12.8 Per Cent Private Investment Growth Under 10MP Is Ambitious, Says Economist

11 June 2010 , By Bernama

A 12.8 per cent average growth in private investments as envisaged in the 10th Malaysia Plan over the next five years is ambitious as private investments only averaged two per cent between 2006 and 2010, says an economist.

Gundy Cahyadi from OCBC Limited based in Singapore, said confidence level in the local corporate sector seemed to have remained low over the past five years.

"Even with increasing commodity earnings in 2006 and 2007, many companies still preferred to invest overseas.

"If the government can succeed in bringing in more foreign investors and work well with them, domestic investments will definitely tag along," he told Bernama via e-mail when asked to comment on proposals in the 10th Malaysia plan, envisaging private investments to grow 12.8 per cent per annum and contribute 13.9 per cent to national gross domestic product in 2015.

Prime Minister Datuk Seri Najib Tun Razak tabled the five-year plan in the Dewan Rakyat Thursday.

On sustained focus to develop economic clusters such as Iskandar Malaysia in Johor, Cahyadi the federal government needs to improve coordination with local authorities to provide the best infrastructures available.

He said the proposed six per cent growth rate between 2011 and 2015 was achievable but more work needed to be done.

"Private investment growth is essential to sustain growth in coming years, as the government cannot sustain its high spending," he said.

Cahyadi also said for fiscal consolidation to take place, investors want to see a faster move towards a balanced budget.

"As a portfolio fund destination, Malaysia may get negatively affected if the budget deficit is to be sustained in coming years.

"We are now in a period of fiscal debt sustainability and fiscal management is in global scrutiny.

"If the rest of the emerging markets in Asia are moving fast towards fiscal consolidation, Malaysia needs to play catch-up or else risk looking relatively less attractive as a portfolio investment destination," he said.

At the moment though, he said: "We are encouraged by the government?s efforts to consolidate their fiscal position.

"However, a lot more details should be forthcoming concerning specific measures targeted at the industry level."