As Asia’s GDP growth cools to 4.4% in 2026, the continent’s greatest untapped resource isn’t artificial intelligence or green energy. It’s the human judgment required to deploy them wisely.

Key Data at a Glance

In a gleaming conference hall in Singapore last January, the chief executive of one of Southeast Asia’s largest conglomerates leaned across the table and said something that stopped me mid-note. “We have the tools,” he said quietly. “We’ve always had the tools. What we’ve lacked — and what no algorithm can give us — is the wisdom to know which door to open with them.” He wasn’t being philosophical. His company had spent $400 million on a digital transformation program over three years. Adoption was near-total. Results were almost nonexistent.

His story is not a cautionary tale about technology. It is, at its core, a story about leadership — and it is one being repeated, with varying degrees of pain, from Jakarta to Shenzhen to Mumbai. As Asia’s GDP growth eases to 4.4% in 2026 from 4.9% in 2025, according to the United Nations’ World Economic Situation and Prospects report, the deceleration has reignited familiar conversations about investment, innovation, and demographic dividends. But the more uncomfortable conversation — the one that will ultimately determine whether this region realizes its extraordinary potential — is about leadership as the essential, irreplaceable catalyst for harnessing tech in Asia.

The central argument here is simple, if politically inconvenient: Asia already has abundant technology. What it often lacks is leadership capable of deploying it with precision, purpose, and strategic clarity. The continent’s next great economic leap — its most consequential since the manufacturing revolutions of the late twentieth century — will not be triggered by another wave of AI investment or another cluster of smart cities. It will come from a new generation of leaders who understand that technology creates value only when a human hand is guiding it toward the right ends.

The Slowdown That Tells the Real Story: Asia Economic Growth 2026

Numbers, by themselves, rarely tell the full story. But the 2026 Asian GDP projections carry an important subtext that too many analysts are missing. On the surface, China’s 4.8% growth projection, powered largely by a surging export machine, looks respectable. India’s 6.6% expansion, fueled by domestic consumption and a demographic engine that most of the world can only envy, looks impressive. And Vietnam and the Philippines, both surpassing the 6% threshold according to the Asia House Annual Outlook 2026, offer genuine bright spots in a global economy still navigating the aftershocks of geopolitical fragmentation.

Yet the aggregate slowdown — a full half-percentage-point drop in Asia’s collective growth rate — is not simply the product of external shocks or cyclical headwinds. It reflects something more structural: the growing gap between the technology these economies have acquired and the institutional and leadership capacity to translate it into sustained, broad-based productivity gains. Technology adoption, as the IMF’s landmark analysis of Asia’s digital revolution made clear, is a necessary but emphatically insufficient condition for growth. The missing ingredient is harnessing tech in Asia at the leadership layer — the place where strategy, culture, and judgment intersect.

Consider the contrast: Japan and South Korea, two of Asia’s most technologically advanced economies, have struggled for years to convert world-class R&D spending into commensurate productivity growth. Both rank highly on standard innovation indices. Both lag on measures of organizational agility and leadership adaptability. This is not a coincidence. It is a pattern — one that stretches from Tokyo boardrooms to state-owned enterprises in Beijing to family-controlled conglomerates across Southeast Asia.

“Technology is the new electricity. Every economy in Asia has access to the grid. But the question that determines winners from also-rans is this: who knows how to wire the building?”

— Senior economic adviser, Asian Development Bank, 2025

Technology Leadership Asia: What “Harnessing” Actually Means

The word “harnessing” does real intellectual work in this conversation, and it deserves unpacking. It does not mean simply deploying AI tools or purchasing enterprise software. Harnessing technology — in the sense that distinguishes the leaders who create value from those who accumulate costs — involves three distinct leadership capacities that most corporate governance frameworks and most public policy discussions systematically ignore.

The first is contextual intelligence: the ability to understand which technologies are suited to an organization’s specific competitive context, workforce culture, and long-term strategic objectives. Asia’s diversity — spanning democratic market economies, authoritarian state-capitalist systems, middle-income manufacturing hubs, and high-income financial centers — means there is no universal playbook. A leader who blindly imports Silicon Valley frameworks into a Taiwanese semiconductor firm, or a Jakarta fintech startup, is not harnessing technology. They are gambling with it.

The second is organizational translation: the often underappreciated skill of remaking internal structures, incentives, and cultures so that technological investments actually change behavior at scale. The World Bank’s East Asia and Pacific Economic Update has documented the persistent gap between technology adoption rates and productivity outcomes across the region. That gap is, almost without exception, an organizational and leadership failure, not a technological one. Tools do not transform companies. Leaders do — by building the conditions under which tools become embedded habits.

The third is ethical navigation: the capacity to make hard choices about AI deployment, data governance, and automation’s distributional consequences in ways that maintain public trust and social license to operate. This is, increasingly, not a soft skills issue. It is a hard commercial and geopolitical one. Leaders who fail at it — whether running a ride-hailing platform in Indonesia or a state-backed AI initiative in China — face regulatory backlash, talent flight, and reputational damage that erodes the very productivity gains they sought.

The Leadership Gap: Where Asia’s Real Vulnerability Lies

None of this is to suggest that Asia lacks talented individuals. The region produces an extraordinary pool of engineers, data scientists, and technical specialists. What it consistently struggles to produce — at scale, across sectors, and across the public-private divide — is the integrated leader: the executive or policymaker who combines deep technological literacy with strategic vision, human judgment, and the organizational courage to drive change against institutional inertia.

The reasons for this gap are partly historical and partly structural. Many of Asia’s most powerful institutions — state enterprises, family conglomerates, hierarchical bureaucracies — were built for a world of incremental optimization, not adaptive transformation. They rewarded compliance over creativity, seniority over capability, and risk avoidance over intelligent experimentation. These cultural and structural patterns do not dissolve simply because a company installs a new AI platform. They require deliberate, sustained leadership intervention to change.

The Economist’s coverage of Asian business has repeatedly highlighted a paradox: the very organizational cultures that enabled Asia’s first great economic leap — discipline, collective cohesion, long-term orientation — can become liabilities in environments that reward speed, iteration, and decentralized decision-making. The tech-driven productivity gains that Asia’s next chapter demands require precisely those latter qualities. Bridging that gap is, fundamentally, a leadership challenge.

Case Studies in Technology Leadership Asia: Who Is Getting It Right

India: The IT-to-AI Pivot — Leadership as the Differentiator

India’s 6.6% growth story in 2026 is widely attributed to consumption and demographic tailwinds. But behind the headline number lies a more instructive story about leadership transformation in the technology sector. Firms like Infosys and Tata Consultancy Services have spent the last three years not simply adding AI capabilities, but systematically rebuilding their leadership pipelines to produce executives who can bridge technical expertise and strategic client partnership.

The result is not just revenue growth — it is a qualitatively different kind of value creation, moving Indian IT firms up the global value chain in ways that pure engineering investment never could. The lesson is direct: tech-driven productivity in Asia accelerates when leadership development is treated as a core strategic investment, not an HR function.

Vietnam: State Leadership in a Transition Economy

Vietnam’s consistent above-6% growth reflects something more interesting than FDI attraction. It reflects deliberate government leadership in managing a complex economic transition — from low-cost assembly to higher-value manufacturing — without sacrificing the social stability and investor confidence that underpin that growth.

Vietnamese policymakers have, often quietly and without fanfare, made sophisticated decisions about which technology partnerships to pursue, which industrial clusters to prioritize, and how to sequence workforce upskilling alongside automation investment. This is harnessing tech in Asia at the policy level — and it stands in instructive contrast to economies that have adopted similar technologies with far less coherent strategic intent, generating disruption without corresponding value creation.

China: Export-Tech at Scale — and the Translation Gap That Remains

China’s 4.8% growth, driven significantly by its formidable export engine, represents a genuine achievement in technology deployment at scale. Chinese firms in electric vehicles, solar manufacturing, and industrial robotics have moved from technology followers to global leaders in less than a decade.

Yet even here, the leadership question reasserts itself. The domestic productivity challenge — converting technological capability into broad-based efficiency gains across a vast and heterogeneous economy — remains formidable. Financial Times analysis of Asian growth patterns has consistently noted the divergence between China’s frontier technology companies and the much larger universe of firms still struggling with basic digital transformation. Bridging that divide requires leadership capacity, not more technology investment.

The Asian Innovation Economy: Rethinking What “Innovation” Requires

The dominant narrative about the Asian innovation economy — the one repeated at Davos panels and in WEF white papers — focuses on inputs: AI investment, patent filings, university research budgets, startup ecosystems. These inputs matter. But they have a tendency to crowd out the harder conversation about the organizational and leadership conditions that determine whether innovation translates into economic value.

Consider a comparison that illuminates the point. South Korea and Taiwan both have world-class semiconductor industries. Both spend heavily on R&D relative to GDP. Yet their innovation outcomes diverge significantly when you look beyond the flagship firms — Samsung, TSMC — to the broader economic ecosystem. The difference lies substantially in leadership quality and organizational culture in the second and third tier of each country’s industrial base.

Technology diffusion — the spread of innovation-derived productivity gains across an economy — is fundamentally a leadership problem. It happens when leaders at every level of an organization understand what new tools make possible and have the authority, incentives, and capability to act on that understanding.

Five Leadership Strategies for Harnessing Tech in Asia

1. Invest in “bilingual” leadership. Develop executives who speak both the language of technology and the language of business strategy — people who can translate between engineering teams and boardrooms without losing meaning in the process.
2. Redesign incentive structures. Align performance metrics and reward systems with innovation and adaptive risk-taking, not just operational efficiency and hierarchical compliance. This is the most consistently overlooked lever in Asia’s corporate governance toolkit.
3. Build adaptive learning cultures. Create institutional environments where failure is analyzed rather than punished, and where experimentation is treated as a legitimate strategic method, not an aberration from the plan.
4. Anchor technology decisions in human outcomes. Require every significant technology investment to be evaluated not just on cost and capability, but on its implications for workers, communities, and the public trust that underpins long-term social license.
5. Invest in public-sector leadership capacity. In most Asian economies, government plays an active role in shaping industrial and technology strategy. The quality of public-sector leadership — its technological literacy, strategic coherence, and adaptive capacity — is therefore central to national competitiveness.

Policy Implications: Leadership as Infrastructure

If the argument above is correct — and the evidence increasingly suggests it is — then the policy implications are significant and, in some respects, counterintuitive. The conventional policy response to economic deceleration in Asia focuses on macroeconomic levers: interest rates, fiscal stimulus, trade policy, and technology investment incentives. These tools remain necessary. But they are insufficient if they are not accompanied by equally deliberate investment in the leadership infrastructure that determines whether technology creates value or merely creates costs.

What does leadership infrastructure look like in practice? It means education systems that prioritize adaptive thinking, ethical reasoning, and cross-disciplinary integration alongside technical training. It means corporate governance reforms that create accountability for leadership quality and succession planning. It means public-sector talent strategies that attract individuals capable of navigating the intersection of technology policy, economic strategy, and social impact.

And it means, frankly, a willingness among policymakers across Asia to acknowledge that the leadership deficit — not the technology deficit — is the binding constraint on the region’s next phase of growth. This is not a comfortable message for governments and business elites that have built their legitimacy on delivering technological progress. It is considerably easier to announce a new AI national strategy or a smart city initiative than to undertake the slow, difficult, institution-by-institution work of building better leaders. But ease and importance are not the same thing.

Asia’s Next Economic Leap: The Human Equation

There is a particular kind of optimism that Asia inspires — not the naive optimism of those who mistake dynamism for destiny, but the earned optimism of those who have watched this region repeatedly confound skeptics and rewrite economic history. That optimism remains warranted in 2026. The fundamentals — a young and growing population in South and Southeast Asia, deepening regional integration, expanding middle classes, and genuine world-class technological capability in multiple countries — are real. Asia’s next economic leap is not a fantasy. It is a genuine possibility.

But the path to that leap runs directly through the leadership question. The region’s most consequential investment in 2026 is not in another data center or another AI research lab — though both matter. It is in the development of leaders who can look at the extraordinary technological resources now available to Asian firms and governments and ask, with clarity and courage: What problem are we actually trying to solve? Who benefits? What do we need to change about ourselves to make this work?

Those are human questions. They always have been. The technology changes. The questions don’t. And Asia’s future — its extraordinary, still-unwritten future — will be determined by how well its leaders learn to answer them.

A Call to Action for Asia’s Policymakers and Business Leaders

The window for building leadership infrastructure at scale is open — but it will not remain open indefinitely. Three immediate steps deserve priority attention:

• Commission independent leadership capability audits in your organizations, measuring not just technical literacy but adaptive capacity and strategic judgment.
• Reform executive education to prioritize interdisciplinary thinking, ethical reasoning, and cross-cultural leadership alongside functional expertise.
• Elevate the leadership question in national technology strategies — not as a footnote to AI investment plans, but as a primary pillar of economic policy.

The technology is ready. The question is whether you are.

Sources & References

1. UN World Economic Situation and Prospects 2026 — United Nations DESA (DA 94)
2. China’s Economy Expected to Grow in 2026 Amid Surging Exports — Goldman Sachs (DA 92)
3. Asia House Annual Outlook 2026 — Asia House (DA 70+)
4. Asia’s Digital Revolution — IMF Finance & Development (DA 93)
5. East Asia and Pacific Economic Update — World Bank (DA 93)
6. Asia Coverage — The Economist (DA 92)
7. Asia-Pacific — Financial Times (DA 93)

Explore how Bangladesh’s new PM Tarique Rahman aims to boost GDP growth, manage remittances, and navigate China-US relations amid post-election revival.

When Tarique Rahman finally set foot on Bangladeshi soil after nearly two decades in London exile, the crowds that greeted him weren’t merely celebrating a political homecoming. They were, in a very real sense, betting their livelihoods on him. The BNP’s sweeping two-thirds majority in February 2026 — an election made possible only by the extraordinary student-led uprising that drove Sheikh Hasina from power in 2024 — handed Rahman a mandate that is simultaneously historic and terrifying in its weight. Bangladesh’s GDP stands at roughly $460 billion, growth has decelerated to a sluggish 4%, and a geopolitical tightrope stretches in every direction. The question isn’t whether Rahman wants to revive Bangladesh’s economy. The question is whether the tools he has are equal to the task.

The Economic Inheritance: More Fragile Than It Looks

Bangladesh’s macro story has long been one of development economics’ favorite fairy tales — a low-income country that outpaced neighbors through garment exports, microfinance, and disciplined remittance flows. That story has grown considerably more complicated.

The IMF projects GDP growth to rebound to 4.7% in FY2026, a modest recovery from the post-Hasina political turbulence that rattled investor confidence in late 2024 and through 2025. But 4.7% is not the 6–7% Bangladesh needs to absorb its vast young workforce, reduce poverty meaningfully, or finance the public investment that decades of cronyism left underfunded. The structural gaps are significant: private investment hovers well below the 35% of GDP economists identify as necessary for sustained high growth. Public institutions — tax administration, the judiciary, anti-corruption bodies — carry the scars of 15 years of systematic politicization.

Agriculture still employs roughly 44% of the workforce, a share that underscores both the rural depth of economic vulnerability and the limits of an export-led model that has concentrated prosperity in Dhaka and Chittagong. When a cyclone hits the Sundarbans or global cotton prices spike, nearly half the country feels it in their bones.

Then there’s the remittance lifeline. Bangladeshis abroad sent home $30 billion in 2025 — a remarkable surge driven partly by the depreciation of the taka making dollar transfers more attractive, and partly by the expanded diaspora built up across the Gulf, Malaysia, and Europe. Remittances now rival garment export earnings as the backbone of foreign exchange reserves. That’s a double-edged asset: invaluable as a buffer, but structurally fragile because it depends on labor-market conditions in Riyadh and Dubai, not Dhaka.

The Garment Sector: A Crown Jewel Under Pressure

Bangladesh’s readymade garment industry — a $40+ billion export engine that dresses much of the Western world — faces its most complex moment in a generation. The challenges are formidable: automation threatens lower-skill sewing jobs, Western buyers are demanding ESG compliance that many Bangladeshi factories can’t yet afford, and competitors from Vietnam and Ethiopia are chipping away at market share.

US tariff policy adds another layer of uncertainty. Bangladesh’s garment exports to America — its single largest market — flow under preferences that have never been fully secure and are now subject to the broader unpredictability of Washington’s trade posture. Rahman’s government has signaled it will pursue a formal trade framework with the US, a pragmatic move that would reduce vulnerability but requires diplomatic capital Bangladesh is only beginning to rebuild.

The harder domestic challenge is labor. The 2024 revolution was partly ignited by garment workers and students united by economic grievance. Any BNP government that ignores wage stagnation in the sector risks repeating the political miscalculations that ultimately doomed Hasina. Rahman has spoken of a “social compact” with workers — the test will be whether that translates into enforceable minimum wages and functional unions, or remains campaign rhetoric.

Navigating the Great Power Triangle: China, the US, and India

China: Partner, Creditor, or Competitor?

Bangladesh’s trade relationship with China is the defining economic relationship most Western analysts underestimate. Bilateral trade runs at approximately $18 billion, overwhelmingly weighted toward Chinese exports — machinery, raw materials, electronics — that Bangladesh’s industry desperately needs but can’t yet produce domestically. Chinese firms have also financed key infrastructure, from the Padma Bridge rail link to power plants, creating debt obligations that constrain fiscal flexibility.

Rahman’s stated approach is “multipolar pragmatism” — maintaining strong economic ties with Beijing while signaling openness to Washington and Tokyo. It’s a reasonable strategy, and it reflects a broader trend across Southeast and South Asia. But it requires a diplomatic dexterity that Bangladesh’s foreign ministry has not traditionally needed to exercise. The risk is that both great powers interpret hedging as hostility rather than prudence.

The India Question: Thaw or Freeze?

Relations with India are the most emotionally charged variable in Rahman’s foreign policy inbox. New Delhi was perceived as Hasina’s patron — a relationship Bangladeshi nationalists resented and the BNP stoked for electoral advantage. Border tensions have flared since the revolution, with incidents along the fencing that runs most of the 4,000-kilometer frontier. The Teesta water-sharing agreement, long in diplomatic limbo, remains unsigned.

And yet the economics of India-Bangladesh interdependence are powerful enough to compel engagement regardless of political temperature. Indian goods flood Bangladeshi markets via both formal and informal channels. Bangladesh’s northeast-facing connectivity — ports, power grids, transit routes — cannot be optimized without Indian cooperation. A sustained chill with Delhi would cost Rahman more than it costs Modi. The smart money is on a gradual, face-saving thaw: enough symbolism to satisfy nationalist sentiment at home, enough pragmatism to keep the border economy functioning.

ASEAN: The Aspiration That Requires Homework

Bangladesh’s ASEAN aspirations have been discussed for years with more enthusiasm than strategy. Joining ASEAN — even as a dialogue partner — would require institutional reforms, trade liberalization, and a regional diplomatic posture that Dhaka has not historically prioritized. Rahman’s team has floated ASEAN engagement as part of a broader Indo-Pacific pivot. It’s an appealing vision. Translating it into policy requires, first, getting the basics right at home.

The Political Economy of Reform: Who’s Really in the Room?

Any honest assessment of Bangladesh’s economic outlook has to grapple with the coalition Rahman is governing within. The BNP’s two-thirds majority is a powerful instrument — but it came partly on the back of Jamaat-e-Islami’s organizational muscle in constituencies where the BNP had been weakened during the Hasina years. Jamaat’s social conservatism and ambiguous attitude toward Bangladesh’s secular liberal elite creates real tension with the reform agenda that investors and multilaterals are expecting.

Youth are the other critical constituency. The students who brought down Hasina want jobs — real ones, not patronage positions — transparency, and an end to the culture of political violence that has made Bangladeshi politics so costly to its own institutions. Rahman’s government has promised a crackdown on corruption and civil service reform. These are not merely good governance talking points; they are the precondition for private investment to grow toward that 35% of GDP target. Foreign capital follows institutional credibility, and Bangladesh’s institutional credibility is currently being rebuilt from a low base.

The Awami League, despite its electoral collapse, commands deep roots in parts of the bureaucracy, the military officer class, and civil society. A wise BNP government manages this not through purges — which historically backfire — but through transparent accountability processes that don’t look like victors’ justice.

LDC Graduation: The November 2026 Cliff

Looming over everything is Bangladesh’s scheduled graduation from Least Developed Country status in November 2026. This is, in development terms, a success story — Bangladesh has met the income, human assets, and economic vulnerability thresholds for graduation. But success brings a cost: the erosion of preferential trade terms that have underpinned garment export competitiveness for decades.

Duty-free access to the EU under the Everything But Arms initiative will phase out. WTO-TRIPS flexibilities on pharmaceuticals will tighten. The IMF and World Bank have urged Bangladesh to negotiate transition arrangements and diversify its export base before the preferences expire. Rahman’s government has approximately two years of post-graduation transition runway — time that must be used to move up the value chain, attract technology-intensive investment, and build the trade infrastructure that makes Bangladeshi exports competitive on merit rather than preference.

This is where the $460 billion economy’s future is genuinely being written. Not in political speeches, but in whether Chittagong port gets the upgrades it needs, whether the power grid can reliably supply the industrial zones, and whether the education system starts producing graduates with skills the 21st-century economy demands rather than the 20th.

Opportunities and Pitfalls: A Forward Look

Where the optimists have a point:

• The remittance surge provides a genuine foreign exchange cushion that buys reform time.
• Bangladesh’s demographic dividend — a young, urbanizing population — is a real asset if youth employment programs gain traction.
• The global supply chain diversification away from China creates an opening for Bangladesh in electronics and light manufacturing if the enabling environment improves.
• The BNP’s large majority, paradoxically, gives Rahman room to absorb short-term political pain from reform — a luxury narrow coalition governments rarely have.

Where the pessimists may be right:

• Jamaat-e-Islami’s influence in the coalition could slow liberal economic reforms and deter Western investors with ESG mandates.
• India-Bangladesh tensions, if they deepen, could disrupt the connectivity projects that unlock northeastern Bangladesh’s economic potential.
• LDC graduation without adequate preparation could trigger a garment sector shock that reverberates across the 4 million workers — mostly women — who depend on it.
• Institutional rebuilding takes longer than election cycles. The IMF’s 4.7% projection is predicated on policy continuity and reform progress that is far from guaranteed.

The Bottom Line

Tarique Rahman inherits a Bangladesh that is more resilient than its critics acknowledge and more fragile than its boosters admit. The $460 billion economy has real foundations — a hardworking diaspora, an adaptable garment sector, a tradition of pragmatic policymaking that survived even the Hasina years’ worst excesses. But those foundations need serious maintenance: institutional reform, investment in human capital, and a foreign policy sophisticated enough to manage great power competition without becoming a casualty of it.

The students who made this government possible are watching with the same energy they brought to the streets in 2024. They are not an audience to be managed with press releases. They are Bangladesh’s most important economic asset — and its most demanding constituency. Getting the economy right, for Rahman, is not just a technocratic challenge. It’s the condition of his political survival, and the measure by which history will judge whether the 2024 revolution delivered on its promise.

A blockbuster bid by billionaire Jeffrey Cheah’s Sunway Group to absorb construction giant IJM has ignited a ferocious debate about race, capital, and who really controls Malaysia’s economic future—just as the country edges toward a pivotal election cycle.

There are corporate deals, and then there are deals that hold up a mirror to an entire nation. The RM11 billion bid by Sunway Berhad for IJM Corporation is emphatically the latter. On the surface, it is a straightforward consolidation play in a sector long overdue for rationalisation. Dig a little deeper, and you find a collision of race politics, institutional shareholder power, and the ambitions of a prime minister still navigating the treacherous waters of multiracial governance.

When Sunway launched its takeover offer on January 12, 2026, valuing IJM at approximately RM11 billion—or around US$2.71 billion—the financial logic seemed sound. A combined entity would command a market capitalisation approaching RM50 billion, vaulting into the top ten on Bursa Malaysia and creating what proponents call a genuine national construction and property champion capable of competing regionally. But the weeks since have been anything but smooth, as bumiputera advocacy groups, opposition politicians, and state investment funds have raised uncomfortable questions about what this merger means for Malay economic ownership in a sector long considered strategically sensitive.

The Deal: What Is Actually on the Table

Sunway’s offer values each IJM share at roughly RM2.60, a premium of approximately 17 percent over IJM’s three-month volume-weighted average price prior to the announcement. IJM shareholders, many of whom have watched the stock languish for years amid rising input costs and a sluggish domestic construction pipeline, initially responded with cautious optimism. IJM’s share price surged past RM2.50 in the days following the announcement before settling into a holding pattern as political controversy deepened.

Sunway itself entered the year trading at a market capitalisation of roughly RM38 billion, buoyed by strong recurring income from its integrated townships and healthcare assets. The combined group would hold property, construction, infrastructure, and quarrying operations across Malaysia, India, the Middle East, and Australia—a conglomerate of genuine regional heft.

IJM also brings a balance sheet that makes the deal attractive beyond pure scale. With cash reserves exceeding RM2 billion and a healthy order book underpinned by ongoing infrastructure projects, it is not a distressed asset. That, paradoxically, has sharpened the controversy: critics ask why a profitable, bumiputera-linked institution should be absorbed into a group whose founder and controlling shareholder, Tan Sri Jeffrey Cheah, is an ethnic Chinese tycoon.

Jeffrey Cheah, Anwar Ibrahim, and the Racial Arithmetic

Few figures in Malaysian business carry the symbolic weight of Jeffrey Cheah. The founder of Sunway Group built his fortune from tin-mining wastelands in Selangor into one of the country’s most admired integrated townships, and has channelled hundreds of millions into education philanthropy through the Jeffrey Cheah Foundation. He is, by any measure, a Malaysian success story.

But success in Malaysia has always been read through a racial lens, and Cheah’s Chinese identity sits awkwardly against the backdrop of a deal that many bumiputera groups see as a dilution of Malay corporate ownership. IJM, while not a state-linked enterprise in the strictest sense, counts the Employees Provident Fund (EPF) and Permodalan Nasional Berhad (PNB)—two of the country’s largest state-backed institutional investors—among its most significant shareholders. Both funds carry an implicit mandate to protect and grow bumiputera wealth.

As reported by Bloomberg, the deal has drawn scrutiny precisely because it tests the limits of how far market logic can override the country’s affirmative ownership framework. PNB, which manages assets on behalf of bumiputera Malaysians, has not publicly declared its position. Its silence has been deafening.

For Prime Minister Anwar Ibrahim, the deal presents a political calculation of extraordinary delicacy. Anwar has staked much of his Madani economic agenda on attracting foreign investment, liberalising ownership rules, and projecting Malaysia as a modern, meritocratic economy. Approving a merger that creates a stronger, more competitive national champion aligns neatly with that narrative. But his political survival rests on a coalition that includes UMNO, whose grassroots remain deeply invested in the premise that bumiputera economic gains must be protected—sometimes at the expense of market efficiency.

UMNO Youth has been among the most vocal critics, with its leadership publicly questioning whether the government should allow what they characterise as a transfer of strategic assets from the bumiputera sphere to non-bumiputera control. The language has been incendiary in places, tapping into anxieties that predate the merger by decades but have found fresh urgency in an environment where Malay voter sentiment ahead of the 2026-2028 election cycle is increasingly volatile.

The Institutional Shareholders: EPF’s Quiet Power Play

Perhaps the most intriguing subplot involves the EPF. In the weeks following Sunway’s January announcement, market observers noted that the pension fund—which is the single largest institutional investor on Bursa Malaysia—had been quietly accumulating Sunway shares. As reported by The Edge Malaysia, EPF’s purchases were interpreted by some analysts as a signal that the fund was positioning itself to benefit from a deal it quietly endorses, while others read it as a hedge against the uncertainty a prolonged takeover battle creates.

The EPF’s dual role as a Sunway shareholder and an IJM shareholder creates an inherent tension. A higher offer price benefits its IJM position; a successful merger and subsequent re-rating of the combined entity would benefit its Sunway position. The fund’s leadership has maintained strict public silence, consistent with its fiduciary mandate, but the market is watching its every filing.

PNB presents a different profile. As the custodian of Amanah Saham Bumiputera (ASB) and related funds, it carries an explicitly race-conscious mandate that makes a straightforward commercial calculation more politically fraught. If PNB tenders its IJM shares to Sunway, it will face intense criticism from bumiputera advocacy groups regardless of the financial merit. If it withholds, it may be accused of undermining shareholder value for political reasons.

Regulatory Overhang: MACC and the Graft Question

Adding further turbulence, the Malaysian Anti-Corruption Commission (MACC) has been conducting investigations related to procurement irregularities in the construction sector—investigations that, while not directly targeted at either Sunway or IJM, have cast a shadow over the broader industry. Opposition politicians have not been slow to connect these investigations to the merger narrative, suggesting that a mega-consolidation could create opacity rather than accountability in public project awards.

These allegations remain unproven, and both Sunway and IJM have categorically denied any wrongdoing. But in the court of public opinion—particularly among Malay-majority voter blocs who are already sceptical of large Chinese-controlled conglomerates—the suggestion of graft, however tenuous, is politically potent.

The Financial Case: Why the Numbers Still Argue for Consolidation

Strip away the politics, and the economic logic for consolidation remains compelling.

Pre- and Post-Merger Snapshot (estimated, 2026):

Malaysia’s construction sector has been fragmented for too long. Dozens of mid-tier contractors compete for the same government contracts, undercutting margins and limiting investment in technology and sustainability. A combined Sunway-IJM entity would have the balance sheet to pursue large-scale infrastructure projects—including potential MRT extensions, Johor-Singapore Rapid Transit System works, and data centre construction—at a scale that smaller competitors cannot match.

As Reuters reported when the bid was announced, the merger is explicitly intended to create a “Malaysian building champion” capable of competing with regional giants from South Korea, Japan, and China that have long dominated Southeast Asian infrastructure. The argument is not merely financial; it is strategic.

Stakeholder Perspectives: A Divided Chorus

Institutional investors broadly favour the deal, citing synergy potential and the premium on offer. Foreign portfolio investors, in particular, have welcomed any signal that Malaysia is willing to allow market-driven consolidation over politically motivated intervention.

Bumiputera advocacy groups remain opposed, framing the merger as a symbolic retreat from the New Economic Policy’s goals of redistributive ownership. Their concern is less about Sunway’s competence than about the precedent: if EPF and PNB are seen to facilitate a transfer of a bumiputera-associated asset to a Chinese-controlled group, it emboldens similar deals in other sectors.

Industry executives, speaking privately, tend to regard the political opposition as short-sighted. One senior figure in the construction supply chain, speaking on condition of anonymity, described the fragmentation of the sector as “a luxury we can no longer afford” given the scale of infrastructure investment required to sustain Malaysia’s economic development targets.

Opposition politicians, from both the right and left flanks, have found unlikely common cause in scrutinising the deal—though for very different reasons. Perikatan Nasional has leaned into the bumiputera ownership argument; Parti Sosialis Malaysia has questioned the concentration of market power.

The Political Clock: 2026 and Beyond

The offer closes on April 6, 2026. That date matters enormously. Malaysia’s next general election is constitutionally due by 2028, but the political calendar is fluid; state elections and the underlying fragility of Anwar’s coalition mean that every major policy decision carries electoral freight.

A government that approves or tacitly facilitates this merger risks alienating a segment of the Malay electorate that sees bumiputera corporate ownership as non-negotiable. A government that blocks or delays it risks signalling to international capital that Malaysia remains a prisoner of ethnic economic politics—precisely the image Anwar has worked to overcome since taking office.

As Channel News Asia noted in its coverage, the controversy has exposed a fault line in Malaysia’s economic governance that no amount of Madani branding fully papers over: the tension between a market-oriented economic vision and the redistributive commitments baked into the country’s political DNA.

Three Scenarios for What Comes Next

Scenario One: The Deal Proceeds, Largely Intact. EPF and PNB tender their shares, the offer closes on schedule in April, and the combined entity lists as one of Bursa’s largest companies. Politically, Anwar absorbs short-term criticism from UMNO backbenchers but points to the resulting national champion as evidence of his economic competence. Markets respond positively.

Scenario Two: A Revised Offer with Bumiputera Conditions. Under pressure from state funds and the government, Sunway sweetens the deal—either by raising the offer price or by committing to structural conditions such as a minimum bumiputera board representation, a ring-fenced bumiputera vendor programme, or a stake reserved for PNB in the combined entity. This is the most politically elegant outcome, though it sets a precedent for race-conditioned M&A that will unsettle foreign investors.

Scenario Three: The Deal Collapses. State funds decline to tender, Sunway fails to achieve the thresholds required for compulsory acquisition, and IJM remains independent. The immediate market reaction would be negative for both stocks. More significantly, it would signal to the region that Malaysia’s affirmative ownership framework remains a structural constraint on market-driven consolidation—a message with long-term consequences for capital allocation.

The Bigger Picture

What makes the Sunway-IJM saga so revealing is not the deal itself but the anxieties it has brought to the surface. Malaysia’s economy has long operated on an implicit bargain: Chinese capital provides commercial dynamism; bumiputera institutions provide political legitimacy; and the government manages the intersection between the two. That bargain is under strain, not because any one actor has behaved badly, but because the world has changed around it.

Regional competition is intensifying. Infrastructure capital is flowing to markets with clearer rules. And a generation of Malaysian investors—bumiputera and otherwise—is increasingly asking whether the inherited framework serves their financial interests or merely their symbolic ones.

The answer Anwar and his government provide in the coming weeks, whether through action or studied inaction, will echo well beyond the construction sector. It will say something fundamental about whether Malaysia is prepared to let economic logic lead—and whether, in the year 2026, it can afford the luxury of letting politics decide.

The offer period for Sunway’s takeover bid for IJM Corporation closes April 6, 2026. Regulatory and shareholder decisions in the intervening weeks will determine whether Malaysia’s most politically charged corporate deal in years reshapes the country’s economic landscape—or exposes the limits of its reform ambitions.