2020 growth projection difficult to achieve

LETTER | The current coronavirus global outbreak out of China is giving the PAS Central’s Economic, Real Estate and Entrepreneur Development committee concern that it will now be almost impossible for Malaysia to achieve its GDP target of 48 percent.

This is based on the fact that a large part of the projected growth had been pegged to the government’s Visit Malaysia Year 2020 (VMY2020) initiative.

VMY2020 anticipated 30 million foreign arrivals, contributing up to RM100 billion to the nation’s coffers in retail spending alone.

With ongoing uncertainties not just on nature but also the length of time

the current viral outbreak will last, its effect on the country’s tourism, and the resulting GDP will be significant.

Malaysia can ill-afford another crisis of confidence, to add to the current dampness in investor confidence.

According to MIDF Amanah Investment Bank, foreign fund flow into Bursa Malaysia in the first three weeks of January 2020 decreased to RM29.4 million, from RM320.9 million the previous month.

The period also saw Malaysia receiving the smallest volume of foreign fund among the Asean countries.

To offset the anticipated decreases, the committee urges with the federal government to urgently consider two key measures:

1. A renewed drive to promote domestic tourism, which will directly boost domestic demand, more so in light of the anticipated weakening of the ringgit from the recent cut in Overnight Policy Rate (OPR). The contribution from domestic tourism cannot be understated, with RM78.2 million domestic tourists contributing RM60.4 billion to the local economy in 2018.

2. The country’s export-oriented manufacturing sector has to be provided with targeted incentives to increase production. It is imperative that they are encouraged to take advantage of the ringgit’s anticipated weakness to increase exports to help offset the projected losses in the tourism sector’s contribution. The current upswing in the Manufacturing Index (PMI) – at 50.0 in December 2019 compared to 49.5 in the month before – needs to be maintained.

The writer is vice chairman of PAS Central’s Economic, Real Estate and Entrepreneur Development committee.