KUALA LUMPUR (March 20): Malaysia has a “window of opportunity” to undertake the necessary structural reforms on the back of steady economic growth projections, coupled with moderating and stable inflationary pressures, said Bank Negara Malaysia governor Datuk Shaik Abdul Rasheed Abdul Ghaffour.

These include ongoing and proposed fiscal reforms, development of future-ready workforce through labour market reforms and the strengthening of social protection programmes in the country.

The central bank has also called for the expediting of numerous industry master plans launched by the government last year as a means to support economic growth.

Fiscal reform measures such as the expansion of subsidy rationalisation have already been incorporated in the central bank’s projections on Malaysia’s GDP growth and inflation trend, he added.

“However, these reforms will entail short term costs, must be strategically sequenced, and supplemented by targeted assistance,” Abdul Rasheed said at a press conference on Wednesday in conjunction with the release of the BNM Annual Report 2023.

“Reform is always painful, but it is equally important, and there’s never the best time.

“Why we said this time there is a good window of opportunity, is [due to] two reasons. You see the projection of growth of 4-5%, that is a very reasonably good level. Secondly, inflation is also moderating, and it is stable,” he said.

Among the master plans announced by the government in 2023 include the New Industrial Master Plan (NIMP) to transform key sectors such as manufacturing, and the National Energy Transition Roadmap (NETR) to uplift the nation’s renewable energy sector as a growth engine.

Ongoing reforms to address the country's fiscal position include the roll-out of targeted fuel subsidies, on the heels of utility tariff adjustments since last year. However, details of the mechanism have yet to be revealed, aside from ongoing efforts to improve granular data collection through the launch of central database hub Padu.

Malaysia’s GDP growth forecast of 4-5% in 2024 compares with 3.7% growth in 2023, with upside risks stemming from the tech sector upcycle spillover, improved tourism numbers and project roll-outs.

Inflation, after incorporating the targeted subsidy roll-out, is forecast at 2-3.5% by the central bank for the year, from 2.5% in 2023.

Don't miss the other highlights of the BNM Annual Report 2023. Read the articles here.