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February 06, 2009 19:45 PM

Malaysia Needs To Spur Domestic Demand Quickly, Says ISIS

By P. Vijian

NEW DELHI, Feb 6 (Bernama) -- Malaysia's toughest economic challenges in the months ahead are how to spur domestic demand and curb unemployment, says the Institute of Strategic and International Studies (ISIS).

"A major problem for Malaysia is the declining export demand and this affects the manufacturing sector. So, how to replace demand in the manufacturing sector, because this decline also affects the unemployment factor," ISIS director-general Dr Mahani Zainal Abidin told Bernama Friday.

The current economic slowdown was unlike the currency crisis that hit the region in 1997 and 1998, she said when speaking at the silver jubilee conference of the Research and Information System for Developing Countries, a leading Indian think-tank.

"This global economic crisis is export-driven. Private investments have dropped and SMEs (small-and medium-scale enterprises) do not have access to loans. The main thing is to ensure people have jobs. When they are employed, they will spend.

"We need to encourage companies to employ people and give more training grants. If we can implement the stimulus package fast and chose the right programmes, maybe we can escape from slipping into recession," she said.

At the conference, the Manila-based Asian Development Bank president Haruhiko Kuroda said some Asian countries have the resilience to weather the global economic meltdown as they have sound fundamentals.

"Asia will have some impact. But most Asian economies are robust, they have sound economic fundamentals and will be able to weather the financial crisis," he said in his keynote address.

He, however, expressed concern the present trade climate could curtail migrant workers' remittances, which many developing countries relied on, and also hinder health, infrastructures and education development programmes, as governments would want to rollback their budgets and plans.

-- BERNAMA

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