The mid-term review (MTR) of the 12 Malaysia Plan (12MP) discussions should consider Malaysia’s strategic positioning amid regional competition, Bank Islam said.
Chief economist Firdaos Rosli said it is virtually impossible to achieve a high-income nation status while maintaining high growth rates.
“We should not view the MTR in isolation as we cannot afford to ‘rebuild’ a better Malaysia with a blunt tool,” he said in The Twelfth Malaysia Plan (12MP) mid-term review: Malaysian Economic Insight.
Firdaos said judging from Prime Minister Datuk Seri Anwar Ibrahim’s recent statement, the bank foresaw that his administration intended to keep the government’s purse strings as tight as possible amid a global slowdown in 2023.
He said this would become contentious because austerity cannot be the answer to moderating growth.
“We must invest for the future. We anticipate constant politicking from all sides in light of the upcoming by- and state elections, aided by media democratisation.
While his decades-long struggle to assume premiership is finally over, the difficult task has just started,” he said.
The economist said Malaysia’s prosperity today is a result of high investment levels pre-Asian Financial Crisis.
He said the global economy today is unlike what it was in the past, so the country should refrain from romantising its past glories and move forward.
To sustain future growth rates, we should be wary about the declining net exports-to-gross domestic product (GDP) and investments,” he said.
He said the rising income is a factor, so technological upgrading is key to pushing investments higher in the coming years while public investments take a back seat as the economy gets larger.
“We are, however, bullish about Malaysia’s investment prospects amid the ongoing megaprojects,” he said.
He said among the projects were the East Coast Rail Link Project, Pan-Borneo Highway and MRT3 and the ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Firdaos said although foreign direct investment in Malaysia is still healthy, the share of investments relative to Malaysia’s neighbours is steadily declining.
Meanwhile, he said Bank Islam expected Malaysia’s real GDP growth to come in at 8.1 per cent for the financial year of 2022.
“However, we foresee that growth will moderate in the coming years to circa 4.5- 4.7 per cent during the remaining period of 12MP,” he added.
