Malaysia: A Corporate/M&A Overview

Overview of M&A in Malaysia: Trends, Challenges and Outlook

The current M&A market in Malaysia is expected to accelerate as Malaysia positions itself as a regional hub for investment. In this article, we explore the current state of M&A in Malaysia, including economic conditions, market trends, legal reforms and challenges, while offering insights on how to navigate this environment.

Current economic conditions affecting M&A

Malaysia’s economy grew by 4.4% in the first half of 2025 (1H25), with the World Bank projecting 4.1% GDP growth for 2025, supported by strong domestic demand and resilient export growth, particularly in the electrical and electronics (E&E) sector. Robust macroeconomic fundamentals combined with stable interest rates and moderate inflation projections creates a conducive environment for M&A.

There continues to be strong foreign direct investment (FDI) into the economy; Malaysia had an 18.7% year-on-year increase in approved investments during 1H25, of which foreign investments accounted for 56.1%. Investment momentum is expected to hold strong, with high-impact investments in the pipeline.

Malaysia leverages trade agreements, including the recently signed Agreement on Reciprocal Trade with the United States (ART), the Comprehensive Economic Partnership Agreement with the UAE and the ASEAN-China Free Trade Area 3.0 Upgrade Protocol, to improve market access, drive trade and attract FDI. During the 47th ASEAN Summit in October 2025, Malaysia also signed memoranda of understanding with Thailand on critical minerals and broader trade co-operation frameworks, and with Canada on green energy, innovation and education.

The ART aims to ensure fair, balanced and mutually beneficial trade relations between Malaysia and the United States, securing better trade terms and supporting Malaysia’s New Industrial Master Plan 2030, and focuses on protecting Malaysian exports – including E&E, palm oil, rubber and manufactured goods – and strengthening investor confidence.

National initiatives such as the New Industrial Master Plan 2030, National Semiconductor Strategy and New Investment Incentive Framework further foster the inflow of FDI and promote high-value sectors.

Level of activity, trends and developments

Malaysia’s M&A market has demonstrated resilience and growth. Notable transactions in 2025 include:

• the privatisation of Malaysia Airports Holdings Berhad (MYR12 billion), led by Khazanah Nasional and Employees Provident Fund (EPF);
• Pantai Holdings Sdn. Bhd.’s acquisition of Island Hospital for MYR3.92 billion;
• Affinity Equity Partners' acquisition of Golden Fresh group (frozen seafood suppliers); and
• a conditional voluntary general offer by a consortium led by Quadria Capital to take Apex Healthcare Berhad private.

The IPO market complements this momentum, with 32 new listings in the 1H25, marking a 52% year-on-year increase and raising MYR3.97 billion, representing 82% growth compared to the same period last year. Notable IPOs were led by the retail and consumer sector, including Cuckoo International (Mal) Berhad, Eco-Shop Marketing Berhad and Oriental Kopi Holdings Berhad. Other significant IPOs are expected in late 2025 or early 2026, including Sunway Healthcare and MMC Ports.

Emerging trends in the M&A space include:

• a focus on data centres, digital infrastructure and semiconductor industries, given the global supply chain demand;
• upstream oil and gas (O&G) transactions as concession holders seek to de-risk investments in a low-oil-price environment;
• ESG considerations, as companies align with sustainability goals;
• private equity investment and exits, particularly in mid-market transactions and primarily in the consumer, education, healthcare and industrial sectors; and
• cross-border deals, fuelled by Malaysia’s strategic location and competitive cost structure.

Legal and regulatory landscape

Malaysia’s M&A framework is governed by the Companies Act 2016, Capital Markets and Services Act 2007, Malaysian Code on Take-Overs and Mergers, and Bursa Malaysia Listing Requirements. There is no foreign investment law of general application in Malaysia, and foreign investment restrictions are imposed on a sectoral basis via equity conditions in licences, permits or government approvals.

A major regulatory shift is imminent: the introduction of a merger control regime under the Competition Act 2010. There is currently no general merger control regime in Malaysia, except in the civil aviation and communications and multimedia sectors, where there is a voluntary notification regime. Amendments to the Competition Act 2010 are expected to be tabled in Parliament by the end of 2025, which will introduce a hybrid regime with mandatory notification obligations once the prescribed thresholds are exceeded and voluntary notification where the thresholds are not exceeded. This aligns Malaysia with global best practices, but introduces new compliance requirements that may affect deal timelines.

Political and strategic factors

Political stability has bolstered investor confidence. Malaysia’s government is aggressively pursuing FDI through initiatives such as the Johor-Singapore Special Economic Zone, the National Semiconductor Strategy and the Malaysian National Energy Transition Roadmap. These policies aim to position Malaysia as a regional hub for high-tech industries. The government has also announced the 13th Malaysia Plan, with the objective of growing Malaysia’s economy by focusing on digitalisation, AI, renewable energy and high-value industries such as semiconductors, targeting high-income-nation status by 2030.

Geopolitics, particularly US-China tensions and trade tariff uncertainties, is prompting multinational corporations (MNCs) to diversify supply chains, creating additional M&A opportunities in Malaysia’s manufacturing and logistics sectors. By signing ART, Malaysia has elevated its relationship with the USA to the status of a comprehensive strategic partnership.

Key challenges and how to overcome them

Despite positive momentum, M&A transactions in Malaysia face several hurdles:

• government intervention – government intervention in certain M&A transactions involving government-linked investment companies (GLICs) or government-linked companies to remind deal actors to consider the national interest in their M&A transactions;
• domestic fiscal consolidation – focus on reducing the fiscal deficit without reintroducing a broad-based consumption tax, such as goods and services tax (GST), has necessitated the introduction of capital gains tax and aggressive implementation of stamp duty;
• merger control regime – the impending merger control regime introduces new compliance obligations and potential delays in deal timelines; and
• geopolitical and market risks – global uncertainties can affect deal feasibility.

Given the dynamic and evolving M&A landscape in Malaysia, flexible deal structures and risk-adjusted valuations must be adopted. Robust contractual safeguards are necessary to effectively allocate risk and align interests between parties.

Forward-looking outlook

The outlook for M&A in Malaysia remains positive, with key drivers including:

• economic liberalisation – business-friendly and facilitative FDI policies continue to enable M&A activity;
• abundant domestic dry powder – significant institutional capital managers (GLICs) have adjusted their strategic asset allocations to deploy more capital in domestic high-growth and strategic sectors;
• deepening regional integration – intensified geopolitical tension and tariff conflagration has accelerated economic and financial integration with its neighbours within the region, facilitating enhanced regional trade and investment and potentially smoother movement of capital;
• digitalisation – national policies and incentives to attract high-quality digital investments and position the country as a regional tech hub;
• green economy – increased demand for renewable energy and green infrastructure projects;
• supply chain – Malaysia benefits from the China Plus One strategy, given its strategic geographical position as a logistics hub; and
• private equity growth – rising interest from global funds seeking exposure to Southeast Asia’s mid-market segment as foreign currency-denominated funds are well placed to take advantage of better valuations against the ringgit.

Conclusion

Malaysia’s M&A landscape is entering a transformative phase, driven by regional economic growth, pro-investment government policies and strategic positioning within global supply chains. As regional integration deepens and supply chains diversify, Malaysia is poised to become a key hub for cross-border investment.