economic outlook and growth opportunities
- The IMF projects the $516 billion economy will grow 4.7 percent this year.
- Thirteenth Plan projection: annual growth will average 4.5 to 5.5 percent between 2026 and 2030.
- Key targeted sectors:
  - Electrical and electronics sector and semiconductor sector (vibrant for more than 50 years).
  - High-end value-chain investment: data centers, including AI-layered data centers, and semiconductors.
- Strategic positioning: attracting AI, data-center, and semiconductor investment to create higher-value jobs and opportunities.

### Leadership background and institutional strengths
- Amir Hamzah Azizan: appointed finance minister II in December 2023; age 59.
- Prior role: chief executive officer of the Employees Provident Fund managing $315 billion in retirement savings for private sector workers.
- Institutional features supporting investment:
  - Policy consistency, transparent planning and execution.
  - Legal and policy stability giving investors confidence they "can get it out" and can take long-term investment decisions.

### Resilience drivers and shock management
- Malaysia attributed resilience to:
  - Policy consistency and clear government direction.
  - Diversified export base across manufacturing, services, and mining.
  - Measures to strengthen domestic demand via better jobs and social protection.
- Fuel price reform timeline: started about two and a half years ago, which moderated subsidy exposure when oil prices rose after the Middle East crisis.
- When subsidy bills rose due to the Middle East crisis, the government reports the increase was "only moderately" higher because of prior reforms.

### Navigating geoeconomic fragmentation and regional strategy
- Approach: maintain an open economy with diversified export markets and pursue free trade deals to secure predictable practices and market access.
- ASEAN intra-regional trade: currently "probably 32 percent of its potential."
- Policy focus: "high-grading" the economy through innovation, efficiency, and regional connectivity to avoid being left behind amid structural change.

### Fiscal reforms, social protection, and public buy-in
- Fiscal strategy: Fiscal Responsibility Act introduced to address prolonged high deficits post-COVID and to rebuild fiscal space.
- Revenue measures: increased sales and service tax; mitigations were implemented to protect the poorest from price increases for necessities like food and water.
- Allocation of fiscal savings: reduced government debt and returned some savings to society.
- Complementary measures: improved social protection, talent management, and targeted communications to help vulnerable groups manage reforms.

### AI, data centers, skills, and labor-market adaptation
- Response to AI concerns:
  - Skilling programs and partnerships between government and investors to align job creation with the redesigned economy.
  - Tax reforms and government programs to incentivize responsible business adoption of AI.
- Malaysia has "made a strategic bet on becoming a major data-center hub" to attract investment and build an ecosystem that supports better jobs.

### Risks, priorities, and outlook
- Top concerns: climate change and geopolitical fragmentation.
- Strategy for risks: focus on controllable actions—build resilience with new friends, relationships, and partnerships; address climate change in a measured way.
- Regional demographic and innovation outlook: Asia benefits from a large population and a "fairly positive demographic dividend"; ambition fuels innovation and experimentation.

*Source: Interview with Malaysia’s Second Finance Minister Amir Hamzah Azizan (F&D, September 2026).*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2026/09/trenches.pdf_