Malaysia Well-Positioned To Capture Rising Passive Investment Flows
By Karina Imran & Danni Haizal Danial Donald
KUALA LUMPUR, July 28 (Bernama) -- Malaysia is well-positioned to attract even greater passive investment flows by capitalising on the ongoing global shift toward passive investing with continued follow-through in policies and reforms, participants at the Sasana Symposium 2026 were told today.
Employees Provident Fund (EPF) chief investment officer Mohamad Hafiz Kassim said that in recent years, passive investing has overtaken active investing globally, marking a fundamental shift in asset management that is increasingly benefiting markets like Malaysia.
"Malaysia is punching above its weight on various fixed income indexes, resulting in more capital being allocated to the country's fixed income market.
“This is particularly remarkable given the interest rate and yield differentials between Malaysian Government Securities (MGS) and US Treasuries, while the ringgit has remained stable," he said during a plenary session titled, "Ringgit and Financial Market: Perspective on Current Trends", at the Sasana Symposium 2026 today.
Passive investment income and cash flows are typically generated from investments such as bonds, fixed deposits, and cash management accounts. These investments generally require minimal ongoing involvement once they are set up.
In contrast, active investment income and cash flows usually come from investments that require regular monitoring and frequent decision-making, such as trading shares, managing an investment portfolio, or other strategies that involve ongoing market analysis and timely buy or sell decisions.
Echoing Mohammad Hafiz on the opportunity for passive investment flow, CIMB Group Wholesale Banking and Corporate Treasurer, chief executive officer Chu Kok Wei said the recent geopolitical developments, particularly tensions in West Asia, have created room for Malaysia.
“Some of the potential competitors in the emerging market (EM) indices are not doing particularly well at the moment. Across Asia, especially South Asia, this creates room for Malaysia to scale up, which could attract more stable international fund flows, particularly from passive funds.
“This is something that needs to be addressed from both the financial flow perspective and, more importantly, the fundamental economic side,” he said, adding that it is where government policies need to come in, be implemented, and be followed through.
In terms of policy, Malaysia continues to benefit from the ongoing "China Plus One" strategy for foreign direct investment (FDI), said HSBC Senior ASEAN Economist director Yun Liu.
“It may sound cliché, but it remains a real and continuing trend. Despite the energy crisis, ongoing tariff developments, and broader uncertainty, Malaysia's attractiveness as an investment destination remains intact,” she said.
Investment decisions are long-term by nature and are not driven solely by tariffs. We have seen significant tariff developments recently. Last week, for example, Malaysia was hit with a 10 per cent tariff under Section 301. While that is an important development, investors also consider many other factors.
“They look at how well connected the country's infrastructure is, the quality of its talent pool, the number of free trade agreements it has, and how investor-friendly its FDI policies are, said Yun.
Ultimately, FDI decisions reflect a country's long-term fundamentals, she said.
In Malaysia's case, the reforms introduced over the past few years are beginning to make a tangible impact. They are making a meaningful difference, particularly in terms of implementation and execution.
“Malaysia is never short of big plans. We have seen all of these great blueprints, but it really boils down to the execution and implementation, which, you know, for the past few years, we have seen an improvement,” she added.
In conclusion, the speakers were aligned in their view that continued policy reforms and consistent execution will be critical for Malaysia to sustain its competitiveness and continue benefiting from long-term investment flows.
-- BERNAMA