MARC Ratings has affirmed Selangor’s sub-sovereign credit rating at AAA with a stable outlook, citing the state’s strong economic performance, minimal debt burden and substantial financial reserves.
In its rating announcement, MARC said Selangor’s diversified economy, favourable socioeconomic profile and fiscal management continue to underpin its credit standing.
The unsolicited rating, based on publicly available information, reflects the rating agency’s assessment of Selangor’s capacity to maintain its financial position and sustain economic development.
Selangor retained its position as Malaysia’s largest state economy in 2025, contributing 26.5% of national gross domestic product (GDP).
The state’s economy expanded by 6.3%, outperforming Malaysia’s overall growth of 5.2%, bringing its total economic output to RM460.1 billion.
The services sector remained the principal growth driver, expanding by 6.0%.
MARC said Selangor’s economic strength is supported by its diversified business activities and large consumer base.
The state also recorded a median monthly household income of approximately RM10,700 in 2024, placing it among Malaysia’s highest-income states.
Selangor’s financial position remains a major factor behind the AAA rating.
MARC reported that the state had outstanding debt of just RM17.3 million as of 2024, the lowest debt burden among Malaysian states, following the transfer of water-related borrowings to Pengurusan Aset Air Bhd.
Meanwhile, Selangor’s consolidated funds reached RM4.1 billion in 2024, equivalent to 151.6% of annual expenditure.
This was above the peer median of 140.6%, indicating a substantial financial buffer to support expenditure and development commitments.
MARC said the combination of minimal debt and sizeable reserves provides Selangor with considerable financial flexibility over the medium term.
Selangor’s socioeconomic indicators also contributed to the rating affirmation.
The state recorded a poverty rate of 0.9%, while unemployment declined to 2.0% in 2025 from 4.5% in 2020.
MARC said these indicators support its assessment of Selangor’s economic resilience, alongside the state’s relatively high household income and diversified employment opportunities.
Looking ahead, MARC identified policy continuity and effective administration as important factors for implementing Selangor’s development agenda under Rancangan Selangor Kedua (RS-2), covering 2026 to 2030.
The rating agency noted that the state’s political landscape had become more competitive following the 2023 state election.
It cautioned that any material misalignment between the state and federal governments that disrupts policy continuity or key development initiatives could place pressure on Selangor’s credit profile.
Nevertheless, MARC maintained its stable outlook, reflecting its expectation that Selangor’s diversified economy, substantial financial reserves and low debt burden will continue supporting its credit strength over the medium term.
