Malaysia Hits Record Economic Freedom Score but Slips to 35th Globally

Malaysia has just recorded its best-ever score in a major global ranking of economic freedom, yet it still lost ground to other countries. According to the Center for Market Education (CME), Malaysia scored 7.57 out of 10 in the Fraser Institute's Economic Freedom of the World: 2026 Annual Report, up slightly from 7.55, but slipped two places from 33rd to 35th out of 165 jurisdictions because other economies improved faster.

The report, published by Canada's Fraser Institute, uses 2024 data and measures five areas: size of government, legal system and property rights, sound money, freedom to trade internationally, and regulation.

Where Malaysia scores well and where it falls short

CME's breakdown, reported by The Malaysian Reserve, shows a mixed picture:

• Sound money: Malaysia's strongest area, with a score of 9.40 and a global rank of 18th.
• Regulation: a score of 7.39, ranked 24th.
• Size of government: ranked 53rd.
• Legal system and property rights: the weakest area, at 5.94 and 54th place.
• Freedom to trade internationally: ranked 63rd.

The think tank flagged heavy state involvement as a drag. Malaysia ranked 135th out of 162 for state ownership of assets and 130th for government ownership of banks. Its score for impartial public administration also fell to 4.14 from 5.78 in 2019.

How Malaysia compares with its neighbours

Malaysia is still ASEAN's second-freest economy, behind Singapore, which scored 8.43 and ranked third globally. Malaysia sits ahead of Thailand (57th), Brunei and the Philippines (both 61st) and Indonesia (72nd). Hong Kong topped the global table, followed by Switzerland, Singapore, New Zealand and the United States.

Over the longer run, the trend is upward. CME noted that Malaysia's ranking bottomed out at 97th in 2009 and has climbed steadily since. Even so, CME chief executive Dr Carmelo Ferlito warned against reading too much into the record score:

"Malaysia's record score is good news, but it is not a reason for complacency. Other countries are reforming faster, and that is why we dropped two places." Dr Carmelo Ferlito, CEO, Center for Market Education

He said that to reach the top 20, Malaysia would need to reduce state ownership, keep the civil service rules-based and impartial, simplify its tariff structure and open markets to more competition.

What this means for Malaysian readers

Rankings like this are not just for economists. Strong scores in sound money and regulation suggest a stable environment for planning prices, wages and investments, which helps SMEs that sign long contracts or import supplies.

The weaker spots point to everyday frictions business owners already know: competing against government-linked companies, uneven tariffs on imported inputs, and slow or unpredictable approvals. If reforms in these areas move forward, smaller firms would likely be among the biggest winners, since they have the least room to absorb red tape.

In the meantime, the best response for a small business is to control what it can, such as keeping processes efficient, documenting compliance well and staying ready to compete if markets open up further.

Sources: The Malaysian Reserve, "Malaysia slips to 35th in economic freedom ranking despite record score" and Malay Mail (Bernama), "Malaysia hits record economic freedom score but slips to 35th globally", 19 October 2026. Rewritten in our own words.