Malaysian economy one of the most resilient in the region

by **Cals** Tue 26 Nov 2013, 18:21

Business & Markets 2013

Written by Bernama

Tuesday, 26 November 2013 17:06

KUALA LUMPUR (Nov 26): The Malaysian economy is one of the most resilient in the region with domestic demand the primary growth driver amid strong government spending.
Head of Investment Strategy and Chief Economist at AMP Capital, Shane Oliver, said this would ensure that its economy would continue to be one of the most vibrant in the region.
"I’d rate Malaysia very highly. Although there are great opportunities in Indonesia and Thailand, Malaysia will always stand out in terms of a country that sort of got its act together and seems to be broadly united behind developing the place," he told ABC News in an interview recently.
Oliver said a favourable investment environment has underpinned the economy’s solid expansion.
"One thing you notice about Malaysia is the determination to succeed and we’ve seen this for 20 years now.
"You can debate the politics and all that stuff as Westerners typically do but the bottomline is that the Malaysian government does seem to have done a pretty good job attracting investments and making the environment attractive for companies to come in and sustain growth," said Oliver.
He said Malaysia’s economy was pretty strong with growth coming around 4.5 per cent this year.
Oliver said household credit bubble doesn’t seen to pose a major risk.
"My feeling is if the debt continues to go up at the pace it had then yes that would be a concern.
"We are starting from a relatively low base and I think we probably have a long way to go before we get overly concerned about household debt in Malaysia," he said.
On Goods and Services Tax (GST), Oliver said: "I think there’s a good chance it will get through. The government is heading towards this direction because a GST, even though it’s not as broad as economists might like it, it’s still a good tax in terms of bringing in the revenue but not causing the economic distortions like personal income tax and corporate tax do."
The GST would replace the current complicated system of various sales and services taxes and its chief benefits being more efficient and broadening the tax base hoping to offset declining oil revenues, he said.
Meanwhile, an economist with Credit Suisse in Singapore, Santitarn Sathirathai, said in ensuring the country's growth, Prime Minister Datuk Seri Najib Tun Razak must still overcome significant political opposition.
"A lot of this rebalancing would involve a politically and popular measures.
"To give the government some credit, the recent Budget announcement was viewed by many economists as a good one.
"The six per cent GST would be implemented in 2015 and there were moves to to further reduce oil subsidies," he said.