Latest news with #RM384bil
The Star
15 hours ago
- Business
- The Star
Execution key for 13MP growth
KUALA LUMPUR: Economists are generally confident that the government can attain its 13th Malaysia Plan (13MP) goal of sustaining gross domestic product (GDP) between 4.5% and 5.5%, despite cautioning that banana skins lie ahead. At the parliamentary tabling of the 13MP yesterday, Prime Minister Datuk Seri Anwar Ibrahim revealed his administration's growth target up until 2030. The Prime Minister also pointed out the country is estimated to register a GDP growth of 5% on average between 2021 and 2025, the median value of the targeted growth range over the next five years. At the same, he is expecting gross exports to grow by 5.8% annually amid broader trade opportunities, while reducing the government's fiscal deficit to under 3% of GDP, after having lowered it from 5.5% in 2022 to 4.1% as of last year. 'The country's gross national income (GNI) per capita is forecast to increase to RM77,200 and is expected to exceed the threshold of a high income nation,' said Anwar, before commenting that the services, manufacturing, and construction sector remains as the main source of growth contributed by a shift to a value-creation based economy. Inflation is projected to remain stable between 2% and 3% annually. Anwar said Malaysia's economy grew at an average of 5.2% annually from 2021 to 2024, outpacing the global economic trend during the same period. The prime minister observed that the overall approved investments between 2021 to 2024 had achieved RM1.29 trillion, increasing at a rate of 23.1% each year. The total approved investments last year was the highest in history at RM384bil. Meanwhile, an economics research analyst from a foreign research house calls the GDP growth target 'realistic but ambitious', given both domestic strengths and external headwinds. 'The plan builds on a strong base, judging from Malaysia's economic performance over the past five years, despite global economic moderation. 'The continued focus on private-sector-led demand, high-value sectors, and digital transformation, particularly artificial intelligence (AI) adoption, reflects a deliberate strategy to deepen economic complexity and productivity—both crucial for sustaining mid-to-high growth,' he told StarBiz. On the other hand, he commented that achieving growth towards the upper end of the target would depend heavily on a number of factors, including private sector buy-in, in the context of the projected RM61bil in public-private partnership (PPP) participation. Anwar had estimated in his speech that an investment value of RM611bil is necessary to ensure the success of 13MP, as he called for a share of RM61bil from the private sector. On top of that, the analyst said global trade environment, political and policy stability, as well as effective execution of public investment plans including the RM430bil allocated for development spending, will also be strong influencing factors. Economist Geoffrey Williams concurred that the growth target is ambitious, as it was only days ago that Bank Negara downgraded its own 2025 GDP growth projection to between 4% and 4.8%. 'The underlying growth potential is more like 4% to 5%. However, there is no special concern about inflation in Malaysia, and recent price pressures were due to external factors. At present, inflation is steady and should continue to be stable,' he opined. Anwar said the government's commitment to fiscal consolidation is reflected in the reduction of new debt to RM76.8bil in 2024, down from RM99.4bil in 2022. 'The framework of the 13MP aims to restructure the economy, and no longer depend only on producing basic products like agriculture, industrial and services. Economic engagement needs to be rejuvenated by a shift to value creation in all sectors,' he added. Furthermore, he noted that fiscal reformation will be continued to ensure financial assistance will be channelled to the needy groups, even as the government continues to prioritise cost efficiency and value-for-money in all public infrastructure projects to optimise returns to the rakyat. On the government's other major objective of raising GNI per capita, the analyst from the foreign research firm sees clear challenges in accomplishing the goal while keeping inflation in check to within 2% and 3%. 'The first challenge is wage growth versus productivity. To sustainably raise GNI, Malaysia needs not just higher wages, but higher productivity per worker —especially in the services sector, which remains fragmented and uneven in quality. 'If wage hikes outpace productivity, it could fuel inflation,' he said. Secondly, he reckoned that food and energy security remain structural weak spots, as supply-side disruptions or fuel subsidy rollbacks could reignite inflation, affecting real income gains. The analyst said: 'While headline inflation is currently low, being 1.1% in June 2025, that may not reflect actual cost-of-living pressures in housing, transport, and food.' Additionally, he explained that human capital and skills mismatch could limit the country's ability to transition to high-value sectors, because without targeted upskilling or industry-academia alignment, GNI growth could stall, and structural unemployment risks may rise. To counter these possibilities, he suggested Putrajaya could double down on upskilling programmes linked to high-growth sectors such as semiconductors and AI, and maintain subsidy rationalisation with a social safety net to prevent inflation shocks from disproportionately hitting the B40 and M40 'Moreover, the Madani administration could also promote research and development incentives and innovation funding to spur productivity-led growth, not just capital accumulation,' he said. Separately, Anwar said the government is also targeting a contribution of 50% to GDP for micro, small and medium enterprises (MSMEs) by 2030, underpinned by the creation of a more progressive MSME ecosystem. This will include the scaling up of MSMEs by the support and active involvement of government-linked companies, through capacity development programmes, digitalisation and operation improvement. 'Among the initiatives that have been put into place in line with this objective are the Strategic Co-Investment Fund, the strengthening of working capital SME Capacity and Capability Enhancement Scheme,' he said.
The Star
6 days ago
- Business
- The Star
The RM2.5bil giveaway that Malaysia cannot afford
When Prime Minister Datuk Seri Anwar Ibrahim delivered his 'Penghargaan Untuk Rakyat' speech on 23 July 2025, he painted a confident picture of Malaysia's economic trajectory. Growth stood at 4.4% for the first quarter of 2025 with expectations of 4.5% in the second. The ringgit had strengthened against the US dollar, climbing to RM4.23/USD. Malaysia rose by 11 spots to 23rd place in the World Competitiveness Index and total approved investments reached a record RM384bil last year. However, beyond the headline figures lies a more complex and fragile reality. Analysts have pointed out that Q1 growth underperformed market expectations. Exports remain uneven. Domestic consumption is cooling and Bank Negara's recent rate cut reflects the underlying weakness that persists despite upbeat official messaging.
