Sarawak capable of hitting 2020 GDP target on time

0

SOURCE: DoSM, MIDF Research

SOURCE: DoSM, MIDF Research

KUCHING: While Malaysia could only reach its 2020 gross domestic product (GDP) target by 2022, analysts believe that Sarawak is capable of reaching its 2020 GDP target on time, given its sound economic growth and possible increase in investment flows in the state.

In its economic report, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) noted that Malaysia targeted to reach a real GDP and population of RM1.4 trillion and 32.4 million respectively by 2020.

For Sarawak, based on the 11th Malaysia Plan (11MP), Sarawak is targeted to reach a 4.7 per cent GDP growth by 2020 and so far, based on MIDF Research and the Department of Statistics Malaysia’s (DoSM) reports, the state’s GDP compounded annual growth rate (CAGR) for the past seven years has reached 3.9 per cent.

Based on its current momentum, it pointed out that the GDP per capita for Malaysia is projected to breach RM43,560 by two years after 2020

“If Malaysia wants to reach the GDP per target by 2020, the economy need to expand at a rate of 7.85 to eight per cent annually starting from 2018 till 2020.

“There are three states achieving the 2020-target in between 2020 to 2025. Negeri Sembilan is expected to reach the GDP per capita target by 2023 while Malacca and Sarawak to reach in 2020,” MIDF Research opined.

The research team also highlighted that most of states in Malaysia registered sound economic growth including commodity-based states such as Sabah, Sarawak and Terengganu as the three states expanded by 8.2, 4.7 and 5.9 per cent respectively in 2017.

Investments are also expected to improve especially in petroleum related states such as Sarawak, Sabah, Johor and Terengganu, MIDF Research said.

“According MIDA, for five-consecutive years Johor has been the highest investments recipient since 2013. The average investments approved value during the half decade period is RM23 billion.

“Besides Johor, states like Selangor, Sarawak and Penang are the major investment recipients. For the period of Post-GFC, for every RM1 of investment, 27 cents in Johor, 16 cents in Selangor, 13 cents in Sarawak and 12.5 cents in Penang.

“Looking ahead, we foresee investment flows will improve further especially in petroleum-related states such as Johor, Sarawak, Terengganu and Sabah,” it added.

It also noted that petroleum-driven states such as Terengganu, Sabah and Sarawak registered solid growth of 9.1, 14.9 and 3.4 per cent respectively for each mining & quarrying sector.

Overall, MIDF Research believed that infrastructure-led economic development is expected to spearhead overall economic expansion.

“We opine the construction of railways and highways in Malaysia will drive up economic development and expansion in the long term.

“For instance, East Coast Railway and Pan-Borneo Highway would be catalyst of economic growth especially for states like Kelantan, Terengganu and Pahang while Sabah and Sarawak to benefit from the longest-highway in Malaysia.”

Apart from that, it also highlighted that changes in Malaysia’s economic policies which aim towards reducing poverty and inequality would uplift economic development in most states.

“As guided by the Pakatan Harapan’s manifesto to raise minimum wage to RM1,500, rationalisation of income distribution and tightening labor laws are some of the economic policies proposed by the government in improving income level and household spending power,” it added.