Johor debt levels low, disciplined fiscal management, says MARC
In a note released today, MARC Ratings Bhd said in terms of fiscal management, Johor's debt levels are among the lowest in Malaysia, having remained at a low level of 0.1% of GDP from 2021 to 2023, supported by disciplined fiscal management and a consistently growing tax revenue base.
'Johor has sustained an impressive track record of fiscal surpluses over the past decade, with the sole exception of a deficit recorded in 2021 due to pandemic-related revenue shortfalls,' it said.
It said the 'prudent' fiscal management has enabled the state to accumulate substantial reserves, which reached RM2.4 billion in 2023, up from RM1.8 billion in 2013.
Nonetheless, it said the state has consistently maintained a high level of development expenditure, allocating 39.4% of its total expenditure towards development between 2019 and 2023.
It noted that Johor holds a significant position in Malaysia's economy, contributing RM148.2 billion or 9.5% to the national real gross domestic product (GDP) in 2023.
'This strength is anchored by a robust services sector, which accounts for 54% of its GDP, alongside the country's largest agricultural sector, contributing nearly a fifth of national agricultural output,' it said.
It added that the state's strategic proximity to Singapore has generated substantial economic spillovers, particularly in the retail, hospitality, and investment sectors, reinforcing Johor's economic momentum. The upcoming Johor-Singapore Special Economic Zone (JS-SEZ), with its ambitious development agenda, is expected to catalyse higher level growth by attracting high-value industries.
While Johor's revenue structure is robust, it said the state could further benefit from strategies aimed at expanding its diversification as it remains reliant on traditional sources such as quit rent and land title premiums.
As such, it said the state has introduced several revenue-enhancing measures for 2025 to build additional fiscal buffers to support long-term fiscal sustainability. The consolidated funds-to-expenditure ratio, while having moderated to 143.3% (2019–2023) from 174.5% (2014–2018), still reflects strong liquidity and financial flexibility.
'Furthermore, Johor benefits from strong and consistent political representation. Historically, Johor's political stability has been notably characterised by the longstanding dominance of the Barisan Nasional (BN) coalition, which has successfully secured the majority in all but one state election.
'The current alignment with the federal Unity Government enhances policy coordination and facilitates the implementation of national economic blueprints at the state level,' it said. — TMR
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