KUALA LUMPUR: Malaysia has begun seeing the green shoots of recovery in the wider economy via the National Recovery Plan (NRP), according to Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz.
This was reflected in a stronger gross domestic product growth in the second quarter of 2021 which included 40.1 per cent and 19.8 per cent growth in April and May respectively, Tengku Zafrul added.
There were also improvements in the labour market with unemployment improving to 4.6 per cent in August from 5.3 per cent at the height of the pandemic as well as an increase of 6.8 per cent year-on-year (YoY) in manufacturing sales value to RM126.5 billion as at August 2021.
Tengku Zafrul said there was an uptick in trade activities, including a 23.0 per cent YoY increase in exports to RM97.3 billion in August 2021 and continued improvements in the capital markets, with about RM2 billion in net inflows from foreign investors in the equity capital markets in August and September.
He said Malaysia remained as an attractive country for high-value and high-tech investments including RM107.5 billion in foreign direct investment and domestic direct investment in the manufacturing, services and primary sectors in the first half of 2021, almost 70 per cent increase over the same period last year.
“This recovery is bolstered further by a resilient financial sector. Banks, insurers and takaful operators continue to be well-capitalised, with sufficient financial buffers to absorb potential losses in the face of severe macroeconomic and financial conditions, while supporting economic recovery.
“For the banking sector in particular, this support included RM154 billion in bank financing disbursed to small medium enterprises (SMEs) in the first half of 2021,” he said at virtual Invest Malaysia 2021 today.
Tengku Zafrul said the pathway to recovery would continue with 2022 Budget, which would be expansionary while laying the foundations for the government’s wider and longer-term reform efforts.
The budget will focus on the 3Rs of speeding up recovery, strengthening economic resilience, and catalysing reform.
“We have mapped our budget initiatives to the sustainable development goals (SDG). Financial assistance will remain ongoing for those most impacted, especially the B40 group, the unemployed and the vulnerable.
“Support for businesses will remain steadfast be it via affordable financing schemes, better access to credit or grants, to support operations while pivoting them towards increased automation and digitalisation.”
He added that there would be increased focus on sustainability and improving the resilience of our environment and water assets, following increased focus towards environmental, social and governance (ESG), net zero emissions targets and further development of our circular economy.
“We will improve the labour market by, among others, focusing on hiring incentives in addition to subsidising wages. And finally, we will be enhancing fiscal prudence by improving the government’s procurement and debt management process while enhancing tax enforcement measures,” he said.
Meanwhile, Tengku Zafrul said the 12th Malaysia Plan (12MP) would lay down fundamental reforms to transform Malaysia’s development trajectory to achieve “A Prosperous, Inclusive and Sustainable Malaysia”.
He said the plan’s immediate priorities would be to catalyse growth, narrow existing socio-economic disparities and ensure environmental sustainability.
It will also focus on upholding national security and sovereignty as well as solidifying national unity.
“Policies, programmes and projects in the plan will continue to be aligned to the SDGs of the 2030 Agenda for Sustainable Development.
“Overall, the plan will target growth of between 4.5 per cent to 5.5 per cent per annum, resulting in a gross national income per capita of more than RM57,000 by 2025, while regaining full employment,” he said.
Since the 2MP, he said addressing poverty and inclusivity had been important pillars of Malaysia’s socioeconomic development.
This included initiatives to raise the income and purchasing power of impoverished households; empower minority groups like the Orang Asli; address inequalities and strengthen the Bumiputera Economic Community.
“It is important to remember that the Bumiputera Economic Community is multi-dimensional. Yes, it refers to equity ownership. However, it should also include other aspects of Bumiputera’s economic participation and contribution, such as human capital development, entrepreneurship, employment, the supply chain, and innovation in new industries, particularly in halal foods and services.”
Tengku Zafrul said the next few years would be critical for Malaysia to address climate related issues.
The government would reinforce its commitment to the environment at the global and domestic stage, he added.
“The National Renewable Energy Policy remains committed to achieving a 20 per cent renewable energy capacity mix by 2025. Similarly, we have also pledged to reduce our green-house gas emissions intensity to 45 per cent of GDP by 2030.
“We remain committed to the Helsinki Principles by promoting national climate action through fiscal policy and the use of public finance. In the long run, these will help us reach our goal of becoming carbon- neutral by 2050,” he added.-NST