‘MALAYSIA NEEDS TO TACKLE CHALLENGES’
4 game changers to help GDP pick up, says economist
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.