KUALA LUMPUR (Sept 1): Malaysia remains attractive for infrastructure investment among Asean countries, despite structural issues weighing on its economic growth in recent years, says the Hong Kong and Shanghai Banking Corp Ltd.

"Although we have a cautious view of growth in Malaysia, given its structural issues, it is still an attractive destination in terms of attracting long-term infrastructure investment," HSBC economist Joseph Incalcaterra told a teleconference with reporters today.

Incalcaterra said Malaysia is also one of the very few high middle income economies, with strong demographic profile in the region.

Malaysia will have good prospects in terms of usage of the infrastructure and in the area of urbanisation, he said.

The HSBC economist said Malaysia has a matured capital market that is able to provide ample liquidity into the infrastructure space, making the country stand out from the rest in the region.

"That is why we see significant funding coming from the capital market," he said.

Incalcaterra shared that the structural issues he refers to, include the country's dependence on the commodities.

With the oil price at subdued levels, this will hurt the government's ability to spend to spur the economy.

"Malaysia is also sensitive to commodity prices, which have weighed down the economic growth in recent years," he said, adding that diversification is needed for the economy.

He noted that Asean has a funding gap of US$1.3 trillion through 2030, the largest being in Indonesia and the Philippines.

For Malaysia, the current spending plans for infrastructure amount to US$67 billion, and the total requirements through 2030 is US$109 billion. There is a gap of US$42 billion.