MARC Ratings: Triple ‘A' with stable outlook for Johor
The rating reflects the state's resilient and growing economy, consistent fiscal surpluses, low debt levels, and a stable political landscape supporting its long-term development.
MARC Ratings noted that Johor plays a key role in Malaysia's economy, contributing RM148.2 billion or 9.5% to the national gross domestic product (GDP) in 2023.
This strength is driven by a robust services sector – making up 54% of its GDP – and the country's largest agricultural sector, accounting for nearly 20% of national output.
Johor's proximity to Singapore has generated significant spillovers in retail, hospitality, and investment, reinforcing its economic momentum. The upcoming Johor-Singapore Special Economic Zone (JS-SEZ) is expected to accelerate high-value growth by attracting advanced industries.
In terms of fiscal management, Johor's debt has remained at just 0.1% of GDP from 2021 to 2023 – one of the lowest in the country – thanks to disciplined financial practices and growing tax revenues.
The state has recorded consistent fiscal surpluses over the past decade, with the only deficit occurring in 2021 due to pandemic-related revenue declines, MARC Ratings said.
These efforts have allowed Johor to build healthy reserves, rising to RM2.4 billion in 2023 from RM1.8 billion in 2013. At the same time, it has maintained a strong focus on development, with 39.4% of total expenditure allocated to development projects between 2019 and 2023.
While Johor's revenue structure is solid, MARC Ratings said, it remains reliant on traditional sources like quit rent and land title premiums.
To boost fiscal sustainability, the state has introduced new revenue-enhancing measures for 2025.
The consolidated funds-to-expenditure ratio, though slightly reduced to 143.3% (2019–2023) from 174.5% (2014–2018), still signals strong liquidity and financial flexibility.
MARC Ratings also highlighted Johor's consistent political stability as a key strength.
'The stable outlook reflects our expectation that Johor will continue its disciplined fiscal practices and maintain healthy surpluses in the medium term,' it said.
'Strong revenue from established sources and robust economic activity will support financial stability. Moving forward, additional revenue growth and efficient development spending will be crucial to preserving Johor's strong credit profile.'
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