PETALING JAYA: Business groups have called for increased measures to stimulate the country’s economic growth after Bank Negara Malaysia (BNM) announced last week that the Malaysian economy grew by 3.7% last year, missing the government’s 4% forecast.
The 2023 growth rate also constituted a sharp drop from the 22-year high of 8.7% recorded for the preceding year. In a statement the finance ministry said the government was still confident of the country achieving GDP growth of 4-5% this year.
Speaking to FMT, Small and Medium Enterprises Association of Malaysia (Samenta) president William Ng suggested that the government lower the overnight policy rate (OPR) by between 25 and 50 basis points to stimulate business growth.
He said lowering the OPR would reduce repayments for existing loans and make new loans cheaper to obtain, which would in turn encourage businesses to expand.
“Given the current uncertain global demand, it takes a very brave business owner to want to spend substantially on expansion,” he said.
The central bank maintained the OPR at 3% last month, saying its monetary policy stance “remains supportive of the economy” and is consistent with its current assessment of inflation and growth prospects.
BNM last raised the OPR in May last year from 2.75% to 3%, citing the need to “normalise monetary accommodation” in the face of a resilient economy and manage persistent inflation.
The central bank had slashed the OPR to its lowest ever rate of 1.75% in July 2020, at the height of the Covid-19 pandemic. BNM subsequently hiked the OPR by a cumulative total of 125 basis points between May 2022 and May 2023.
Meanwhile, SME Association Malaysia secretary-general Chin Chee Seong remains optimistic that Malaysia’s economy is heading in the right direction despite last week’s GDP announcement, citing improvements in the political landscape.
However, he said the government would need to initiate more large-scale projects and implement a robust action plan to boost the country’s reserves.
Chin hopes to see the introduction of more public sector initiatives to assist businesses, particularly SMEs, in lowering their operational costs.
He added that the government’s decision to introduce visa-free entry to Chinese and Indian citizens would boost the tourism sector and hasten a return to economic conditions seen prior to the Covid-19 pandemic.
Angus Ng of the Malaysia SME Sustainable Entrepreneurship Organisation also stressed the importance of tourism to spur the economy, adding that state agencies must play a bigger role in attracting tourists by promoting local destinations.
“Tourism is a catalyst industry. If the states don’t do anything about it, then the federal government might not put money in it,” he told FMT.
Earlier this month, Tourism Malaysia said it was confident the more liberal visa scheme and increased promotion of tourism abroad will help the country achieve its target of 27.3 million foreign tourist arrivals this year.
In a Bernama report, Tourism Malaysia director-general Ammar Ghapar said the country attracted more than 20 million foreign tourists last year, surpassing its target of 19.1 million tourist arrivals.
Source: https://www.freemalaysiatoday.com/category/highlight/2024/02/22/do-more-to-stimulate-economy-business-groups-tell-govt/