Malaysia’s Fiscal Balancing Act: The Interplay Between FDI, Debt, and Deficit (2023–2025) - Overview by Nik Zafri

Disclaimer: The information presented in this article is compiled from various public domain sources and reflects the personal views and interpretation of the author. While every effort has been made to ensure accuracy, readers are advised to consult official publications and expert opinions for decision-making purposes.

NAVIGATING COMPLEX FISCAL LANDSCAPE

Malaysia, like many emerging economies, finds itself at a critical juncture. As the country positions itself as a hub for regional investment, the government must walk a fiscal tightrope, balancing the need to attract Foreign Direct Investment (FDI) while managing a growing national debt and persistent budget deficits.

Much I like to say about the Malaysian economy but In this article, I will attempt to explore briefly how these three financial pillars, FDI, national debt, and the fiscal deficit, interact and shape Malaysia's economic future from 2023 to 2025.

1. Foreign Direct Investment (FDI): A Double-Edged Sword

FDI has long been a cornerstone of Malaysia's development strategy. According to the Malaysian Investment Development Authority (MIDA), the country recorded RM225 billion in approved investments in 2023, of which RM127 billion were foreign investments. Key contributors included major players from the United States, China, Singapore, and Germany, particularly in high-tech manufacturing, green energy, and the digital economy.

In 2024, FDI inflows remained strong with increased interest in semiconductor manufacturing, data centers, and electric vehicle (EV) ecosystems.

However, 2025 presents both opportunities and risks, with global economic uncertainties and geopolitical shifts possibly affecting investor sentiment.

2. National Debt: A Growing Concern

Malaysia’s national debt has steadily increased, reaching RM1.5 trillion by the end of 2024, or approximately 82% of GDP when including contingent liabilities. While much of this debt is domestically held, the rising debt-to-GDP ratio poses risks to the country's credit rating and limits fiscal flexibility.

The government has been actively managing its borrowings, focusing on long-term bonds and sukuk instruments. However, interest payments consume a significant portion of the national budget around 15% in 2024 leaving less room for development spending. Between 2023 and 2024, Malaysia paid approximately RM97 billion in interest payments alone, reflecting the growing burden of debt servicing.

3. Fiscal Deficit: Persistent but Improving

Malaysia's fiscal deficit stood at 5.6% of GDP in 2023, with a slight reduction to 5.0% in 2024. The government aims to lower it further to 4.3% by the end of 2025. Several measures have been introduced to achieve this goal, including subsidy rationalisation, targeted cash assistance, and a possible reintroduction of a broad-based consumption tax like the Goods and Services Tax (GST).

Despite these efforts, challenges remain. A large portion of government expenditure is still dedicated to operational spending, including civil servant salaries and social programs, limiting capital investment.

4. Interconnections: A Delicate Balance

FDI can help reduce fiscal deficits in the long term by boosting economic growth and increasing tax revenues. However, to attract FDI, the government often needs to invest heavily in infrastructure, offer tax incentives, and ensure regulatory stability expenditures that may exacerbate short-term deficits and add to public debt.

Conversely, high debt levels and persistent deficits may erode investor confidence. Agencies like Fitch and Moody's have signaled concerns about Malaysia's fiscal discipline, potentially affecting future FDI inflows.

A key case study is the Digital Free Trade Zone (DFTZ), which has attracted significant investment but required large upfront infrastructure spending. Similarly, mega projects like the East Coast Rail Link (ECRL) have FDI elements but also contribute to rising public debt.

5. Policy Implications and Recommendations

To ensure a sustainable fiscal path while remaining attractive to investors, Malaysia should consider:

• Strengthening tax collection and broadening the tax base.

• Implementing stricter fiscal rules to manage debt accumulation.

• Enhancing public investment efficiency.

• Promoting ESG-compliant and high-value-added FDI.

• Increasing transparency and data-driven policymaking.

Conclusion: Striking the Right Balance

Malaysia’s economic journey from 2023 to 2025 underscores the delicate balancing act between attracting FDI, managing debt, and reducing fiscal deficits. While foreign investments can be a catalyst for growth, they must be aligned with sound fiscal policies to ensure long-term sustainability. With careful planning and bold reforms, Malaysia can chart a path toward economic resilience and fiscal responsibility in an increasingly complex global environment.

Read more :

1. China Retaliation Towards US Tariffs and The Impacts to Both Country/Global Economy

2. US-China Trade Truce: A Strategic Pause or Temporary Relief?

3. Trump’s presidency raises concerns for US investments in Malaysia’s semiconductor, data centre

4. Why BRICS?

5. Data Centers in Malaysia: Purpose, Potential, and Challenges

6. ESG - 3 Parters

7. Urban Intelligence - An Upgrade to Smart City

8. More here

Data Centers in Malaysia: Purpose, Potential, and Challenges - Overview by Nik Zafri

1) INTRODUCTION

In today's digitally driven world, data centers form the backbone of national infrastructure. Malaysia has been steadily positioning itself as a strategic hub for data center development, thanks to its stable climate, strategic geographic location in Southeast Asia, robust connectivity, and pro-investment government policies. But beyond the appeal lies the complex reality of running and maintaining high-performance data centers.

2) PURPOSE

Data centers are specialized facilities designed to store, process, and disseminate digital data. They host the infrastructure that supports cloud computing, enterprise operations, government digital transformation initiatives, content delivery, banking and finance transactions, e-commerce platforms, and a vast range of online services.

Organizations depend on data centers for:

• Data storage and backup
• Secure hosting environments
• Disaster recovery and business continuity
• Real-time data processing
• Edge computing and IoT integration

In short, data centers are the nervous system of modern economies, quietly powering everything from emails to AI workloads.

2.1 WHY IT MATTERS

Data centers store, process, and manage the data that powers:

• E-commerce and online banking,
• Cloud computing and SaaS platforms,
• Smart cities and IoT ecosystems (Urban Intelligence)
• AI and big data analytics
• Business continuity and Integrity
• Disaster recovery solutions

Malaysia’s appeal as a data center location includes:

• Proximity to global undersea cable landing points,
• Growing demand from the ASEAN digital economy, 
• Competitive energy prices and workforce,
• Political neutrality, compared to other regional hubs

2.2 INDUSTRY GROWTH

According to MDEC, Malaysia has attracted over RM10 billion in data center investments over the past five years. Demand is expected to double by 2030, driven by cloud adoption, 5G, and AI.

Globally, Malaysia ranks in the top 5 emerging APAC data center markets, with multiple projects in progress or recently completed.

3) ADVANTAGES

3.1 Strategic Location - Malaysia’s proximity to major Asian markets makes it an ideal node in regional data flow.

3.2 Competitive Energy Costs - Energy prices remain relatively competitive compared to neighboring countries, critical for an industry that is extremely power-intensive.

3.3 Regulatory Support - The Malaysian government has introduced incentives for digital infrastructure investments under its various economic blueprints and digital economy initiatives.

3.4 Abundant Talent Pool - Local universities and polytechnics are producing graduates in ICT, engineering, and technical fields that support operations and maintenance needs.

3.5 Political Stability and Neutrality - For global companies concerned with data sovereignty and neutrality, Malaysia remains a stable and neutral ground.

4) CHALLENGES

Despite the growth and demand, data centers face multiple operational and maintenance issues, such as:

4.1 Power Reliability and Redundancy - Even short interruptions in power can lead to data loss or downtime. Although backup systems (like UPS and generators) are standard, poor maintenance or system misconfigurations can lead to failure during critical moments.

Some sites face unexpected generator failures due to irregular servicing or fuel contamination. In one real-world scenario, a testing exercise revealed backup power would not kick in within 10 seconds, a violation of Tier III design expectations.

Requiring - Strict load testing regimes, fuel conditioning, and biannual third-party audits of generator and UPS systems.

4.2 Cooling System Efficiency - Malaysia’s tropical climate demands efficient and scalable cooling systems. Overreliance on traditional air conditioning systems leads to higher energy consumption and operational costs.

At least one facility experienced 15% higher PUE (Power Usage Effectiveness) than design specs due to unsealed raised floors and inefficient hot aisle containment. This raised operational costs significantly.

4.3 Security Threats - Both cybersecurity and physical security are ongoing concerns. Breaches whether digital or physical can result in substantial financial and reputational damage. Many operators still rely on legacy security systems. One attempted intrusion during a patching window exploited outdated firewall settings. While no data was lost, it triggered urgent compliance reviews.

4.4 Resource Management - This includes everything from water for cooling to land use and waste disposal (especially for e-waste and batteries). Improper handling poses environmental and compliance risks.

4.5 Latency and Connectivity Bottlenecks - As demand grows, ensuring low-latency and high-bandwidth connectivity becomes increasingly challenging, especially when scaling out to meet regional or edge-computing needs.

4.6 Maintenance Downtime - Scheduled maintenance can still pose risks if not properly coordinated with clients and redundancies. Poorly planned upgrades may cause unexpected interruptions.

5) MITIGATION

To keep operations efficient and sustainable, data center developers and operators adopt several best practices:

5.1 Tiered Redundancy Designs - Using globally recognized standards such as Tier ratings, data centers can plan for different levels of fault tolerance and downtime acceptability.

A Tier III-level facility experienced significant downtime risk during an annual preventive maintenance when a generator load bank failed. This led to reengineering of their maintenance coordination process using a three-layer escalation protocol, including simulation testing of N+1 configurations.

The lesson: "Redundancy on paper is not resilience in practice without rigorous testing and alignment with live operational behaviors."

5.2 Efficient Cooling Solutions - Implementing advanced technologies like liquid cooling, hot/cold aisle containment, and AI-based temperature optimization systems can greatly reduce power usage. (e.g.) Adoption of liquid cooling, AI-controlled HVAC, CFD simulation for airflow design.

5.3 Regular Audits and Testing - Continuous commissioning, predictive maintenance, and disaster simulation exercises ensure system readiness and resilience.

5.4 Adoption of Green Technologies - Use of renewable energy sources, energy-efficient servers, and LEED-certified building materials can reduce carbon footprint and improve ESG compliance. This is also related to Climate Change which is addressed in ABMS ISO 37001 where the companies need to start developing the system and applied for certification.

5.5 Cybersecurity Frameworks - Implementing zero-trust architectures, regular penetration testing, and compliance with relevant standards to enhance security readiness. (e.g. Shift toward Zero Trust Architecture, network segmentation, and regular penetration testing per ISO/IEC 27001 and NIST SP 800-53)

5.6 Environmental, Social, and Governance (ESG) compliance is becoming non-negotiable. Stakeholders, especially global hyperscalers are demanding green certifications and energy usage transparency.

Key metrics to monitor:

• Power Usage Effectiveness (PUE): Optimal < 1.5
• Water Usage Effectiveness (WUE): Minimal where air-cooled solutions are viable
• Renewable Energy %: Still below 15% for most Malaysian DCs (2024)

5.7 Up-skilling Workforce - There’s an ongoing shortage of Uptime-certified engineers and facility managers. Most sites operate with lean teams, increasing the risk of fatigue-related human error. Continuous training and certification for data center staff is vital to keep up with evolving technologies and protocols. 

6.0 WHAT FUTURE-READY DATA CENTERS TO LOOK LIKE

• Design for Modularity and Scalability
• Avoid over-provisioning. Build in phases, leveraging prefabricated solutions.
• Implement AI-Driven Monitoring
• Use predictive maintenance, anomaly detection, and real-time environmental monitoring.
• Green Certification Pathway

Plan for LEED, GreenRE, or ISO 50001 and ABMS ISO 37001 (2025) compliance from the design phase.

6.1 Community Engagement and Transparency

As energy-intensive operations, data centers must engage openly with local communities, sharing ESG reports and impact disclosures.

6. CONCLUSION

Malaysia’s data center industry is poised for continued growth, fueled by digital transformation, e-commerce expansion, and regional demand. However, as reliance on data increases, so does the complexity of maintaining these mission-critical facilities. With proper design, proactive risk management, and sustainable practices, Malaysia can continue to offer reliable and efficient data center services contributing significantly to both its economy and digital aspirations.

9 QUALITIES TO BECOME A GOOD LEADER - NIK ZAFRI

These are insights I’ve gathered over the last 30 years through experience and observation. When I first wrote this in 1999, there were 14 points but I’ve since summarize them into 9 core qualities, refined to suit 2025 and beyond. I’ve made them clear, memorable, and practical for everyday leadership.

It's my version of "Leadership" module

Of course, it shouldn’t take you another 30 years to apply them. Who knows, your leadership journey might just begin today.

1) KNOWLEDGABLE 

A good leader must possess strong domain knowledge and be well-informed about the industry, current trends, and the specifics of the organization. This includes:

• Technical expertise and decision-making frameworks,
• Understanding the roles and responsibilities of the team,
• Being aware of external factors like market forces, regulations, and competitors.
• Staying updated through continuous learning, training, and reading.

Why it matters: A knowledgeable leader earns respect, gives informed direction, and avoids costly mistakes.

2) DO THE RIGHT THING

Integrity and ethics are non-negotiable traits of leadership. 

• Stand for principles even when it’s hard or unpopular,
• Uphold fairness, transparency, and accountability,
• Be a role model in behavior, honesty, and consistency, lead by example

Why it matters: People follow leaders they trust. 

Doing the right thing builds long-term loyalty and credibility.

3) HEAD TO THE RIGHT DIRECTION

Leadership is about setting and aligning everyone with a clear vision.

• Set logical, measurable and achievable goals based on strategic foresight,
• Align the team’s work with the organization’s mission and values.
• Periodically reassess the path to ensure relevance.

Why it matters: A leader without direction leads a team to confusion. Purposeful direction gives clarity and unity.

4) WORK HARDER

Effort and commitment are infectious.

• Show dedication and passion through your work ethic.
• Don’t shy away from getting your hands dirty when needed.
• Be willing to put in the extra time to support your team or resolve crisis.

Why it matters: Hardworking leaders inspire their teams to rise above mediocrity and follow by example.

5) THINK OF NEW WAYS

If you're a seasoned professional, you may need to work with the younger generation. Innovation keeps the organization relevant and competitive.

• Be open to change and embrace creative thinking,
• Encourage brainstorming and experimentation without fear of failure (should you fail, do it again),
• Look for improvements in processes, products, and people development.

Why it matters: Stagnation is the enemy of progress. Leaders must innovate to adapt and thrive.

6) MAKE THE BEST DECISION

Not a popular decision, but the best decision

• Decision-making is at the heart of leadership,
• Base your choices on facts, resources, data, experience, and intuition, 
• Involve stakeholders when appropriate, but take responsibility and to be accountable,
• Balance risks and rewards with long-term implications in mind.

Why it matters: The ability to make timely, sound decisions determines whether a team succeeds or struggles.

7) BUSINESS SUSTAINABILITY

Leadership must consider long-term viability, not just short-term gains.

• Balance economic success with environmental and social responsibility (ESG), 
• Invest in people, processes, and technologies that support sustainable growth.
• Make ethical decisions that preserve reputation and resources.

Why it matters: Sustainability ensures your organization endures and thrives in an ever-changing world.

8) BE A GOOD LISTENER

Effective communication starts with listening.

Practice active listening, seek to understand, not just to respond,

Show genuine empathy and openness to different views and feedback,

Use listening as a tool to detect problems early and build trust.

Why it matters: People feel valued and motivated when they are heard. It improves morale, loyalty, and problem-solving. (AND always reward good ideas)

9) CONTINUAL IMPROVEMENT

Strive for excellence, not perfection.

Promote a culture where learning and improvement are continuous,

Encourage reflection, feedback, and growth - personally and organizationally,

Invest in upskilling, process optimization, and quality enhancement.

Why it matters: In a rapidly evolving world, continuous improvement is necessary to stay competitive and agile.

CONCLUSION 

"The impact of doing something is FAR more greater than doing nothing at all" - Nik Zafri

"True leadership is not about authority, it's about responsibility, humility, and vision" - Nik Zafri

t.

Building Resilience Through Business Continuity and Integrity Management (BCIM)

In today’s volatile world, organizations are increasingly vulnerable to disruptions that threaten their operations, reputation, and financial standing. From cyberattacks and natural disasters to regulatory crackdowns and global pandemics, businesses must proactively prepare to face the unexpected. This is where Business Continuity and Integrity Management (BCIM) comes into play – a strategic framework designed to sustain operations and protect ethical integrity in the face of adversity.

1.0 Understanding BCIM

Business Continuity and Integrity Management (BCIM) is an integrated approach combining Business Continuity Management (BCM) and Integrity Management, including elements like anti-corruption practices, compliance, and organizational ethics. While BCM focuses on operational resilience, Integrity Management ensures that recovery and continuity are upheld with ethical accountability.

2.0 The Case for Integration

Traditionally, business continuity and integrity initiatives were managed in silos. However, recent disruptions have shown that unethical conduct during crises can severely damage trust and reputation. For instance, cutting corners during supply shortages or manipulating data during audits can unravel an organization’s standing faster than the disruption itself. Thus, integrating BCM and Integrity Management isn't just best practice – it's a necessity.

3.0 Core Components of BCIM

• Risk and Impact Assessment - Identifying critical operations, their vulnerabilities, and the potential ethical implications during recovery,
• Continuity Planning - Developing comprehensive recovery strategies that include transparent decision-making processes, accountability, and stakeholder communication.

4.0 Compliance and Ethics

Embedding frameworks like ISO 37001 (Anti-Bribery), ISO 37301 (Compliance Management), ISO 22301 (BCM), and Environmental, Social, and Governance (ESG) principles ensures systematic alignment and responsible governance.

5.0 Training and Awareness

Regular training sessions not only prepare employees to act swiftly but also reinforce a culture of integrity, especially during emergencies.

6.0 Testing and Evaluation

Periodic tabletop exercises and scenario testing should include both continuity and ethical decision-making stress tests.

7.0 Benefits of BCIM

• Operational Resilience: Faster and structured recovery.
• Reputation Management: Trust is maintained even during crisis.
• Regulatory Compliance: Stronger positioning during audits and legal scrutiny.
• Cultural Strength: Promotes ethical behavior as a core value.

8.0 Moving Forward

As business environments grow more complex and interconnected, the fusion of continuity and integrity functions is no longer optional. 

Organizations that invest in BCIM are not only better prepared to face crises but also to emerge from them stronger, more transparent, and more trusted.

BCIM is not just about survival - it's about sustainable resilience. In an age of unpredictability, it provides the moral compass and operational roadmap every responsible organization needs.

PROPERTY COMPANY - IT'S TIME TO REBRAND

I know this might be hard on some, but let’s admit it, just like #architectural, #construction and #consulting firms (which I have spoken enough on the subjects) - even a highly successful PROPERTY COMPANY can benefit from a "new breath of life", a strategic refresh that sustains relevance, competitiveness, and long-term growth without abandoning its core values and principles.

LET’S START WITH SOMETHING NOT TOO AMBITIOUS

HERE’S A TYPICAL 6 PHASE PROPOSED ROADMAP SUITABLE FOR PROPERTY COMPANIES OPERATING IN SOUTH EAST ASIA – Hope it helps

ASEAN SUMMIT - WHAT TO EXPECT – Overview by Nik Zafri

PHOTO SOURCE : MALAYMAIL

Disclaimer: The following reflects my personal opinion and interpretation, based on open sources available both internationally and domestically. The information presented here is considered to be in the public domain. However, readers are encouraged to refer to the original sources for accuracy and context. The author bears no responsibility for any inaccuracies, misinterpretations, or consequences arising from the use of this content.