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

A LITTLE COURTESY PLEASE

 Some individuals communicate their expectations clearly/professionally and with great courtesy, I truly appreciate that.

However, there are others who aren't as clear. Their profiles lack even a photo and the information provided is minimal.

When asked about the project background, instead of offering clarity, they repeatedly insist on getting my contact number.

I’m sorry, but that’s not how I operate even the project is genuine or cost millions of dollars.

Transparency and mutual respect matters to me for meaningful collaboration.

Beyond the Hype: Why VR, AR, and MR Still Struggle in Architecture and Construction : Nik Zafri

I wrote the following article back in May 2023, during the peak surge in interest surrounding VR, MR, and AR technologies particularly within the realm of modern architecture:

AI and the Future of Architectural AR/VR/MR

Toward the end of 2023, I had a Zoom discussion with a CEO from a neighboring country, who echoed my concerns: the hardware, software, and headsets required for these technologies remain prohibitively expensive. Moreover, most banking and financial institutions were unwilling to finance such initiatives except in the gaming sector, where VR headsets continue to gain traction. Unfortunately, VR adoption in the Malaysian architectural scene remains limited.

Closing out 2024, I delivered a short lecture right in the heart of Bukit Bintang (at Berjaya Times Square), where I addressed eye impairment in the construction industry. During the talk, I highlighted the long-term visual effects of prolonged use of VR headsets and simulation technologies an issue that has largely gone unnoticed in mainstream discussions.

I've been waiting for years to see meaningful discussions or research on the disadvantages of using VR/AR/MR headsets especially in architecture and construction but so far, not a single speaker, manufacturer, or supplier has seriously addressed this issue.

With ARCHIDEX 2025 just around the corner, I genuinely hope this topic will finally be brought into the spotlight. As someone who has studied and spoken about the long-term impacts including visual fatigue, ergonomic risks, and accessibility limitations especially in the gaming industry. I believe it’s time we stop romanticizing immersive tech and start having a more balanced, research-driven dialogue.

I’ll be attending sessions at both KL Convention Centre and MITEC, and I plan to raise some pointed questions to the exhibitors and speakers. Let’s see if anyone is ready to talk about what’s being overlooked.

Virtual Reality (VR), Augmented Reality (AR), and Mixed Reality (MR) have been transformative in architecture, but they are not without challenges. Here's my take on problems and limitations associated with their use in the architecture, engineering, and construction (AEC) industry. 

1. HIGH LEARNING CURVE

• Problem - Many architects and stakeholders are not trained in immersive tech.
• Effect -  Requires time and resources to upskill teams, especially for older professionals.

Example -  A seasoned architect might struggle with VR navigation or interpreting AR overlays.

2. COST OF EQUIPMENT AND DEVELOPMENT

• Problem - High initial costs for headsets, software licenses, and custom content,
• Effect -  Small firms may be unable to afford investment in quality VR/AR/MR systems.

Example - Microsoft HoloLens or high-end VR setups like HTC Vive Pro can be prohibitively expensive.

3. HARDWARE LIMITATIONS

• Problem - Many devices still suffer from limited field of view, motion sickness, and poor resolution.
• Effect - Impairs user experience, especially in long design sessions or presentations.

Example -  Long VR walkthroughs may cause nausea or eye fatigue, especially for clients.

4. COMPATIBILITY

• Problem - Inconsistent compatibility between AR/VR/MR platforms and BIM/CAD tools.
• Effect - Workflow disruption and data conversion issues.

Example -  A Revit model might not easily export into Unity or Unreal Engine for immersive viewing.

5. NETWORK STABILITY

• Problem - Cloud-based AR/VR platforms require high bandwidth and low latency.
• Effect -  Difficulties arise on-site or in remote areas with weak internet.

Example: An MR overlay of MEP systems on-site may lag or misalign due to poor signal.

6. FRAGMENTED ECOSYSTEM

• Problem - Many vendors, platforms, and standards lead to confusion and lack of industry standardization.
• Effect - Complicated selection process and poor long-term ROI.

Example: Choosing between Autodesk XR, Enscape VR, Twinmotion, or Unity-based tools can overwhelm teams.

7. LIMITED STAKEHOLDER ENGAGEMENT

• Problem - Not all clients or decision-makers are comfortable or impressed by immersive tech.
• Effect - Underutilized tools in client presentations or public engagement.

Example: A senior developer may prefer 2D plans and physical models over VR.

8. GREY AREAS - LEGAL AND REGULATORY

• Problem - up till now - there is a dire lack of legal frameworks around VR/AR-based design approvals.
• Effect: Approvals still rely on 2D plans and formal documentation.

Example: City councils may not accept MR walkthroughs as official submissions for planning approval.

9. ACCURACY

Problem - Real-world overlays often misalign due to calibration or sensor errors.

Effect - Risk of construction errors if used for site validation or inspection.

Example: An MR overlay of HVAC routing may not align perfectly with physical ducts, misleading contractors.

10. OVERRELIANCE ON VISUALIZATION

Problem -  Pretty visuals can overshadow practical concerns like structural integrity, sustainability, or cost.

Effect -  Decision-makers may approve unfeasible or inefficient designs.

Example:  A beautifully rendered VR house may ignore sun orientation or passive cooling strategies.

MITIGATION STRATEGIES

Invest in training and incremental adoption.

• Use hybrid approaches, such as using VR for immersive design visualization and 2D drawings for regulatory approvals.
• Choose cross-compatible platforms (e.g., Unity Reflect, Autodesk Construction Cloud) to ensure smoother integration with existing BIM workflows.
• Run pilot projects to evaluate actual ROI before full-scale implementation.
• Encourage banking and financial institutions to create dedicated initiatives and funding mechanisms to support immersive technology adoption, especially for architecture, engineering, and construction sectors.

nikzafri : It’s truly rewarding to be recognized for all the hard work and effort you’ve invested. Another milestone achieved in 2025 with many more to come!

 

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

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Exposing Modern Investment Frauds - Forex, Stock Market, and Cryptocurrency Traps - Overview by Nik Zafri

In the ever evolving world of digital finance, fraud and scams have also evolved becoming more sophisticated, harder to detect, and dangerously convincing. Investors, especially those new to online trading, are now increasingly vulnerable to elaborate schemes involving fake Forex platforms, stock market trading sites, and cryptocurrency exchanges.

1) The Illusion of Legitimacy

Fraudsters deploy advanced digital tactics to appear legitimate.

1. Fake Live Charts

Many fraudulent platforms use convincing, real-time charts to simulate active trading. These charts are entirely controlled by a back-end operator and bear no connection to actual market data. Investors are lured by apparent gains, only to be denied withdrawals later under false pretenses (e.g., needing to “upgrade accounts” or pay “taxes”).

2. Bogus Licensing and Fake Review Portals

Fraudsters create fake websites mimicking regulatory bodies or ranking agencies. These sites display fabricated ratings and licensing credentials, often appearing high on Google search results thanks to paid ads and SEO manipulation. Victims may believe they're investing through a "licensed broker" or "top-rated crypto exchange."

3. Interactive and Engaging Fake Platforms

Well-designed websites offer demo accounts, AI chatbots, and "account managers" to build trust. Some even use deepfake video calls or pre-recorded webinars to showcase fake testimonials and investor success stories.

4. Pretending to Fight Scams

In a bold twist, some fraudulent websites go to great lengths to appear trustworthy by displaying "anti-scam" warnings on their own platforms. They may even include links to real regulatory authorities like the SEC, FCA, or local police departments. This reverse psychology tactic is designed to lower your guard and convince you they are above suspicion.

2) Reducing the Risk - What You Can Do

1) Verify Licensing with Official Sources

In Malaysia, verify a broker or platform’s registration with:

Securities Commission Malaysia (SC) or Bank Negara Malaysia (BNM)

Both regulators provide Investor Alert Lists that identify unlicensed or suspicious entities.

1.1) International Verification

For international checks, refer to:

• Financial Conduct Authority (UK)
• U.S. SEC’s Investment Adviser Public Disclosure
• IOSCO (International Organization of Securities Commissions)

Avoid Platforms That:

• Pressure you into “urgent” investments
• Ask for payment via crypto or gift cards
• Block withdrawals without explanation
• Have no physical address or hide behind offshore jurisdictions

Report Immediately

Victims or whistleblowers can file reports with:

• CCID (Commercial Crime Investigation Department) – PDRM
• CyberSecurity Malaysia
• SC Malaysia Investor Affairs – hotline or online form
• The National Scam Response Centre (NSRC)

Conclusion

Financial scams today are not run by amateurs, they are often coordinated operations involving web developers, social engineers, and online marketers. The key defense is awareness, skepticism, and verification through official channels. Never let the appearance of legitimacy override proper due diligence.

#InvestmentScamAlert #CryptoFraudAwareness #ForexScamPrevention #VerifyBeforeYouInvest #StopOnlineScams