Malaysia’s Private Sector Investments Drop Sharply In Q1

Malaysia business
Residential apartments under construction are pictured at Forest City in Johor, Malaysia February 26, 2019. (Photo: REUTERS/Edgar Su)

HSBC Global Research revealed that Malaysia's private investments sector saw a sharp decline during the first quarter of 2019. Investments declined to 0.4 percent compared to 5.8 percent in Q4 2018.

In the same period last year, gross domestic product (GDP) data recorded 1.1 percent in private sector investments, The Star reported. Public investments also dropped by 13.2 percent, echoing the country's need for more foreign interest.

There have been earlier concerns over the country's economic status and how Prime Minister Tun Dr. Mahathir Mohamad's administration will drive Malaysia towards growth following years of alleged corruption by the previous government.

Despite tremendous declines in private and public investment sectors, HSBC noted that Malaysia's economy expanded by 4.5 percent in the first quarter. The research agency said these figures echo how the country has been thriving under regional terms.

According to the agency, the Malaysian economy has been striving to uphold its manufacturing industry and private consumption did well over the last few months. Despite headwinds over the last years, the commodity sector has started recovering.

HSBC also attributed the growth figures to "strong industrial production data through March." It is expected that Malaysia will boost its petrochemical production as part of its short-term development goals.

Private consumption will still be one of the key drivers in the Malaysian economy. Expansive fiscal policies will help stabilize the labor market as part of the efforts to boost production.

Most economic experts have become optimistic about the Malaysian economy despite a decline in government confidence among the masses. ING noted that it no longer needs to cut rates for the rest of 2019 as the economy outperformed amid struggles with the ringgit earlier this year.

Amid fears of a potential decline in the Malaysian economy, analysts urged the Pakatan Harapan (PH) government under Mahathir to develop a long-term plan for economic development.

UOB Research Senior Economist Julia Goh said the country needs to expedite the process of implementing reforms necessary for growth. She said the PH government's next two years in power will be crucial in gauging Malaysia's economic development.

While Goh recognized the efforts of the Mahathir's administration in revamping existing policies that weigh heavily on the economy, she said growth should be more apparent by the second half of 2019.

Private Equity Investor Ian Yoong said Malaysia's business atmosphere is showing improvements as many entrepreneurs have started relying on their own strengths instead of leaning on political connections.

For Yoong, the developments in Malaysian business communities could be a driving force in helping the economy recover. He noted, though, that the government should improve its public relations activities so the masses will be informed about the work it does for the economy.

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