KUALA LUMPUR (Nov 17): Following the release of Malaysia's third quarter (3Q) economic growth data that sets Malaysia on path to reach its 4% economic growth forecast for the year, Putrajaya has expressed its commitment to further implement the economic reforms mapped out in its recently launched key policy documents, with a focus on improving ease of doing business and promoting quality investments to generate higher-income jobs, that will bolster Malaysia's fundamentals.
The government will also ensure good governance while investing in better public services and infrastructure to improve the rakyat's quality of life, the Ministry of Finance said in a statement on Friday.
The policy documents it cited were the Ekonomi Madani framework, the National Energy Transition Roadmap, the New Industrial Master Plan 2030, and the 12th Malaysia Mid-Term Review.
“Belanjawan 2024 [Budget 2024] will effectively translate the Madani Government’s fiscal and economic reforms into reality, with more measures introduced to realise the vision set forth in the Ekonomi Madani. While the government will continue to taper the fiscal deficit from 5% in 2023 to 4.3% in 2024, it remains steadfast with a expansionary fiscal policy stance to support Malaysia’s economic growth and ease the rakyat’s cost-of-living burden,” said Prime Minister Datuk Seri Anwar Ibrahim.
Anwar, who is also the finance minister, noted that the country achieved a "steady performance" in 3Q, as domestic demand rose 4.8% to anchor the country's growth — with a resilient labour market and an improving tourism sector lending further support.
“The dynamic domestic demand reflects the Madani government’s ongoing efforts to restore the vibrancy of the Malaysian economy. The early stages of fiscal reforms undertaken by the government have already generated savings and higher revenue that are being redistributed to the rakyat directly or indirectly,” Anwar said.
The latest quarterly growth also "sets a strong signal for a positive trajectory for Malaysia to achieve economic resilience and support the restructuring of the economy envisaged under Ekonomi Madani", he said.
The growth also came amid weak and volatile global conditions, as geopolitical tensions set a domino effect following a protracted disruption in the global supply chains and elevated global interest rates, which culminated in a slump in external demand and exposed Malaysia's economy to downside risks that could linger for the medium term.
"Efforts to rein in these downside risks come from the government’s ongoing initiatives to rope in high-value foreign direct investments [FDI]. In 3Q2023, net FDI more than doubled from the preceding quarter to RM7.2 billion (2Q2023: RM3.1 billion). The financial and insurance/takaful activities; information and communication as well as wholesale and retail trade sectors attracted the most FDI, primarily from Hong Kong, China, the UK, Singapore and Japan.
"Going forward, more efforts will be mobilised to attract FDI in the high-value manufacturing sector, particularly for electrical and electronics [E&E], petrochemicals and renewable energy," the statement added.
In the meantime, the ministry expects the domestic market to continue to improve, with the onset of a recovery in the E&E industry envisaged to provide some reprieve to the export market in 4Q2023.