Malaysia Drops to 20th in 2024 Global Financial Inclusion Index: Key Insights and Analysis

Malaysia has dropped to 20th place in the 2024 Global Financial Inclusion Index, falling two spots from the previous year out of 41 markets. The report, conducted by Principal Financial Group and the Centre for Economics and Business Research, reflects Malaysia’s evolving financial landscape amid global shifts.

Key Takeaways from the Report:

1. Decline in Government-Supported Financial Inclusion: Malaysia dropped one spot to 24th in government-backed financial inclusion and fell 11 places to 16th in the availability of government-provided financial education.
2. Improvements in Education and Financial Literacy: Despite some declines, Malaysia saw progress in other areas, including a one-spot rise to 28th in education levels and a four-spot improvement to 26th for financial literacy.
3. Stability in Financial System Support: Malaysia's ranking for financial system support held steady at 16th. The country also advanced in digital finance, with notable improvements in real-time transactions, fintech quality, and online connectivity.
4. Employer-Supported Financial Inclusion: Malaysia fell eight spots to 13th for employer-supported financial inclusion, though it recorded gains in areas such as employer pay initiatives and pension contributions.

Regional and Global Context: The report suggests that markets in Southeast Asia, including Malaysia, Thailand, Indonesia, and Vietnam, may be reaching a plateau in financial inclusion growth after rapid fintech expansion. This could indicate challenges in adapting to current economic conditions or a shift towards a more mature phase of financial development.

CEO of Principal Asset Management Malaysia, Munirah Khairuddin, noted that Malaysia, similar to India, has benefited economically from China’s slowdown by absorbing labor demand and leveraging higher commodity prices to boost exports. Despite the decline in rankings, Malaysia’s ongoing investment in digitization continues to advance its financial system, positioning the country as a global leader in digital finance.

Global Trends in Financial Inclusion: The report also highlighted that financial inclusion improved globally for the second consecutive year, with 78% of the markets reporting higher scores due to increased public and private sector efforts. Singapore maintained its position as the top-ranked country for financial inclusion for the third year in a row, driven by robust collaboration between the government, financial system, and employers.

Conclusion: While Malaysia’s ranking may have dropped in 2024, the country continues to see advancements in digital finance and financial literacy. The overall drop reflects reduced dependence on government intervention, signaling maturity in its financial development rather than regression.