`No high growth for Malaysia for now'<\/p>\n
Eileen Ng, Agence France-Presse, Kuala Lumpur<\/p>\n
The Malaysian economy is likely to grow only moderately over
\nthe next few years until it can sharpen its competitiveness,
\neconomists said Tuesday.<\/p>\n
Sluggish foreign investment, uncertainties over political
\nsuccession and slow corporate reforms cloud the country's growth
\nprospects, the analysts told a conference here on Malaysia's
\nstrategic outlook.<\/p>\n
They predicted growth of between 4.3 and 5.4 percent this
\nyear, compared to the official forecast of 6.0 to 6.5 percent.<\/p>\n
K and N Kenanga research chief Seow Choong Liang said Malaysia
\nwas now in the middle phase of a long-term recovery characterised
\nby low interest rates, mixed economic data, a volatile share
\nmarket and disinterested investors.<\/p>\n
Seow said Malaysia's economy would not return to its heyday of
\nabove eight percent growth before the 1997-98 Asian crisis until
\nit improved its competitiveness.<\/p>\n
Government policies had been \"too accommodating\", resulting in
\na lack of healthy competition to spur productivity growth which
\nhad averaged below one percent in the last decade.<\/p>\n
\"The government has been too kind. There are many monopolies
\nand oligopolies in Malaysia which are operating profitably
\nwithout having to compete,\" he said.<\/p>\n
\"Competition needs to be reintroduced and a market-oriented
\nsystem needs to be returned in order for productivity to
\nimprove.\"<\/p>\n
Seow told reporters later that he projected Malaysia's economy
\nto grow between three and five percent over the next few years.<\/p>\n
\"I don't expect Malaysia's economy to grow more than five
\npercent over the next three to four years until Malaysia can find
\nits new niches and become more competitive,\" he added.<\/p>\n
Morgan Stanley regional economist Daniel Lian noted that
\nMalaysia's equity market had been sluggish in the past year,
\nunderperforming peers such as Thailand and Indonesia since 2001.<\/p>\n
Lian told the conference local investors seemed to feel the
\npinch more acutely as rising unemployment and a lackluster asset
\nmarket hit domestic confidence.<\/p>\n
Foreign investment also showed no signs of recovering last
\nyear after a sharp decline in 2001 and there was a market
\nperception that corporate restructuring had come to a standstill,
\nhe said.<\/p>\n
Lian said the market was also jittery over Prime Minister
\nMahathir Mohamad's planned resignation in October due to his
\ndominance and the relatively low profile of his successor and
\ndeputy Abdullah Ahmad Badawi.<\/p>\n
\"The market appears to be uncomfortable about the emergence of
\na new leadership as Mahathir has been at the helm for 20 years.
\nAlso, Abdullah has been hesitant to announce his market
\nplatform,\" he said.<\/p>\n
\"There is also a market perception that Mahathir will probably
\ncontinue to exercise executive power, possibly reducing
\neffectiveness of the new leadership.\"<\/p>\n
Lian said a slump in foreign investment, slower export pricing
\npower and relatively stagnant economies since the 1997-98 Asian
\ncrisis had led to increased economic tension among Southeast
\nAsian countries.<\/p>\n
These issues had to be addressed by the government before
\nmarket confidence could be restored, he added.<\/p>\n
The government's National Economic Action Council secretariat
\nchief K. Govindan said the economy was fundamentally strong and
\nhe foresaw a better year in 2003.<\/p>\n
But he said the country had to diversify its sources of
\ngrowth, tap new export markets, expand its services sector and
\nboost competitiveness and efficiency to sustain long term growth.<\/p>",
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