KUALA LUMPUR: Despite being a resilient economy, Malaysia needs to find its growth narrative if it is to continue to move forward, says a leading regional economist.

Maybank Kim Eng senior economist Chua Hak Bin said this, adding that there are several low-hanging fruits that the country could capitalise on, two of which are the US- China trade war, and the local tourism sector.

“I think the big question mark ( which arises) when I speak to investors is that there’s no real growth story here.

“To be fair, there is a lot of house cleaning to do (as a fairly new government) and I think everyone is concerned, but I think the situation is somewhat okay now,” he told Starbiz in an interview.

Singapore-based Chua, who was previously head of Asean economics at Bank of America Merrill Lynch, pointed out that although bond outflows were huge last year, yields have been manageable and the ringgit has managed to bounce back so far this year after finishing 2018 on a volatile note.

This demonstrates the local economy’s resilience.

“I think that for the most part, there’s that upside of money coming back.”

But the narrative of resilience and taking care of debts left by the previous Government is not enough and Malaysia needs to find new avenues of growth especially after several major infrastructure projects were rolled back to cut costs, Chua stressed. “People need to be convinced that there is a catalyst.”

Here, he believes that Asean, Malaysia included, could leverage on the current trade war between the two economic giants, to spur manufacturing activities.

Recall, in the ongoing war which started around the middle of last year, the US has imposed taxes on US$250bil of Chinese goods, and China has retaliated by levying tariffs on some US$110bil of US imports.

While an agreement to end the tit-for-tat war is likely to be reached next month, many corporations are not taking any chances.

“Any company thinking about expanding in China will now think twice…they would want an insurance policy…,” Chua said.

According to him, Asean has already seen some benefit from the trade war with several companies planning to relocate or increase their production facilities in this region as an alternative to China.

Within Malaysia, there have been two companies so far, namely Hong Kong-based Internet of things device maker Kayamatics which has said that it plans to set up production lines in Kuala Lumpur and Penang and US semiconductor company Micron Technology which said late last year that it has plans to set up a plant in Batu Kawan, Penang with an initial investment of RM1.5bil.

“The other obvious angle (of growth) is tourism,“ Chua said.

“I don’t think it’s too hard for Malaysia.”

Chinese tourists which form the bulk of tourist numbers in most parts of the world, thanks to a growing middle-class which increasingly favours overseas travel, currently visit Malaysia much less than they visit countries like Thailand and Singapore, Chua said.

While these countries have loosen their visa regulations on Chinese tourists to boost tourism, Malaysia which requires Chinese tourists to obtain visas, has yet to do anything in this aspect, he said.

“What is Malaysia’s strategy here?

“I think if we can make it easier for them to come here, the numbers will be large.”

Maybank Kim Eng is expecting Malaysia’s economy to expand by some 4.9% this year after growing 4.7% in 2018.

Source: https://www.thestar.com.my/business/business-news/2019/02/25/malaysia-in-need-of-growth-story/#raea7YfRFKkqXDE0.99