KUALA LUMPUR, Dec 7 – Putrajaya said today that Malaysia’s economy remains strong amid external challenges, and that it will seek to grow it further by encouraging domestic spending and investment.
Minister Datuk Abdul Rahman Dahlan, who is in charge of the Economic Planning Unit, pointed to several key indicators that showed the strength of the economy, including the country’s gross domestic product (GDP) or economic growth of 4.2 per cent in the first nine months this year.
This figure is comparable to that of Malaysia’s major trading partners who are facing similar external economic challenges and volatilities, he said.
“At present, the Malaysian economy is in a firm position in spite of signs of moderation in the global economic growth for this year and the next,” he minister in the prime minister’s department said in a statement today.
He noted among other things that Malaysia’s unemployment rate at the end of September was at 3.5 per cent, while inflation rate stayed at 2.1 per cent for the January to October period and the federal government is on track to meet its target to trim down its budget deficit to 3.1 per cent to the GDP this year.
Abdul Rahman also said Putrajaya has been proactive in addressing current external challenges to economic growth, noting that Malaysia has diversified its revenue sources – with oil and gas only accounting for 14 per cent of the country’s revenue today as compared to 41 per cent in 2009.
“Malaysia is able to withstand the more challenging external environment as our economic structure is now diversified, where we are no longer over dependent on any commodity, sector or market,” he said.
He said the government will continue to introduce initiatives to further diversify Malaysia’s sources of growth and ensure they remain sustainable to help the country meet next year’s economic growth target of 4.0-5.0 per cent.
“Focus will be given to encourage domestic-oriented growth, especially private consumption and investment,” he said.
To boost spending and increase Malaysians’ disposable income, Putrajaya has introduced short-term strategies such as reducing interest rates to three per cent in July, hiking the minimum wage to RM1,000 in peninsular Malaysia and RM920 in Sabah and Sarawak, giving tax exemption for lifestyle-related expenses and higher cash transfers through the BR1M programme to the targeted low-income group, he said.
Putrajaya is also encouraging the private sector to reduce their exposure to volatile commodity prices by diversifying their investment from upstream to downstream industries in the agriculture and mining sectors.
The government will also give incentives to support manufacturers who seek to increase automation and switch to production of higher-value added products, he said.
“To counter the pressure from the moderation in external demand especially for our commodity exports, focus will be given on increasing high value-add and knowledge-intensive services exports, such as Islamic financial services, oil and gas services, private healthcare, private higher education, halal industries and professional services.
“Overall, our fundamentals are strong. However, given the challenging headwinds, this is the time for all Malaysians to rally together and rise to the challenge to steer the nation forward,” he said.
