MARC Ratings has assigned an unsolicited sub-sovereign credit rating of AAA with a stable outlook to the state of Selangor. The rating reflects the state’s robust and sizeable economy, low debt burden, healthy reserves, and strong socioeconomic fundamentals, all of which underpin its long-term development trajectory.

Selangor contributed RM406.1 billion, or 25.9%, to Malaysia’s real gross domestic product (GDP) in 2023 — the largest share among all states. Growth was primarily driven by the services sector, which accounts for nearly two-thirds of the state’s GDP. Selangor’s strategic location, surrounding the federal territories of Kuala Lumpur and Putrajaya, positions it at the heart of Malaysia’s economic and administrative centres. As the country’s most populous state, Selangor also benefits from a large and dynamic consumer base that supports strong domestic demand. The state government’s ongoing implementation of Rancangan Selangor Pertama, its five-year (2021-2025) development master plan, is expected to accelerate GDP growth.

Selangor’s strong fiscal position is underpinned by its exceptionally low debt and prudent financial management. As of 2023, the state’s debt stood at just RM19.1 million — the lowest among all states. Between 2019 and 2023, Selangor consistently maintained one of the highest average consolidated fund levels. The state’s reserves stood at RM3.6 billion in 2023, covering 143.3% of total expenditures, providing a substantial financial buffer.

The state’s socioeconomic performance further strengthens its credit profile. Selangor recorded Malaysia’s lowest poverty rate at 1.5%, reflecting resilient economic fundamentals and effective social programmes. Its Gini coefficient ranked fifth-lowest, signalling relatively better income distribution. The unemployment rate improved to 2.7% in 2023 from 4.5% in 2020, while labour productivity of RM105,000 per worker ranked third-highest among states, reinforcing Selangor’s role as a national economic hub.

While Selangor’s political environment has remained stable under the Pakatan Harapan (PH) coalition since 2008, the narrower victory margin in the 2023 state election suggests a more competitive landscape. PH’s seat count declined to 34 in 2023 from 51 in 2018, which may lead to recalibration in policy direction and governance priorities.

The stable outlook reflects expectations that Selangor will maintain its status as Malaysia’s economic powerhouse, supported by a resilient and diversified economy, sound fiscal management, and solid socioeconomic indicators. The state’s minimal debt burden and strong reserve levels are expected to continue providing credit strength over the medium term.