Malaysia’s GDP likely to moderate in 2H, says Nazir

This article first appeared in The Edge Financial Daily, on August 22, 2017.
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KUALA LUMPUR:  Malaysia’s economic growth is expected to moderate in the second half (2H) of this year, said CIMB Group Holdings Bhd chairman Datuk Seri Nazir Razak.

“I think we should lower down our expectations for the second half of this year,” he told reporters on the sidelines of the Asean Roundtable Series on “Deepening Capital Markets in Asean: Opportunities and Challenges” here yesterday.

“If you look at analysts’ expectations, they are expecting a gross domestic product (GDP) of about 5% for 2017, which by definition would equate to a slower second half,” he said.

“The first half shows that the fundamentals of the economy are still strong,” Nazir said, adding that the country is also benefiting from a syncronised global recovery.

The local economy expanded by 5.8% in the second quarter of 2017 from a year earlier — exceeding the consensus estimate of 5.4%, driven by domestic demand and export growth. For the first half of 2017, GDP grew at 5.7% year-on-year.

Last Friday, Bank Negara Malaysia governor Datuk Muhammad Ibrahim said the country’s growth would probably exceed the official forecast of 4.8% this year. Last year, the economy grew by 4.2%. 

Nazir also said the establishment of a virtual board that lists out the top companies in Asean could be a way to promote greater capital flows within the region.

He pointed out that many domestic funds that were looking to diversify their portfolio usually looked towards developed markets, but he said there could be better opportunities in Asean.

“Why not we create a virtual board that lists out all the top companies in Asean, and make this virtual board visible across Asean as a whole?

“On the board, there should be information on the stock, which exchange it is listed on and information on how these securities can be accessed by the investor, with full transparency on how to invest and eventually divest,” he said.

Nazir said enabling companies to have access to the broadest range of capital providers would also provide a huge boost to the overall value proposition of being part of Asean.

Securities Commission Malaysia executive chairman Tan Sri Ranjit Ajit Singh concurred, saying there was a greater propensity for people to invest in markets such as Hong Kong and the US rather than Asean.

He noted that at a joint meeting of Asean finance ministers and central bank governors in April, a senior finance minister had pointed out that he was able to invest in the US using mobile technology, but could not do so in Asean countries.

However, Ranjit said there are already several brokers around Asean who have licences in multiple countries, which allow clients to invest using mobile technology, but the awareness of them is absent.

“Somehow, the awareness of the opportunities for intra-Asean trade is not known to the finance minister — and he’s a quite a plugged-in individual. You can imagine the cascading effect of that.

“So, one of the first things that has to be done is to pool together information on what is available out there in Asean in an easier manner. We need some sort of Asean market information hub,” he said.

Ranjit said the virtual hub should also provide information on taxation policies surrounding settlements and other tax issues. “We need to be able to elevate that. Otherwise, the notion of an Asean asset class remains an aspiration and capital will go elsewhere,” he said.