MALAYSIA Law and Practice Contributed by: Munir Abdul Aziz, Ee Von Teo and Addy Herg, Wong & Partners
of renewable energy to capitalise on strong energy demand from neighbouring Singapore. UEM Group (wholly owned by Malaysian sovereign fund Khazanah Nasional Berhad) recently announced its collabora - tion with local and foreign investors to develop a 1 GW hybrid solar photovoltaic power plant that will be integrated with a renewable energy industrial park in Malaysia. There are also investment opportunities in connection with large-scale solar projects, third- party access to the national grid operated by Tenaga Nasional Berhad, and corporate power purchase agreements. 1.2 Market Activity and Impact of Macro- Economic Factors Key sectors of interest for private equity investment in Malaysia include the consumer goods and retail sector, a broad sector that encompasses food and beverages, pharmacy and more specialised segments such as the pets retail market. This sector is favoured by private equity investors for a number of reasons, including favourable long-term prospects, driven by demographic trends, a growing middle class and ris - ing incomes. These deals are also largely immune to commodity cycles and do not rely on government concessions. A number of deals in this sector were cited in 1.1 Private Equity Transactions and M&A Deals in General . Other sectors attracting strong interest from private equity firms include private education, healthcare, medical devices, producers of active ingredients in supplements and advanced manufacturing. There has also been increasing interest and investment in greenfield data centre development, specifically in the state of Johor. The JSSEZ is expected to be a catalyst for private equity investment. By stimulating economic growth, attracting foreign investment, and creating new busi - ness opportunities, the JSSEZ is poised to expand deal flow, enhance exit options, and provide lucrative investment avenues in infrastructure, real estate, and human capital for private equity firms. Additionally, supportive government policies are likely to create a favourable investment climate in the region.
Geopolitical instability in the form of the global eco - nomic and political contest between the United States and China, the Russia–Ukraine war, and conflict in the Middle East, has led to supply chain fragmenta - tion worldwide, causing disruptions and escalating inflation. As a small and open trading nation with a population of approximately 35 million, Malaysia is significantly exposed to these effects. Nonetheless, the broader macroeconomic outlook in South-East Asia has exhibited resilience, evidenced by the con - tinued strong growth in the region’s GDP. Malaysia has benefitted from the “de-risking” strat - egy of many global multinationals that have sought to diversify their supply chains away from reliance on China by adopting a “China Plus One” strategy. Many elements of the supply chain of global multinationals have shifted to South-East Asia, including Malaysia. The Malaysian economy also rebounded relatively quickly after the COVID-19 pandemic, with strong fis - cal support from the government resulting in strong trade and investment growth in 2025. Malaysia also has a relatively low rate of inflation, owing in part to extensive subsidies for essential goods. While broader economic indicators provide grounds for optimism, the private equity landscape has not been immune to the dip in global deal activity seen in the first half of 2025. High interest rates, volatility in global economic conditions, a fraught geo-political environment and continuing uncertainty about the time scales over which returns from the digital and energy transitions may be realised have buffeted private equi - ty sponsors. Large Malaysian corporations continue to “right size” and consolidate their portfolios to focus on core businesses. For example, Petronas is undergo - ing a major restructuring and continues to evaluate opportunities to rebalance its portfolio of assets. In Malaysia, additional risks have flowed from suscep - tibility to adverse political or public reactions to cer - tain investments made by foreign parties in industries considered to be of a sensitive nature. The impact of the war in Gaza has also significantly affected the per - formance of retail and consumer brands perceived to be sympathetic to Israel in Muslim-majority Malaysia.
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