The confidence is backed by a healthy growth of manufacturing and the restored position of the mining production

By SHAZNI ONG / Pic By ISMAIL CHE RUS

THE country’s 2018 GDP growth could rise between 4.8% and 4.9% as a result of stronger economic figures that were observed recently.

Deputy International Trade and Industry Minister Dr Ong Kian Ming said the confidence is also backed by improved industrial production index (IPI) figures that indicated a healthy growth of the manufacturing sector, along with the restored position of the country’s mining production.

“This shows that an achievement of between 4.8% and 4.9% in GDP growth for 2018 is something that is very achievable.

“Some banks such as Standard Chartered plc (StanChart) have shown optimism towards the GDP figure growth for 2019 as well,” he told the media after attending a luncheon talk organised by Malaysian Industrial Development Finance Bhd (MIDF) in Kuala Lumpur yesterday.

On Monday, the Department of Statistics Malaysia (DoSM) revealed that the country’s December 2018 IPI rose 3.4% year-on-year compared to the previous year’s corresponding period, backed by a higher manufacturing index (4.4%), electricity (2.7%) and mining output (1%).

Last month, StanChart said Malaysia’s GDP is expected to grow 4.9% this year despite the slower global growth projected which could be attributed to the projected growth in the manufacturing (4.8%) and electricity sectors (3.7%). However, the mining sector declined by 1.9%.

StanChart chief economist for Asean and South Asia Edward Lee said the tax rebate amounting to some 2.5% of the country’s GDP and the potential recovery from the mining supply disruption would provide a small boost to the economy.

Lee added that the resumption of production capacity in the mining sector, which was disrupted by unplanned outages and pipeline repairs (according to the central bank), may also contribute to the growth in 2019.

He also said without such one-off factors, he expects the GDP growth level to be slow, around 4.4%-4.5%, from 4.7% last year.

Ong said the manufacturing sector would continue to drive the country’s exports and the economy, despite the challenges that could be expected as a result of the ongoing US-China trade talks.

“The Ministry of International Trade and Industry and our agencies such as MIDF, look forward to working with the manufacturing sector to see how we can continue to co-operate and increase their productivity and output, especially using Industry 4.0 policies that we would roll out in 2019,” he said.

Ong also said he looks forward to the GDP figures that will be released by Bank Negara Malaysia (BNM) today.

BNM is also expected to release the fourth quarter of 2018 (4Q18) GDP data, while the DoSM is expected to announce the official GDP results.

Meanwhile, Ong said the country will able to weather the “storm” and grow economically in 2019 and beyond, despite some of the challenges that might arise this year.

“I think the business confidence indexes are mainly based on surveys, that might not be totally reflective of the numbers that we see now.

“Of course we have to be concerned about a dip in business sentiment, but as long as we can address those concerns by coming out with good policies, by showing good figures, I think we can convince the business community,” he said.

Ong was responding to queries by the media who asked if business confidence would be among the top priority of the ministry after RAM Rating Services Bhd and the Malaysian Institute of Economic Research (MIER) posted the indexes last month which showed a decline.

According to the RAM Business Confidence Index, business confidence going into the first half of 2019 has dropped to the lowest level in two years as a result of the challenging economic landscape.

Based on the data from the survey compiled by RAM Holdings Bhd and RAM Credit Information Sdn Bhd, the corporate index and small and medium enterprises index for 1Q19 and 2Q19 fell to 55.1 and 51 from 55.7 and 53.5 in 4Q18 and 1Q19 respectively.

According to MIER, the consumer sentiment index fell 10.7 points to 96.8 in the October to December 2018 period from 107.5 in the preceding quarter.

Meanwhile, the business condition index, which tracks domestic manufacturing activity, dropped to 95.3 points, 13.5 points lower than the previous quarter.

On a separate matter, MIDF group MD Datuk Charon Wardini Mokhzani said discussions are still ongoing over on the proposed merger between the financial services provider and Al Rajhi Banking and Investment Corp (M) Bhd.

“We are still in discussions at the moment, to the extent that if there is something to be announced, we will definitely announce it,” Charon said.