Malaysia and Saudi Arabia said they would establish a $2.5 billion (R19.4 billion) partnership to invest in economic and energy projects.
The joint-venture company is a collaboration between government development and investment firm 1Malaysia Development Berhad (1MDB) and Saudi Arabia's PetroSaudi International Limited (PSI).
In a statement the companies said the fund would target the renewable energy sector and "long-term sustainable economic development" projects in Malaysia.
It is also aimed at attracting further investment from the oil-rich Middle East region to Malaysia, the statement said.
It did not specify details of each company's investment in the joint venture or where the fund would invest.
Foreign investment in Malaysia has plummeted this year as a result of the global financial crisis. Its economy is expected to contract by 5.0 percent this year.
It is targeting about 30 billion ringgit (R67.2 billion) worth of investments, down from 62 billion ringgit last year amid a tough investment climate.