KUALA LUMPUR: Malaysia’s gross domestic product (GDP) growth is likely to shift upwards to 5.2 per cent in the first quarter of 2019 (Q1 2019), once the new government’s policies and direction become clearer by year-end, says an economist.
Professor Mahendhiran Nair, Vice-President of Research and Development of Monash University Malaysia, said with the clearer policies expected under the 2019 Budget to be tabled on Nov 2, coupled with the mid-term review of the 11th Malaysia Plan slated to be tabled in mid-October, these measures would be able to help drive the country’s GDP to between five and 5.2 per cent by Q1 next year.
“However, this is provided that there is no full-scale trade war erupting in the global arena,” he told Bernama on the sidelines of the launch of the Malaysian Business Sentiment Survey 2018/2019.
The survey was conducted by Monash University Malaysia in collaboration with Certified Practising Accountants (CPA) Australia and Global Asia in the 21st Century Research Platform from January to July this year.
Commenting on Bank Negara Malaysia’s downward revision of the country’s 2018 GDP forecast to five per cent recently, Mahendhiran, who is also the Chief Executive Officer of Monash Malaysia Research and Development Sdn Bhd, said this was mainly influenced by the uncertainty in the global environment, especially fears of a full-fledged trade war between the United States and China.
“However, I believe that as long as the government continues to provide the right incentives for firms to move up their value chain, introduce more business-friendly policies, build more technological infrastructure, and open up the government-to-government (G2G) regional market opportunities within ASEAN, with China or India, these moves would improve the businesses and investors’ confidence, and subsequently, accelerate the GDP growth,” he added.
Echoing Mahendhiran’s views, Deputy Head of School and Director of Research at Monash University Malaysia, Professor Pervaiz Ahmed, said the government’s focus on fighting corruption was also playing an important role in creating a strong confidence among businesses.
“From the investors’ point of view, they want to have an open and transparent system, and what the government is doing now is to put in place all that and create some level of transparency, which will give so much stronger faith for the companies to invest in Malaysia,” he said.
On the business impact from the implementation of the minimum wage that would be done in stages, Mahendhiran opined that adopting technology was the most effective strategy to cope with the increasing cost of doing business.
“Based on the experience from developed countries, companies in those countries embraced technology to reduce their cost of doing business when the minimum wage was increased.
“From our Business Sentiment Survey 2018/2019 too, it also showed that investing in technology is the future strategy to drive cost efficiency in doing business,” he said.
The survey showed that the biggest concern among the local businesses was the increasing cost of doing business as it would have an impact on their bottom lines.
“The second major issue is the weakening of the ringgit, which will severely impact firms that are dependent on imported goods for their production process,” it said.
Despite the concerns on growth, the survey, which covered 416 large, medium and small companies in Malaysia, revealed that 71 per cent of the respondents remained confident in their business prospects over the next 12 months.
“This optimism is partly due to the increased infrastructure investment, particularly in the information and communications technology-related infrastructure, along with the greater adoption of Industry 4.0 technologies,” it added. — Bernama