KUCHING: Malaysia has climbed two spots to 35th place in the Economic Freedom of the World 2025 report by the Fraser Institute, reflecting modest reform gains despite continued state control and regulatory hurdles.
Released last week and co-authored by the late James Gwartney, Robert Lawson and Ryan Murphy, the report measures how much freedom people in 165 jurisdictions have to make their own economic choices using data from 2023.
According to the Fraser Institute, global economic freedom has risen since 2000 but dropped sharply during the pandemic, erasing almost a decade of progress. The most economically free jurisdictions in 2023 were Hong Kong, Singapore, New Zealand, Switzerland, the United States, Ireland, Australia and Taiwan (tied), Denmark and the Netherlands.
The report showed that Malaysia recorded a score of 7.56 out of 10, up from 7.46 in 2022 when it ranked 37th.
The Center for Market Education (CME), which represents the Fraser Institute in Malaysia and Indonesia, described the outcome as both encouraging and cautionary, with CME chief executive officer Dr Carmelo Ferlito calling it a bittersweet result for Malaysia.
“The report sends clear signals about the areas requiring reform: the government’s significant stake in the economy, capital controls, judicial independence, labour market regulation, and regulatory burdens,” he said.
The report noted several persistent weaknesses.
Malaysia scored 7.22 for the size of government, ranking 54th, down one place from 2022, due mainly to the high level of state ownership in business.
It stated that in the legal system and property rights category, Malaysia improved to 62nd from 68th, scoring 5.71, though judicial integrity and independence remain concerns.
For freedom to trade internationally, the report found Malaysia held steady at 63rd place with a score of 7.89. It cited capital controls, restrictions on financial openness, and limits on the movement of capital and people as key obstacles. According to the report, Malaysia’s strengths lay in monetary and regulatory performance.
It ranked 10th globally for sound money with a score of 9.33, slightly lower than 2022 when it placed seventh. The Fraser Institute credited low money supply growth and contained inflation for the strong result.
Malaysia also climbed from 17th to 13th place in regulation, scoring 7.66.
The report said open markets and well-structured credit market rules supported the improvement, though labour market rigidity and bureaucratic hurdles continued to pose challenges. Ferlito praised the Central Bank of Malaysia (BNM) for its steady monetary policy.
“BNM deserves special praise for its commitment to keeping inflation low by controlling money supply.
“For this achievement to be sustained, fiscal policy must remain aligned with the central bank’s prudence. “This means keeping government spending under control and, as highlighted in the report, working to liberalise markets still dominated by government-linked companies,” he said.
