Malaysia’s big state-linked funds will increase their investments in local startups and venture capital companies to promote the government’s goal of building a resilient domestic economy in the face of external headwinds, according to a government minister.
Second finance minister Amir Hamzah Azizan told Nikkei Asia in an interview that pension fund Employees Provident Fund, state sovereign wealth fund Khazanah Nasional Berhad, and investment management company Permodalan Nasional Berhad will commit an additional MYR 120 billion (USD 27 billion) to private companies, including startups, over the next five years.
“We’re encouraging institutional funds to reinvest in Malaysia, not in traditional areas like fixed income or [publicly traded] equities, but in private markets,” he said, adding that the government aims to channel this capital into high-growth sectors, such as technology and infrastructure.
The three institutions together manage assets totaling around MYR 1.7 trillion (USD 382.5 billion). The MYR 120 billion in new commitments would add to their usual domestic allocations of MYR 440 billion (USD 99 billion) annually. The move is part of a broader strategy to reduce Malaysia’s reliance on foreign direct investment (FDI) and to strengthen its economic resilience as geopolitical risks loom, the minister said.
“This reduces Malaysia’s risk exposure because we no longer rely solely on FDI exposures. Instead, we’re building a more resilient and diversified economy by leveraging both domestic and foreign investments,” Hamzah said.
Malaysia secured a record MYR 378.5 billion (USD 85.2 billion)) in approved FDI last year, an increase of 14.9% versus 2023. “The investments coming in are translating into real economic activity,” the minister stressed. However, the outlook for FDI is murky for the Southeast Asian manufacturing hub, especially as US President Donald Trump’s protectionist trade policies threaten global economic growth.
Hamzah added that state investors’ increased commitments to domestic businesses will help expand Malaysia’s financial markets and make its capital markets “more vibrant,” adding to the country’s growth momentum.
Malaysia’s economy grew 5.1% in 2024, up from 3.6% the previous year, thanks to robust household spending. The local stock market has boomed, with more companies going public last year.
“The energy level in the country has surged,” the minister said. “People are spending, investing, and businesses are expanding. This is how we know we’re on the right track.”
Through domestic investments from state funds, Hamzah said the government is looking to diversify Malaysia’s economic drivers, expanding the semiconductor, artificial intelligence, and data center industries, while continuing to develop traditional sectors such as tourism.
He said that even against a backdrop of economic uncertainty, Malaysia continues to benefit from supply chain shifts in industries like semiconductors. “Malaysia has always been an open trading economy, and this reflects the strengths of Malaysia’s ecosystem. As global supply chains realign, it’s only natural for Malaysia to become a preferred destination,” Hamzah said.
He also said that by inviting businesses that bring added value to the country and expanding their capacities, Malaysia is building a more resilient economic framework. “This resilience will be what carries us through uncertainties and challenges.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.