Wednesday, February 10, 2010

November 10, 2009 16:59 PM

Malaysia's Economy Needs To Grow At 5.4 Per Cent Per Annum Over The Next 10 Years

KUALA LUMPUR, Nov 10 (Bernama) -- The Economic Planning Unit (EPU) estimates that Malaysia's economy must grow by at least 5.4 per cent annually over the next decade.

"This is to enable it to move into the league of high income advanced economies in 2020," said the Minister in the Prime Minister's Department in charge of the EPU, Tan Sri Nor Mohamed Yakcop Tuesday.

Speaking to the media after attending the EPU's briefing session on the 10th Malaysia Plan (10MP) for captains of industry here, Nor Mohamed said he was very confident that Malaysia can achieve this growth and on time to become a developed country by 2020.

He also expressed confidence that the country can achieve the 5.4 per cent target by 2011, the first year of implementation of the 10MP.

"We estimate a positive growth for the country next year. I am confident we can achieve at least 5.4 per cent the following year," he said.

The government has indicated earlier that the economy is projected to shrink three per cent this year and return to growth of two to three per cent in 2010.

Nor Mohamed said that the 10MP was the yardstick to determine Malaysia's success or failure in achieving the Vision 2020.

"As such, preparations for the 10MP have begun two years earlier than the date of implementation.

"It is also expected to be tabled in Parliament six months earlier, that is on June 10, 2010," he said.

Nor Mohamed said the 10MP period will be used to pilot new structures of private financing initiatives (PFI).

In particular, he stated, the government will establish a facilitation fund as part of the PFI.

He said the purpose of the fund is to provide the tipping point to enable marginally non-viable PFI projects to become viable.

"The projects to be given preference are those that can enhance future national competitiveness, generate new sources of growth, induce a high spillover effect and create sustainable employment opportunities," he highlighted.

However, he declined to comment when asked about the size of the fund.

According to a source, the development expenditure and private investment to be generated by the PFI facilitation fund is RM15 billion under the 10MP.

Nor Mohamed said apart from the 5.4 per cent minimum growth, achieving the high-income status involved a per capita income of about US$15,000 by 2020.

"This requires among others, private investment growth of 10.5 per cent annually or an average of almost RM90 billion of private investment annually.

"This should be achievable as at that level, private investment contributes 9.5 per cent to GDP.

"By comparison, private investment used to contribute 25 per cent of GDP during the years of rapid growth and before the 1998 financial crisis," he added.

Nor Mohamed said that on the journey to become a high-income economy, Malaysia's investment strategy will need to focus on three qualities.

"The country has to continue its emphasis on export oriented investments, leverage on existing comparative advantages and link investments with building domestic capacity," he said.

-- BERNAMA

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