News Room - Business/Economics

Posted on 01 Jul 2010

6% GDP growth achievable, says PM (Malaysia)

Prime Minister Datuk Seri Najib Tun Razak is optimistic that Malaysia’s target of 6% gross domestic product (GDP) growth this year is achievable.

 

He said the nation started the year with a strong economic recovery which was set to continue throughout 2010 following the Government’s various initiatives.

 

“Our position in the Global Competitiveness Index rose to 10th from 18th a year earlier and now The Report: Malaysia 2010 forecasts a high growth number of at least 6%.

 

“This is an exciting time for all Malaysians and with initiatives under the Government Transformation Programme and the New Economic Model, we are in for a sustainable and robust economic growth.

 

“Achieving real GDP growth of 6% per annum is an ambitious yet achievable target,” he said when launching The Report: Malaysia 2010 here yesterday.

 

The report, which is the fifth edition, is a business guide published by Oxford Business Group that provides a comprehensive overview of all sectors of Malaysia’s economy, highlighting the key opportunities for domestic and international investors and its transformation into a high-income economy.

 

The report contains in-depth, up-to-date analysis of the Government’s plan to persuade investors to target advanced technology industry rather than low-cost sectors and assume the role of facilitator rather than provider of economic change with the private sector taking centre stage as the principle catalyst for economic activities.

 

Oxford Business Group regional editor Paulius Kuncinas said Malaysia needed to focus on its core strength such as Islamic finance, halal food sector, downstream oil palm and alternative fuel like biofuel.

 

“Many countries are competing in the same areas. It is important to differentiate and not compete in the lower skills sector,” he told a press conference after the launch of The Report.

 

Going forward, Kuncinas said, the catalyst for growth for Malaysia would be research and innovation. He said setting up of labs alone was insufficient but there was a need to create a whole supply chain by linking universities and private firms.

 

“The main challenge ahead will be to encourage the private sector and financial institutions to be more involved in helping to start up companies to commercialise their projects,” Kuncinas said.

 

Earlier, in his speech, Kuncinas said the global credit crisis served as a reminder to Malaysian industry leaders that they could not rely exclusively on export markets for growth.

 

Malaysia’s resilience in the face of the credit crunch improved significantly its investment profile placing it amongst the fastest growth countries, he said.

 

“The main lessons that companies and policy makers can draw from the crisis is that balance sheet strength is essential in a synchronised cyclical downturn.

 

“The second key lesson is that financial sector liquidity should not be taken for granted — it is one of the main assets that served Malaysia well thought the crisis,” Kuncinas said.

 

Meanwhile, Association of Banks in Malaysia chairman Datuk Seri Abdul Wahid Omar, who was at the press conference, said he expected the GDP to grow 7.5% this year on the back of recovery in certain sectors like manufacturing as well as the improvement in services.

 

“The momentum of growth in the first quarter would be enough to carry through (growth) for the rest of the year, and the banking sector will also continue to lend, meaning economic activities will continue,” he said.

 

However, Wahid said, next year would be more challenging as a cut was expected in the Government’s expenditure in order to reduce the budget deficit.

 

“With that, there is a need for private sector to step in and we reckon that growth for 2011 will be lower at around 6%,” he said.

 

However, he said, the country could still achieve the growth target of 6% per annum in the long run to reach the high-income economy status by 2020.

 

Wahid, who is also Malayan Banking Bhd president and CEO, said the bank would play its part in terms of funding and seeding growth towards meeting the goals of the 10th Malaysia Plan and New Economic Model.