Economists Flag 2026 Export Slowdown!

 

Malaysia’s export outlook is expected to remain challenging in 2026. Economists forecast a slowdown driven by renewed US tariffs, heightened geopolitical risks, and the fading of "front-loading" activities. This cautious outlook comes despite a historic performance in 2025, where Malaysia's exports grew by 6.5% to reach an all-time high of RM1.61 trillion. This was supported by a strong finish in December, with shipments abroad surging 10.4% to RM153 billion from 2024. 

December's growth far exceeded the 2.5% median estimate in a Bloomberg survey and a sharp acceleration from November's 7% growth. Imports also saw a double-digit increase, rising 12% to RM133.7 billion. Trade surplus for the month rose a marginal 0.1% to RM19.3 billion, marking the 68th consecutive month of surplus since May 2020. For the full year of 2025, Malaysia's exports grew 6.5%, while imports rose 6.2%, raising total trade by 6.3% past RM3.1 trillion for the first time. Annual trade surplus rose 9.2% to RM151.8 billion. 

Source: https://en.wikipedia.org

Malaysia’s largest export segment, electrical and electronic (E&E) sector faces additional pressure from the recently announced 25% tariff on certain semiconductor products, which could dampen the broader economy and technology industry. On the upside, E&E exports are expected to remain resilient amid the ongoing global tech upcycle, while the oversupply condition in the commodity market may result in the exports of mining goods to constrain overall growth, said MBSB Research. 

OCBC Group Research expects goods export growth to slow to 2.2% in 2026, down from 6.5% in 2025, due to payback from aggressive front-loading of exports to the US seen last year, and softer external demand. It also projected that import growth would slow to 4.3% from 6.2% in 2025, as investment spending normalises. These forecasts are consistent with OCBC’s view that headline GDP growth will slow to 3.8% in 2026 from 4.9% in 2025. 

UOB Global Economics and Markets Research expects a bumpy trade outlook for 2026, amid the renewed US tariff threats and escalating geopolitical risks and has likewise kept its export growth forecast modest at 2.5%, slightly below the Finance Ministry’s 2.8% projection. While recent US tariffs on eight European countries — including Denmark, Norway, Sweden and the UK — are not expected to have any direct impact on Malaysia, potential secondary effects will take time to assess. 

The impact will be ringgit, GDP growth and investment outlook. A more cautionary stance my occur. This can be countered by higher domestic consumption and higher public investment in infrastructure or related areas. The constraints may of course be inflationary pressures and higher public sector borrowings to GDP. Walking the tight balance is the art of governance! 

References:

Economists flag 2026 export slowdown despite Malaysia's record-breaking 2025 trade performance, Syafiqah Salim / theedgemalaysia.com, 20 Jan 2026

 

2026 MATRADE

Car Sales Hit Record 820,752 Units in 2025!

 

Malaysia's automotive sector total industry volume (TIV) reached an all-time high of 820,752 units in 2025. This represents a record four-year growth streak. However, the Malaysia Automotive Association (MAA) does not expect the momentum to continue, as it sees lower sales at 790,000 units in 2026.  TIV grew 0.5% year-on-year in 2025, initially rising from 508,883 units in 2021 to 721,177 in 2022 and subsequently to 799,821 in 2023. The projected 3.75% year-on-year decline is due to moderating economic growth, cost pressures and policy changes that weigh on vehicle affordability. 

The TIV outlook reflects Malaysia’s gross domestic product growth moderating to between 4% and 4.5% in 2026 from an estimated 4.9% in 2025, alongside persistent inflationary pressures stemming from higher manufacturing, component and operational costs.

 

The expiry of tax incentives for imported electric vehicles (EV) and potential revisions to excise duty and vehicle pricing calculations could make new cars less affordable for consumers. In addition, rising living costs are expected to constrain disposable incomes, potentially weakening consumers’ ability to commit to new vehicle purchases. Despite these challenges, low unemployment, stable incomes, strong demand for affordable and fuel-efficient cars, growth in the EV ecosystem, new models, and attractive promotions will continue to support car sales. 

Malaysia’s auto market exceeded 800,000 units for the second year in a row in 2025, supported by the strong domestic demand, recovering exports, lower interest rates, low unemployment, new EV launches, and aggressive year-end promotions. 2025 also saw the highest monthly TIV on record at 90,716 units in December, as well as the highest quarterly TIV of 241,416 units in the fourth quarter, said Mohd Shamsor. 

Following the end of the completely built-up (CBU) EV tax holiday at the end of December last year, the pricing adjustments may emerge once existing inventories are cleared. Starting January this year, fully imported completed built-up (CBU) EVs in Malaysia are subject to a 30% import duty, 10% exercise duty and 10% sales tax, marking the end of the duty-free period previously granted to promote EV adoption. 

However, the applicable import duty varies depending on the country of origin and free trade agreements, with CBU EVs imported from China, for example, subject to a lower import duty of 5%.  Any price adjustments are expected to be reflected only three to four months later, as distributors continue to sell existing inventory brought in before the incentive expiry. CBU EVs that arrived in Malaysia and were declared to customs before Dec 28, 2025 can still be sold at tax-free prices in 2026, allowing companies to use existing stocks before new pricing structures take effect. EV sales are expected to remain supported by wider model availability, growing consumer awareness and increasing charging infrastructure.  

The association has asked the government to extend tax incentives for locally assembled EVs until at least 2040, noting that investments in EV assembly plants require a longer planning and recovery horizon of between five and 10 years. The tax incentives for the completely knocked down (CKD) locally-assembled EVs will remain until the end of 2027. EV sales continued to gain traction in 2025, with battery electric vehicle registrations rising 109% year-on-year to 30,848 units, bringing the total EVs sales – including hybrid EVs – climbed 52% to 69,363 units. 

On a broader picture, isn’t it time for national cars to be weaned off from protection? How many more years? It’s already over 40 years and still need “parental” support? Stop helping Geely and Daihatsu/Toyota, they must stand competition! The problem is the R&D is not here but in China or some other place. If you want to be proud of your national car – ICE or EV – then have the R&D, parts including batteries produced locally. Be like the Koreans and not produce re-badged cars and call them national! Minimise taxes and please remove APs. 

Reference:

MAA: Car sales hit record 820,752 units in 2025; 2026 to end four-year record, Justin Lim / theedgemalaysia.com, 20 Jan 2026

RAM Ratings: Corporate Bond Financing to Moderate?

 

Corporate bond financing is expected to moderate in 2026 from the record-high issuance seen, RAM Ratings said. The ratings agency projects gross issuance of between RM130 billion and RM140 billion this year, down from a record RM174.4 billion raised by 205 issuers in 2025. This projection is still above the historical average of about RM122 billion recorded between 2017 and 2024, RAM Ratings noted. In 2024, gross issuance stood at RM124.2 billion from 171 issuers.

 

 

Issuances in 2026 will also be supported by financial institutions’ capital-raising plans. The rating agency expects foreign investor demand for Malaysian bonds to remain healthy this year, underpinned by resilient domestic economic conditions and prospects for global monetary easing, which should enhance the yield differential in favour of ringgit-denominated bonds. 

2025 saw a sharp jump in foreign net inflows to RM25.6 billion, compared with RM4.8 billion in 2024 — the largest since 2021 — concentrated mainly in April (RM10.2 billion) and May (RM13.4 billion) amid expectations of US Federal Reserve (Fed) rate cuts. 

Given increasing signs of economic weakness in the US, RAM expects the Fed to cumulatively reduce rates by at least 50 bps by year end. The overnight policy rate (OPR) will stay unchanged at 2.75% for 2026, Fed cuts will help further improve the attractiveness of Malaysian bonds. 

Meanwhile, gross issuance of Malaysian Government Securities (MGS) and Government Investment Issues (GII) is projected to rise to between RM175 billion and RM185 billion this year, from RM168.5 billion in 2025, driven by increased refinancing needs for maturing debt. However, net supply in 2026 is expected to be lower due to a smaller government deficit financing requirement. The scenario in one of caution by issuers. It remains for banks to do due diligence adequately such that court action like in MEX II Sukuk will not surface. If there are too many court or legal tussles, bond issuance will be impacted.

 

Reference:

RAM Ratings: Corporate bond financing to moderate after record high issuance in 2025, Syafiqah Salim / theedgemalaysia.com, 20 Jan 2026

Employees Stay When…

 

People don’t leave companies — they leave fear-based environments. In many organizations, talented and capable employees are not lost because they underperform, but because their competence is perceived as a threat. When insecurity replaces leadership, growth becomes dangerous, and excellence becomes something to suppress rather than nurture. In such environments, some superiors feel compelled to protect their positions instead of developing stronger teams — and the easiest way to do that is to push capable people out. This is why so many highly qualified, driven professionals struggle to stay, or even to be hired. Not because they lack value, but because their potential challenges fragile hierarchies. When fear governs decision-making, top management may unintentionally avoid strong talent — choosing comfort over capability, control over progress. 

But organizations that lead with confidence, trust, and vision understand a deeper truth: Great leaders are not threatened by talent — they are amplified by it. Employees stay when they are respected, trusted, and allowed to grow without fear. They stay when excellence is celebrated, not punished. They stay when leadership is secure enough to say, “If you grow, we all grow.” 

Retention is not about control. It is about courage — the courage to hire people better than you, smarter than you, and different from you. Because when leadership is rooted in confidence rather than fear, people don’t just stay… they believe, they commit, and they build something greater — together.

 

Reference:

Post by Audra Lim, Linkedin

 

HSR: What’s Next?

 

When KTM Bhd finally commenced its Kuala Lumpur to Johor Baru ETS (electric train service) on 12 December 2025, after around seven years of construction – one thing was clear:  journey time now is approximately 4.5 hours. 

It is possible for a train running non-stop from KL Sentral to reach JB Sentral, a rail distance of 330km, in three hours, given the design speed of the alignment, which is 160kph. 

 

In practice, however, KTMB is running the ETS sets at 140kph to maintain a decent safety margin on the metre-gauge network, as well as to keep the lid on maintenance costs. 

A significant limitation is the relatively dated metre-gauge alignment. The new southern ETS makes 15 stops between Kuala Lumpur and Johor Baru – including at Pulau Sebang (Tampin), Batang Melaka, Gemas, Segamat, Labis, Bekok, Paloh, Kluang, Rengam, Layang-Layang, Kulai, and Kempas Baru – before arriving at JB Sentral. This means a journey time of at least four hours and 20 minutes. This is a disappointment for those who are time-strapped, especially when the ETS is averaging only 76kph. 

Do we still need the cross-border HSR? Some people have argued that the completion of the Gemas-Johor Baru double track, coupled with the impending completion of the Johor Baru-Singapore Rapid Transit System (RTS) Link by the end of 2026, will remove the need for the proposed Kuala Lumpur-Singapore High Speed Rail (HSR). 

In its original form, the KL-SG HSR was to complete the non-stop journey from Bandar Malaysia in Kuala Lumpur to Jurong East in Singapore, after passing Iskandar Puteri in Johor, in no more than 90 minutes. This 90-minute cross-border journey time is guaranteed as all immigration or customs formalities will be completed before the passenger boards the train, whether in Kuala Lumpur or Singapore. While not explicitly stated by the project proponent, the alignment and infrastructure that allows the 90-minute non-stop journey also allows those from Kuala Lumpur to reach Iskandar Puteri in a mere two hours, even after the train stops at Sepang-Putrajaya (near Bangi), Seremban, Ayer Keroh, Muar, and Batu Pahat. 

Experts also note that KTMB’s network often passes through old towns with limited space for sizeable new developments, while the proposed HSR stations will be located slightly away from mature areas to spread development more equitably, with the intent of attracting high-value or cutting-edge industries in ways old towns can’t accommodate. 

In its original proposal, the HSR was to pass through high-growth areas such as Seremban (Labu), Ayer Keroh, Muar, and Batu Pahat, along with Iskandar Puteri. The ETS cannot deliver the ‘time is money’ efficiency required to replace short-haul flights or integrate the two national economies the way the HSR would be able to. 

The key is cost. If HSR costs are borne largely by the Governments of Singapore and Malaysia, then the operating company running the express and transit (HSR) trains has a fair chance to be profitable. The right business model is the key to its viability. 

Reference:
What next for the high-speed rail to Singapore? Meng Yew Choong, The Star, 28 December 2025

Is Auto Market on Slow Lane?

 

Malaysia’s automotive market, after three years of unprecedented growth, is set to decelerate in 2026 as demand stabilises, policy support diminishes, and competition intensifies across both the electric and conventional vehicle segments. 

Industry data reveals a 4.6% month-on-month decline in November sales to 72,509 units, following October’s peak of 75,992 vehicles. Year-to-date deliveries totalled 727,836 units, 1.15% lower than the same period last year. For perspective, 2024 sales reached a record high of 816,747 units. 

Analysts anticipate a gradual return to a more sustainable demand environment, with a notable adjustment expected heading into 2026. 

A key factor shaping 2026 is the expiry of tax exemptions for fully imported (CBU) electric vehicles (EVs) at the end of 2025. CBU EVs are now subject to import and excise duties. Estimates suggest that prices for CBU EV models could rise by 20% to 40%. 

 

Xpeng plans to start EV assembly in Malaysia in 2026, while national brands Proton and Perodua are expanding CKD production as part of their broader localisation strategies. BYD is building a CKD facility in Tanjung Malim, with operations slated to begin in 2026, while Leapmotor, through its partnership with Stellantis, is planning CKD production at its Gurun facility. Chery and Great Wall Motor are expanding or preparing CKD plans as part of their wider Asean strategies. 

Beyond EV-specific policies, the broader automotive market will also be shaped by structural changes beginning in 2026. A revised open market value (OMV) excise duty framework for CKDs – originally slated for January 2026 but recently pushed to July 1, 2026 – could push vehicle prices higher by 10% to 30%, depending on model specifications and localisation levels, according to industry players. TIV is projected to moderate further in 2026 to around 750,000 units. 

The continuation of the RON95 petrol subsidy under initiatives such as Budi95 is expected to support demand for internal combustion engine (ICE) vehicles, particularly in the mass-market segment, dampening the incentive for some consumers to switch to EVs in the near term. 

Malaysia’s long-term target is for EVs and hybrids to account for 20% of new car sales by 2030, 50% by 2040 and 80% by 2050. Currently, BEVs (battery electric vehicles) make up about 5% of total industry volume. 

Usually, car sales is a barometer of economic growth. Caution in 2026 suggests consumers are likely to hold back consumption because of uncertainties in the local and global scenes. And that’s not good for GDP growth! 

Reference:

Auto market switching to slow lane, Kirennesh Nair, Star Biz7, The Star, 5 January 2026

Have Mercy on Whom?

 

Muhammad Azrul Haqim Azman, a 29-year-old father of two, was sentenced to jail recently. His crime? Stealing basic household items valued at RM113.70 from a supermarket on New Year’s Day. Azrul, now jobless and with no steady income, stole out of desperation. The items were not for resale, but for the daily needs of his young family, which includes a four-year-old and an infant just three months old. His plea for leniency fell on deaf ears. 

Could some civic-minded citizens help this man? Shouldn’t the people sign a petition seeking a pardon from the Terengganu Ruler? Meanwhile, the Yang di-Pertuan Besar of Negeri Sembilan expressed deep concern over the prevalence of corruption, while also voicing disappointment at those who continue to support individuals convicted of graft. He said he was shocked that some still rallied behind individuals found guilty of serious corruption offences, as if such acts were acceptable or forgivable.

 

Source: https://www.wikihow.life

But all these remarks or chidings are akin to water off a duck’s back as far as the “Party” is concerned. Its “pardon for Najib (Abdul Razak)” juggernaut, which rolled out after the Federal Court dismissed his appeal in the SRC case in 2022, shows no sign of abatement. In April 2023, its supreme council asked the Yang di-Pertuan Agong to consider granting former prime minister Najib a royal pardon. The party’s supreme council intend to seek an audience with the King to present a memorandum asking for Najib to be pardoned. Since then, at every given opportunity, their leaders have never missed the opportunity to talk about a pardon. 

Regulation 113 of the Prisons Regulations 2000 states:

 (1)   A prisoner may, if he wishes, petition the Yang di-Pertuan Agong or the Ruler or Yang diPertua Negeri, as the case may be, on the subject of his conviction or sentence, once as soon as practicable after his conviction and a second such petition shall be allowed when a prisoner has completed three years from the date of conviction, and thereafter such petitions shall be granted at two yearly intervals, unless there are any special circumstances which the Officer-in-Charge may consider should be brought to the notice of the Yang di-Pertuan Agong or the Ruler or the Yang di-Pertua Negeri, as the case may be.

 

(2) A prisoner may, if he wishes, petition the Yang di-Pertuan Agong or the Ruler or the Yang diPertua Negeri on any other subject at any time, provided that no petition shall be permitted if the reply to a previous petition on the same subject is still outstanding. 

The keyword in Rule 113 is “prisoner”. Period. Any petition other than that from Najib will never be considered. So, why this futility? 

Malaysia’s justice theatre plays on a father is jailed for RM113 worth of groceries, while a former prime minister convicted of siphoning billions is serenaded with chants of “Bossku.”

One man’s desperation is treated as a crime; another man’s corruption is dressed up as a cause for compassion. Perhaps the lesson is this: steal a little, and you are a criminal; steal a lot, and you are possibly awaiting a pardon. 

Poverty earns punishment, privilege earns petitions. The message is clear — steal bread, and you are a thief; steal billions, and you may become a celebrity. 

Reference:

Exclusive | RM113 vs RM45 billion: Who deserves mercy?

Citizen Nades, https://newswav.com, 19 Jan 2026