HIGH-INCOME NATION ACHIEVABLE BY DOING THE RIGHT THINGS THE RIGHT WAYS, SAYS

By Samantha Tan Chiew Ting

KUALA LUMPUR, June 11 (Bernama) -- Malaysia's aspiration to become a
high-income economy can be achieved by doing the right things the right ways,
says an analyst with a domestic research house.

Syed Muhammed Kifni Syed Kamaruddin, a senior analyst with MIDF Research,
says the numerous government programmes and initiatives outlined in the 10th
Malaysia Plan (10MP) were the right things to do, but only by executing them in
the right ways will see the desired results.

He said implementation efforts will fall far short of the targets with
the government's seriousness in its transformation efforts like the Government
Transformation Programme (GTP) not being executed promptly and efficiently.

Syed Muhammed Kifni said the government's fiscal reforms entail cutting of
subsidies in order to rein in its burgeoning budget deficit. In the 10MP, the
government plans to reduce its subsidy bill to RM15.7 billion (us$4.75
billion)in 2015 from RM18.3 billion (US$5.54 billion) this year.

"However, the main challenge to the realisation of this target is the
government's willingness to actually push through the needed reforms. The
government had in the past delayed implementation of subsidy cut as well as
the introduction of the Goods and Services Tax (GST) after strong public
opposition," he said.

Syed Muhammed Kifni said the government needs to continue with its fiscal
reforms to achieve greater value for money to government spending and widen its
revenue base via introduction of the GST.

The government's overall budget deficit is targeted to be reduced from 5.3
per cent of the gross domestic product (GDP) this year to 2.8 per cent in 2015.

Consequently, its total debt is expected to decline from 52.9 per cent of
the GDP this year to 49.9 per cent by 2015.

Syed Muhammed Kifni said that it was quite a tall order to achieve the six
per cent GDP growth under the 10MP, considering the fact that private
investments grew by only two per cent a year during the Ninth Malaysia Plan
(9MP) period.

From the demand side, the six per cent yearly GDP growth should come mainly
from private investment and consumption expenditures which are expected to grow
by 12.8 per cent and 7.7 per cent a year, respectively.

The economy will require an average of RM115 billion (US$34.84 billion)worth
of private investments per annum to achieve the target and the key component of
the private investment growth is expected to come from foreign direct
investments (FDIs), he said.

To attract FDIs, the 10MP offers material improvements in the business
environment for private investment, including measures to further liberalise the
economy, and better public sector efficiency by streamlining bureaucratic
processes and reducing the costs of doing business.

With proper implementation, Syed Muhammed Kifni said the 10MP will help
Malaysia in transforming itself into a high-income economy in an inclusive and
sustainable manner in line with objectives of the New Economic Model.

Meanwhile, ECM Libra Research, in a separate statement, viewed the 10MP to
be largely neutral for now.

"While the high GDP growth target, if achieved, will catapult the country
towards a developed nation, there are still many questions unanswered at this
point in time," it said.

On impact to various sectors, it said the 10MP will be positive for power,
property, toll and oil and gas sectors but negative for construction, building
materials, plantation and glove sectors.

"Impact of other sectors is generally mixed or neutral," it says.
-- BERNAMA