News Room - Business/Economics

Posted on 02 Feb 2010

Gradual economic recovery seen for M'sia

Malaysia’s economy is expected to experience gradual recovery this year, supported by commodities such as petroleum, gas and palm oil, and driven by Government spending on the economic corridors, according to Kenanga Investment Bank Bhd.

 

Its chief executive officer Lee Kok Khee said the country likely registered growth of close to 2% in the final quarter of 2009, which showed the domestic economy had begun to recover.

 

“We target for 4% growth rate this year. I think we could see some results from the economic corridors this year,” he said, in reference to the various special economic zones in the country.

 

Lee was speaking to StarBiz on the sidelines of the Forum and Roundtable Dialogue on Financial Economic Outlook of 2010.

 

He said Malaysia’s “natural advantages like commodities and oil and gas” would continue to support the economy, while Government spending would help drive economic activities.

 

On whether the country needed another stimulus package, he said: “It is not a pressing issue. We would rather look at (whether there would) be inflation or adjustment of the overnight policy rate (OPR).

 

“The market is pointing towards an adjustment of the OPR towards the second half of this year.”

 

Meanwhile, Cheong Kee Cheok, an adjunct professor at Universiti Malaya, said he agreed with World Bank reports that Malaysia’s economy had reached a crossroads.

 

“It is at a crossroads because it has reached a middle-income level which is high enough to make a jump to the high-income level,” he said. “Malaysia has basically lost the low-cost labour advantages which have gone to countries like China, Vietnam, Indonesia.”

 

To overcome that, Cheong said Malaysia needed to add value to its products.

 

“We need technology to increase the value-add but the question is whether we can make the technological jump to high value-added output,” he said.

 

“One of the key drivers of long-term technology growth is human capital. If you don’t have this fixed, you are not going to anywhere fast,” Cheong added.

 

On the world economy, Michael Lim, a senior fellow at the Asian Public Intellectuals Programme of the Nippon Foundation, said the global economy had “definitely come away from the recession, principally due to the huge monetary and fiscal stimulus pumped in by countries of the world.”