PETALING JAYA: Several factors such as government reforms and strategic initiatives through foreign direct investments (FDIs) have contributed to the positive economic environment, say experts.
SME Association of Malaysia secretary-general Chin Chee Seong said the other factor is Bank Negara Malaysia retaining the interest rate at 3%.
He said all these managed to create a favourable economic atmosphere that played a crucial role in fostering growth.
He said this in response to Prime Minister Datuk Seri Anwar Ibrahim’s announcement on Saturday of the country’s “extraordinary” achievement in attaining 5.8% economic growth in the second quarter of 2024 (Q2 2024).
Chin said Malaysia’s gross domestic product (GDP) growth underscores a robust economic recovery compared with 2023, and is likely to boost the confidence of foreign investors.
“For the services sector, this growth was likely fuelled by the Hari Raya holiday season and a surge in tourists from China and India.
“Many entrepreneurs have been pleasantly surprised by the strength of this recovery, which has surpassed expectations, especially given that many retailers experienced low turnover and less demand in the second quarter,” he said.
Chin added that the growth has been driven by effective government policies under the Madani economic framework and a significant increase in domestic demand.
He also cited the optimistic outlook forecast by the Statistics Department for the second half of the year.
“Should this growth trend continue, supported by strategic FDIs and sustained government efforts, Malaysia is on track to achieving 5% GDP growth for the entire year of 2024.
“However, we have to remain cautious because businesses still face various challenges, including the increasing cost and the potential cut of subsidies in petrol, which seems to be on track for implementation this year,” he said.
Chin added that it is crucial for the government to balance its optimism with continued support for businesses.
He said this is to ensure sustainable and inclusive growth by addressing ongoing challenges, particularly those faced by small and medium enterprises (SMEs), to sustain the momentum and support long-term prosperity.
Associated Chinese Chambers of Commerce and Industry of Malaysia treasurer-general Datuk Koong Lin Loong said the 5.8% GDP growth was largely contributed by FDIs.
He said the growth was due to the services and manufacturing sectors following the influx of FDIs, especially after the Prime Minister’s visit to China in March last year.
On the notion that Malaysia was bouncing back amid the growing economies in Indonesia and Vietnam in South-East Asia, Koong said that was the case.
He also said Malaysia has a business-friendly ecosystem with good English proficiency.
“So, you can expect to see more SMEs in the country, becoming the satellite industry in the supply chain,” Koong said.
Political pundit Dr Tunku Mohar Tunku Mohd Mokhtar of International Islamic University Malaysia said the announcement by Anwar was done to set the record straight on the country’s economy.
He said it was aimed at dispelling misconceptions and disinformation about the health of our economy.
“The announcement was also meant to instil confidence in investors.
“The economy’s steady growth will also help address people’s concerns over the long term.
“What is important is that the Prime Minister tell the nation that our economy is on the right track, and this will spill over to the people at large,” Tunku Mohar said.
On Friday, the Statistics Department estimated that Malaysia’s economy would expand by 5.8% in Q2 2024, up from 4.2% in the previous quarter and the highest since Q4 2022’s 7.4%.
For the first half of 2024, Malaysia’s GDP increased by 5%, up from 4.1% a year ago.
The department said the economic growth was spurred by improvements in all sectors during the quarter, particularly the services, manufacturing and agriculture sectors.
“Malaysia’s economy is expected to continue its growth momentum, supported by domestic and export-driven factors, with a positive outlook for the remainder of the year,” said its chief statistician Datuk Seri Dr Mohd Uzir Mahidin.
He said the services sector drove economic performance for the quarter, with most key sectors showing higher growth than the previous quarter.
It expanded by 5.6%, driven by growth in wholesale and retail trade, transportation and storage as well as finance and insurance.
The manufacturing sector grew by 4.7%, supported by non-metallic mineral products, basic metal and fabricated metal products, petroleum, chemical, rubber and plastic products, as well as transport equipment.
The agriculture sector grew by 7.1%, largely due to the oil palm and livestock subsectors.
The mining and quarrying sector increased by 3.3%, contributed by higher natural gas production.
The construction sector registered the strongest growth at 17.2%, with positive performance across all subsectors, particularly in civil engineering and specialised construction activities.
