MARC Ratings has affirmed the state of Perak’s sub-sovereign credit rating at AA+ with a stable outlook. This is an unsolicited rating based on public information. The affirmed rating reflects Perak’s sound fiscal position, relatively high development expenditure, low debt burden and healthy consolidated funds position.
Perak demonstrates fiscal discipline, maintaining a broadly balanced fiscal position while allocating a substantial share of expenditure to development. Development expenditure averaged 32.4% of total expenditure over 2020–2024, above the median across Malaysian states of 27.5%. The state recorded fiscal deficits only in 2020 and 2021 during the pandemic, followed by surpluses every year since 2022. Total revenue grew at a compound annual growth rate of 4.0% (2019–2024), outpacing expenditure growth of 3.4%. Tax revenue, driven mainly by quit rent and royalties, accounted for an average of 45.4% of total revenue over 2020–2024, well above the Malaysian states’ median of 30.4%.
Nevertheless, expenditure pressures are emerging. The second phase of the federal Public Service Remuneration Scheme, effective January 2026, has lifted emoluments costs; the 2026 budget allocates 10.2% more to supplies and services than the 2025 budget, reflecting the expansion of welfare and district maintenance programmes. Consequently, continued efforts to broaden the revenue base and strengthen revenue mobilisation will be key to preserving fiscal flexibility and maintaining the state’s sound fiscal position.
Perak’s debt profile remains conservative. The state’s outstanding debt declined to RM154.6 million in 2024 from RM159.8 billion in 2023, the fourth lowest among Malaysian states. Debt-to-revenue fell to 11.6% in 2024 (2023: 13.2%), below the Malaysian states’ median of 45.7%. Most of the state’s debt is associated with water supply infrastructure. Meanwhile, Perak’s consolidated funds position remained healthy at RM1.52 billion in 2024 (2023: RM1.45 billion), equivalent to 118.3% of total expenditure and 9.9 times outstanding debt.
Perak’s economy is relatively diversified, underpinned by the services and manufacturing sectors, alongside established resource-based industries. The state’s real gross domestic product (GDP) grew by 5.7% in 2025, up from 4.8% in 2024 and exceeding national growth of 5.2%. Its real GDP reached RM91.5 billion, accounting for 5.3% of Malaysia’s total. Ongoing industrial and infrastructure developments could support further economic diversification and strengthen the state’s longer-term growth prospects.
As Perak advances its development agenda under state and national plans, policy continuity remains important, particularly for projects with long implementation periods. Changes in the state’s governing administration across recent elections underscore the importance of sustained policy direction and execution. While smaller development projects can often be efficiently executed within a single administrative term, larger, multi-phase initiatives, including the Kerian Integrated Green Industrial Park and the Lumut Maritime Industrial City, would benefit from consistent support across electoral cycles.
The stable outlook reflects MARC Ratings’ expectation that Perak will maintain fiscal discipline and sustain a high level of development expenditure while preserving its low leverage and healthy consolidated funds position. Successful execution of the state’s industrial pipeline, alongside further progress in broadening the revenue base, could strengthen its credit profile over time. Conversely, sustained expenditure growth in excess of revenue growth, resulting in recurring fiscal deficits and rising debt, or a material drawdown in consolidated funds, may introduce downward pressure on the rating.