BUSINESS

12MP SET TO REVIVE BUSINESS DYNAMISM FOR ROBUST POST-COVID 19 RECOVERY -- AMBANK

28/09/2021 11:48 AM

KUALA LUMPUR, Sept 28  --  AmBank Research has welcomed the 12th Malaysia Plan’s (12MP) focus on market-oriented reforms, saying that there is an urgent need to reinvigorate business dynamism through regulatory reforms.

It said that this is in order to achieve a robust post-COVID-19 recovery as pandemic risks remained.

According to the research house, the reforms are needed although Malaysia is a business-friendly country that attracts large flows of foreign direct investment and is well-integrated in global value chains.

“Measures initiated under the plan are essential to drive growth in the post-pandemic world and to position Malaysia on a better footing as vibrant competition remains an essential component of business dynamism which will foster cost reductions, innovation and promote productivity growth,” it said in a note today.

For business dynamism, it said, the key focus is the ease of new firms in entering the market, or entrepreneurs starting up new businesses.

“As the country transitions to the high-income status, future sources of growth will increasingly need to shift to innovation and productivity gains.

“Hence, there is an urgent call for further improvements in business dynamism while ensuring a regulatory environment that encourage effective competition for long-term growth and sustainability of the country,” it said.

And irrespective of the current scenario, AmBank Research said, Malaysia remains competitive in attracting foreign investors.

It noted that in the first half of 2021, the country attracted investments worth RM107.5 billion from the manufacturing and services sectors, a significant jump of 69.8 per cent compared to RM63.3 billion for the same period in 2020.

Foreign direct investment (FDI)  contributed 58.1 per cent or RM62.5 billion compared to RM19.8 billion for the same period in 2020.

“With the 12MP set to steer the economy to the next phase of growth, the focus on high quality and value-add investment that will drive productivity, the emphasis on talent development and business-driven policies to support growth should continue to place Malaysia as a strategic investment destination.

“We remain optimistic despite the recent relocation of some FDIs as that could be due to many factors such as business rationalisation or policies relating to the Movement Control Orders,” it said.

However, looking at the equity market, the overall impact from the 12MP has been lukewarm, it highlighted.

“This could be due the measures announced that are more for the medium term. Besides, the market has been in a net foreign selling position, implying the support of local players.

“Also, the market could be focusing on Budget 2022, the opening of the cross-border travels, incoming data and the US Federal Reserve tapering. The bond market has also factored in the 12MP,” it added.

-- BERNAMA

 

 


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