PETALING JAYA: Malaysia’s gross domestic product is expected to rebound by 6% this year before stabilising to about 5.7% in 2022, according to the Asian Development Bank (ADB).
This estimate shaves off 0.5% from the 6.5% it had projected for 2021 in September 2020.
In its latest report released today – the Asian Development Outlook 2021 April edition – it said Malaysia’s economy was expected to recover well in 2021, buoyed by Covid-19 vaccination efforts and an improved external demand around the world.
Malaysia recorded a 5.6% contraction in 2020 as the economy was rocked by movement restrictions implemented to stem the transmission of Covid-19.
As a whole, Malaysia’s rebound is expected to outpace the regional average, as Southeast Asia is expected to experience a slightly slower growth of 4.4% compared with the rest of developing Asia.
The ADB also noted that the government’s fiscal recovery efforts, such as wage subsidies, cash stimulus and tax relief, should result in increased spending and private consumption. However, it noted, this would be influenced by the overall labour market situation.
It said a major policy challenge the country was likely to face would be in upgrading small- and medium-sized enterprises (SME), which make up 98.5% of businesses.
The ADB said despite efforts such as the Industry4WRD plan launched by the government in 2018 to improve the adoption of digital technologies among SME manufacturers, take-up had been relatively low.
It cited international trade and industry ministry statistics showing that just 849 businesses had applied for the programme in 2019, and an SME Association of Malaysia survey that found three-quarters of SMEs had not yet taken any action to digitise their processes that same year.
“Identifying and addressing the constraints preventing SMEs from fully harnessing digital technologies is a key policy challenge. It is important to realise that upgrading takes time and hence a long-term strategic focus is needed.
“As consumer behaviour changes and competition rises once the Covid-19 pandemic is over, businesses need to evolve and aim for the entire business process transformation itself, including training and upskilling workers to improve their technical competencies,” the report said.
Further, the government has been urged to encourage collaboration between SMEs and promote public-private partnerships to help smaller companies make the necessary technological upgrades.
Source: https://www.freemalaysiatoday.com/category/nation/2021/04/28/asian-development-bank-projects-6-growth-for-malaysia-this-year/