Guan Eng: Malaysia to see sustainable economic growth in 2H19

Jerry Choong
Finance Minister Lim Guan Eng speaks during the National Economic Forum 2019 at Kuala Lumpur Convention Centre in Kuala Lumpur August 29, 2019. — Picture by Shafwan Zaidon

KUALA LUMPUR, Sept 6 — The Malaysian economy is predicted to expand sustainably in the second half of the year following considerable export growth in July and a staggering 97.2 per cent increase in approved foreign investment for the first half of 2019, said Finance Minister Lim Guan Eng.

He said despite market expectations, Malaysian exports for July rose by 1.7 per cent to RM88 billion compared to RM86.5 billion last year, despite the challenging international conditions as a result of trade tensions and slow global economic growth.

“The country’s export resilience has boosted Malaysia’s trade surplus for July, increasing by 75.6 per cent to RM14.3 billion, from RM8.1 billion in the same month last year,” Lim said in a statement.

This made it the highest trade surplus in history for July, according to the International Trade and Industry Ministry. The minister said Malaysia’s economy is also expected to sustainably grow in the third quarter of the year, following its rapid GDP growth at 4.9 per cent in the second quarter.

“From January to July this year, Malaysia recorded a RM81.6 billion trade surplus, 15.9 per cent more than RM70.5 billion recorded for the same period in 2018.

“This health trade balance will maintain the country’s current account in a surplus for this year, and protect the domestic economy from increased uncertainty due to global factors from the ongoing United States-China trade war,” he said.

Lim explained that there are two primary reasons for the surplus, namely a trade diversion and an investment diversion.

“The trade diversion has increased Malaysian exports to China and the US in July by 3.8 and 7.9 per cent respectively, compared to the same period last year.

“From July 2018 to April this year, Malaysian parts for photosensitive semiconductors and diode transistors increased by 10 and six per cent respectively. During the same time, Malaysian parts for petrochemical goods imported to China increased to almost 25 per cent,” he said.

On the trade diversion, Lim said data from the Malaysian Investment Development Authority indicated that approved foreign investment for the first half of 2019 rose by 97.2 per cent to RM49.5 billion, when compared to the RM25.1 billion last year.

“Approved manufacturing investment from the US jumped to RM11.7 billion during this time, compared to RM307 billion last year. In 2018, approved foreign direct investment rose by 47.1 per cent to RM80.1 billion, from RM54.4 billion in 2017.

“The jump in approved investment from the US for the first half of this year indicates the confidence of its investors in Malaysia, which is mirrored by the American companies operating in the country,” he said.

A research study conducted by the American-Malaysian Chamber of Commerce in 2019 revealed that 76 per cent of the companies surveyed planned to expand their investments in Malaysia within the next five years.

These companies include analytical laboratory instrument manufacturer Agilent Technologies, Dell, semiconductor manufacturer Freescale Inc, Motorola, semiconductor company Texas Instruments Inc, and Western Digital.

Lim said the chamber also believes the domestic business environment will improve, since the study indicated two-thirds of the companies surveyed will expand their businesses in the near future.

“The government will continue its efforts to attract high-quality investment, especially from China and the US, into the country so as to prepare higher income job opportunities for all Malaysians.

“The ministry will also monitor the country’s economic conditions neatly, so that measures prioritising its sustainable growth can be taken immediately if need be,” he said.

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