Since its independence in 1957, Malaysia had evolved from an agrarian economy into an industrial one envied by many other developing nations. In 1991, former Prime Minister Dr Mahathir Mohammed launched Vision 2020 as a roadmap for the country to achieve developed nation status. This vision called for a self-sufficient, democratic, economically just, mature, united, liberal and tolerant society by 2020, with US$6,000 in per capita income in 1980 prices. However, the Asian Crisis of 1998 significantly set this back, as Malaysia had to spend a number of years recovering from the crisis and regaining foreign investor confidence. The Global Financial Crisis of 2008 also negatively impacted on Malaysia's economic development and slowed its progress towards the achievement of Vision 2020.

Today, Malaysia is perceived by many as being stuck in a middle-income trap, facing challenges on many fronts. A disconnect appears to have developed between policy-making and the national economic reality. In addition, the challenges of globalization have meant that Malaysia has to significantly increase its productivity, especially in the services sector in order to stay relevant. The shortage of skills necessary for a move towards a knowledge-based economy compounds the problem, the infrastructure has expanded significantly but only in certain parts of the country, with many other areas left with little development.

Since assuming office in April 2009, Prime Minister Najib Tun Razak has shown his determination to stay on course to achieve the goals of Vision 2020. In June 2010, he unveiled the 10th Malaysian Plan(2011–15) to chart Malaysia's development from a middle- to a high-income nation. In dollar terms, Malaysia will need to achieve an income level of US$15,000 per capita by 2020. More importantly, its economy will need to be restructured to one which is driven by productivity, innovation, and a focused specialization on selected economic sectors.

Malaysia is also working intensively on bilateral and regional trade agreements. In addition to the commitment to be a member of the ASEAN Economic Community, Malaysia has signed or is negotiating thirteen bilateral FTAs. It is a member of ASEAN+1 FTAs and is negotiating its way to be a part of the ASEAN-led Regional Comprehensive Economic Partnership (RCEP) and the US-led Tran-Pacific Partnership (TPP) Agreement. One important rationale for Malaysia to be part of these FTAs is its intention to undertake difficult domestic reforms, which currently face serious domestic opposition.