This article first appeared in The Edge Financial Daily on September 25, 2018

KUALA LUMPUR: The new government can no longer depend on private consumption to support the sustainability of economic growth momentum the country has been experiencing, but instead has to now focus on stimulating private investment to capitalise on the growth potential, an economics professor said yesterday.

Prof Dr Yeah Kim Leng of Sunway University’s Business School said the government should put together clear and consistent policies that will provide a business- and investment-friendly economic environment to stimulate private investment.

“At this point, there is a need to push for greater private investment to sustain Malaysia’s production capacity expansion,” he said in a speech at the CEO Series 2018 organised by Rehda Institute, the training and research arm of the Real Estate and Housing Developers’ Association.

Yeah pointed out that Malaysia’s private investment has stayed around 10%-12% of gross domestic product (GDP) in the last decade, especially after the 2008 global financial crisis, which was relatively low compared to neighbouring countries.

“Only in the last five years we saw the rise of private investment in Malaysia, but even then it was still below what we call the dynamic level.

“We need to achieve a more sustainable and robust economy whereby private investment becomes the key driver for industrial upgrading and capacity expansion,” he said, noting that private investment should be between 25% and 30% of GDP to be considered on the dynamic level.

Understandably, Yeah said it is a key imperative for the new government to take necessary fiscal consolidation given the legacy issues that it has inherited from the previous government.

This, he said, further supports the point that the government should no longer rely on private consumption to carry the bulk of the country’s economic growth.