‘MALAYSIA NEEDS TO TACKLE CHAL­LENGES’

4 game chang­ers to help GDP pick up, says econ­o­mist

New Straits Times - - Business -

KUALA LUMPUR

WHILE the stars are align­ing to boost Malaysia’s ex­ports, there re­main chal­lenges to its growth prospects, such as fi­nan­cial ca­pac­ity, com­pe­ti­tion from neigh­bours and geopo­lit­i­cal tensions, said Euler Her­mes-Al­lianz Re­search.

The gross do­mes­tic prod­uct (GDP) is ex­pected to grow by 4.5 per cent this year from 4.2 per cent last year.

Euler Her­mes-Al­lianz se­nior econ­o­mist for Asia Ma­hamoud Is­lam said Malaysia’s fi­nan­cial ca­pac­ity to sup­port growth was lim­ited due to the high public debt and house­hold debt and lower gross na­tional sav­ings.

“Com­pe­ti­tion from neigh­bour­ing coun­tries is in­ten­si­fy­ing as re­gional man­u­fac­tur­ing pow­er­houses ag­gres­sively ex­pand their mar­ket share, while Malaysia’s mar­ket share re­mains stuck at around 1.2 per cent,” he told a me­dia brief­ing, here, yes­ter­day.

Ris­ing geopo­lit­i­cal tensions and pro­tec­tion­ist mea­sures also pose fur­ther chal­lenges.

He said Malaysia would need four “po­ten­tial forces” to help growth pick up and achieve the gross na­tional in­come per capita of US$15,000 (RM65,000), in­clud­ing a more sup­port­ive busi­ness en­vi­ron­ment.

“Malaysia ranked low in the key com­po­nents of con­tract en­force­ment and in­sol­vency pro­ce­dures in the World Bank Do­ing Busi­ness Sur­vey.”

An­other game changer is for Malaysia to in­crease its com­pet­i­tive­ness by in­vest­ing fur­ther in in­no­va­tion and in­fras­truc­ture.

Dig­i­tal­i­sa­tion and servi­ti­sa­tion also rep­re­sent an­other game changer where Malaysia could make progress in the busi­ness en­vi­ron­ment and the qual­ity of con­nec­tiv­ity.

Malaysia ranks 36th out of 137 coun­tries in Euler Her­mes En­abling Dig­i­tal­i­sa­tion In­dex.

Ma­hamoud said the fourth game changer was for Malaysia to deepen ties with Asean part­ners and China.

Euler Her­mes-Al­lianz Re­search se­nior econ­o­mist for Asia Ma­hamoud Is­lam says ris­ing geopo­lit­i­cal tensions and pro­tec­tion­ist mea­sures also pose fur­ther chal­lenges to Malaysia’s growth.

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