Tuesday, March 23, 2010

GDP May Rise More Than 5pc

Malaysia’s Prime Minister Najib Razak said the economy may expand more than 5 per cent this year as the country recovers from last year’s recession.

“I’m on record to say I am looking at 5 per cent and beyond,” Najib told reporters in Hong Kong.

“But that’s a general kind of goal for the government.” Najib said last week Southeast Asia’s third-largest economy can expand as much as 6 per cent in 2010. The country’s central bank will release its official economic forecast in Kuala Lumpur tomorrow.

The economy may expand 5.5 per cent this year after shrinking 1.7 per cent in 2009, according to the median estimate of seven economists surveyed by Bloomberg News. The government said in October that gross domestic product would expand 2 per cent to 3 per cent in 2010.

Najib, who boosted government spending and eased investment rules last year to revive growth, is scheduled to announce a long-term plan for the economy next week. Central bank Governor Zeti Akhtar Aziz raised interest rates for the first time in almost four years on March 4, joining nations from Australia to India in withdrawing monetary stimulus as Asia leads a recovery from the global slump.

The government is also considering whether to issue a global bond after fund managers indicated such a security would be “viewed very favorably,” Najib said today. -- Bloomberg

Higher FDI This Year On Reforms
HONG KONG, March 23 — Malaysia should see increased foreign direct investment (FDI) this year after the government implements administrative reforms, Prime Minister Datuk Seri Najib Razak said.

The country’s new economic model, to be announced later this month, would include unspecified administrative reforms that should result in a “marked improvement” in FDI, Najib (picture) told an investment forum in Hong Kong today.

Malaysia has been considering proposals to end its subsidy regime and phase in a new goods and services tax as it begins dismantling a four-decade race-based economic system that has deterred foreign investment.

Najib also reiterated an earlier statement that Malaysia’s GDP growth should hit 5 per cent or more this year. The country’s economy shrank by 1.7 per cent last year.

The economic regime adopted after race riots in 1969 has given an array of economic benefits to the ethnic Malay population, which makes up 55 per cent of the total, but investors complain it has led to a patronage-ridden economy that has resulted in foreign investment increasingly moving to Indonesia and Thailand.

Najib is scheduled to unveil initial details of a new economic model to boost growth and win back foreign investment at the annual “Invest Malaysia” conference organised by Bursa Malaysia on March 30.

Earlier this month, the government backed off from an economic reform plan, including the introduction of a goods and services tax, just weeks after it halted implementation of petrol price increases aimed at cutting its subsidy bill, and electricity price rises.

In all three cases it cited the need to “engage with the public”, a message that may derail Malaysia’s bid to reverse investment outflows and tackle a budget deficit that has overshot its targets since 2007 to hit a more than 20-year high of 7.4 per cent of gross domestic product in 2009. — Reuters

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