KUALA LUMPUR, Feb 3 (Bernama) -- Malaysia will have to move toproductivity driven based economy underpinned by greater emphasis onresearch and development in view of the slowing exports growth this year,said leading economists.
Head of Research, K&N Kenanga Bhd, Seow Choong Liang said due to theexpected slowdown in exports of semi-conductors and easing of crude palmoil prices, Malaysia might have to move towards higher value-addedactivities.
Crude palm oil prices had been hovering around RM1,250 per tonne ongrowing speculation that China may slowdown its imports this year to tiein with its efforts to calm an overheating economy.
"The property sector has also been overstretched with most bankinginstitutions focusing their efforts to lending for consumer basecustomers," he said at the Malaysia strategic outlook conference 2005entitled "Malaysia in 2005 - What to expect? What to look out for".
"The banking sector is flushed with liquidity yet there is stillpreferences being given to preferred customers with better financialstanding than the many small and medium scale businesses," he said.
Seow said the recent announcement on the government's plan to set up aspecialised bank for small and medium-sized enterprises (SMEs) this yearwill ensure the needs of small business being given considerableattention.
Senior regional economist (South & Southeast Asia) of DBS Bank Ltd,Singapore, Dr Chua Hak Bin highlighted another significant impact on theMalaysian economy - the ringgit peg.
"It is time for the government to re-look at the ringgit peg in line withthe surging inflation and lower purchasing power of both consumers andimporters of capital goods," Dr Chua said at the seminar.
Dr Chua said the government should look into introducing export tax rebateto ensure the competitiveness of Malaysian exports rather than penalisingconsumers who had seen their purchasing power eroded due to risingregional currencies.
Dr Chua envisaged that the Malaysian economy would achieve a moderategross domestic product (GDP) growth of 5.7 percent (2004: 7.2 percent)with the electronics downturn making a recovery towards the second half of2005.
Senior research fellow, Malaysian Institute of Economic Research, Dr AzmiSetapa said the Malaysian economy would require more competentresearchers.
"There is a need to achieve a competent workforce of at least 60researchers per 10,000 labour force by 2010. In Malaysia there are only 15researchers per 10,000 labour force, compared with 136 in Japan, 83 inSingapore and 74 in US," he said.