logo
Maybank IB: Malaysia's economy to stay resilient in 2H25

Maybank IB: Malaysia's economy to stay resilient in 2H25

KUALA LUMPUR: Malaysia's economy is expected to remain resilient in the second half of 2025 (2H25), driven by domestic fundamentals, easing monetary policy and targeted reforms amid persistent external headwinds, said Maybank Investment Bank (Maybank IB).
Its chief economist Suhaimi Ilias said Malaysia is on track to achieve a lower budget deficit of 3.8 per cent of gross domestic product this year, following a better-than-expected 4.1 per cent in 2024 compared to the official target of 4.3 per cent.
"The numbers so far are encouraging. Obviously, after things like the Sales and Service Tax measures effective July 1, I guess eyes are on these targeted RON95 petrol subsidy rationalisation," he said during the virtual media briefing on the 2H25 market outlook.
On equities, Maybank IB has retained its FBM KLCI year-end target at 1,660, anchored by improving forward earnings and several key investment themes.
Its head of equity research Lim Sue Lin said five core themes continue to drive the bank's strategy on external disruption, domestic consumption, state-driven development, investment realisation, and corporate restructuring.
"As for the top stock picks, it includes Tenaga Nasional Bhd, YTL Power International Bhd, Gamuda Bhd, Public Bank Bhd, KPJ Healthcare, Farm Fresh Bhd and Solarvest Holdings Bhd, with YTL Power and Gamuda being the leading data centre plays," she said.
She added that although the broader market remained range-bound due to a lack of immediate catalysts, rising activity in infrastructure, renewable energy, and data centres had strengthened the firm's conviction in those segments.
"Maybank IB maintained a 'Neutral' stance on banks due to margin compression and slower loan growth expectations following the latest Overnight Policy Rate cut.
"Still, we forecast FBM KLCI earnings to grow 2.5 per cent in 2025 and 7.7 per cent in 2026, with a rebound anticipated in the banking sector next year," Lim added.
Meanwhile, Maybank IB head of FX research Saktiandi Supaat said the ringgit may strengthen slightly to 4.10 against the US dollar by end-2025.
"Local currency has been one of Asean top performers so far this year, appreciating by about 5.25 per cent year-to-date. Our view is that the ringgit is around its fair value. We also project the dollar-ringgit to strengthen towards 4.10 by the end of this year and move closer to 4.00 by mid-2026," said Saktiandi.
Looking ahead, the bank flagged several key upcoming policy milestones which the 13th Malaysia Plan mid-term review on July 31, the launch of the National Investment Incentive Framework, the unveiling of the Johor-Singapore Special Economic Zone (JS-SEZ) blueprint, and Budget 2026, which is expected to be tabled on October 10.
Despite the external uncertainties, Maybank IB remained cautiously optimistic about Malaysia's outlook for 2H25, citing continued reform momentum and a relatively resilient domestic backdrop.
"Of course, we need to keep monitoring the global situation, especially with the tariff uncertainties in the US. The risk is if this escalates further, we may see more volatility in global trade flows again.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Ringgit Ends Lower Vs Greenback Following BNM's GDP Forecast Revision
Ringgit Ends Lower Vs Greenback Following BNM's GDP Forecast Revision

Barnama

time2 hours ago

  • Barnama

Ringgit Ends Lower Vs Greenback Following BNM's GDP Forecast Revision

WORLD By Durratul Ain Ahmad Fuad KUALA LUMPUR, July 28 (Bernama) -- The ringgit ended easier against the US dollar today, as traders' sentiment was affected by Bank Negara Malaysia's (BNM) gross domestic product (GDP) revision for the year. At 6 pm, the local note slid to 4.2275/2345 versus the greenback from last Friday's close of 4.2195/2245. The central bank has revised Malaysia's 2025 GDP growth to 4.0-4.8 per cent from 4.5-5.5 per cent previously, and similarly, the inflation rate for 2025 is projected to range between 1.5 per cent and 2.3 per cent from the previous forecast of 2.0-3.5 per cent. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the BNM is being pragmatic by adjusting the growth forecast lower, taking into account external risks. At the same time, a lower inflation forecast suggests that the impact from the anticipated RON95 subsidies rationalisation is likely to be manageable. 'As such, we foresee this will be positive for the ringgit in the mid- to long-term as fiscal consolidation will continue to take place, resulting in more fiscal space which can be redirected into targeted assistance as well as higher development expenditure (DE). 'This Thursday, the government will announce the 13th Malaysia Plan, and we foresee a higher allocation for DE in the next five years to drive the Malaysian economy into high-income status,' he said to Bernama. Meanwhile, he noted that the US Dollar Index (DXY) has strengthened, buoyed by optimism over the upcoming US-China trade talks.

Sarawak Timber Association calls on federal govt to re-introduce GST
Sarawak Timber Association calls on federal govt to re-introduce GST

New Straits Times

time2 hours ago

  • New Straits Times

Sarawak Timber Association calls on federal govt to re-introduce GST

KUCHING: Sarawak Timber Association (STA) has called on the federal government to re-introduce the Goods and Services Tax (GST), saying businesses in Sarawak generally welcomed it compared with the Sales and Service Tax (SST). STA chief executive officer Annie Ting said most businesses already had GST-ready accounting systems and their personnel were also familiar with compliance procedures in the previous implementation from April 2015 to August 2018. "Hence a reintroduction of GST may not require a long preparation of 18 months like when it was introduced in 2015," she said in a statement today. Ting reckoned that a short six-month period would suffice for its smooth re-implementation. She added that as previously experienced, GST could bring in higher and stable revenue for the government, which were crucial for economic stability and development funding. She said that it was generally felt that GST could be introduced at a low rate, say three per cent, instead of six, to mitigate price increase which may be one-off and inflation. Ting said targeted subsidies to B40 households, such as direct cash aid, could be dispatched to offset their burden on price hikes, adding that basic groceries and essential services such as education and healthcare service might be exempted from the tax. Ting said the expanded SST, which coincided with Phase 3 of the e-invoice rollout, had left businesses scrambling to adapt to new compliance requirements on a tight deadline. "While consumers may receive temporary relief, businesses face a permanent increase in complexity and cost," she said, adding that the cascading tax effect inherent in the SST system remained, where taxes had accumulated through the supply chain, ultimately raising the cost of doing business. "For industries like timber, the reclassification of previously exempt goods such as sawn timber and plywood into the five or 10 per cent sales tax bracket presents a significant challenge. "This situation is further complicated by the intricate sales tax exemption mechanisms for raw materials, which create compliance burdens for manufacturers producing both taxable and non-taxable goods. "These industry-specific issues highlight a disconnect between broad fiscal policies and the granular realities of business operations," she said. She said Malaysia's fiscal health required a stable revenue stream and GST was the best option for long-term economic resilience despite issues such as slow refunds. "Any effort to strengthen the country's fiscal position, including through the SST, must be built on transparency and accountability. "Without addressing crucial points such as leakages and weak governance, even the most well-designed tax measures will struggle to achieve their goals," she said. She said the federal government, rather than simply introducing new taxes or expanding the scope of the SST, its focus should be on restoring public trust and ensuring the responsible use of public funds. "A fair and effective tax system can only succeed when revenue is managed holistically and with integrity," Ting said.

Full house at PKNPk's 'Special Coffee Series' in Perak
Full house at PKNPk's 'Special Coffee Series' in Perak

New Straits Times

time2 hours ago

  • New Straits Times

Full house at PKNPk's 'Special Coffee Series' in Perak

KUALA LUMPUR: Perbadanan Kemajuan Negeri Perak (PKNPk) has drawn a full house with the 16th edition of its Special Coffee Series forum today. This underscores strong interest from businesses in understanding the expanded scope of the Sales and Service Tax (SST), it said. PKNPk said the forum provided an informal yet high-impact platform for direct engagement with officials. This allows participants to raise questions and gain guidance on issues such as sector-based exemptions, transitional arrangements and updated registration processes. PKNPk chief executive Datuk Redza Rafiq Abdul Razak said the session aims to go beyond tax compliance by encouraging clear, informed decision-making and building business resilience. "We don't want policies to exist in silos, detached from the realities on the ground. This is not just about tax compliance, but it's about helping businesses operate with clarity, make informed decisions and remain competitive," he said in a statement. Redza added that the initiative reflects PKNPk's role as a proactive enabler and connector between government institutions and the private sector. Held at Hotel Casuarina @ Meru, the session attracted nearly 300 participants, including entrepreneurs, manufacturers and industry players from across Perak. The event was co-organised with the Royal Malaysian Customs Department (Perak) and the Federation of Malaysian Manufacturers (Perak). The Special Coffee Series has become one of Perak's most trusted platforms for industry-government dialogue, with six sessions held in 2025 alone. It is part of the Perak Sejahtera 2030 plan under the investor-friendly programme, aimed at promoting transparency and a business-friendly policy environment. Participants responded positively to the open dialogue, with many appreciating the practical, real-time feedback, a shift from conventional, bureaucratic sessions. "In a fast-moving world, communication between government and industry needs to be faster, more open and more responsive. That's the very purpose of this series.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store