Malaysia poised to post solid economic growth next year

PETALING JAYA: Alliance Bank Malaysia Bhd anticipates solid economic growth next year following the government’s recent tabling of Budget 2025.

“The Budget is a testament to the government’s commitment to responsible fiscal management and continued priority for effective governance,“ said Alliance Bank group CEO Kellee Kam Chee Khiong said in a statement.

“We are confident that the Budget will undoubtedly stimulate additional investments and evidence the government’s persistent efforts on strengthening the nation’s economic fundamentals. This is a progressive budget that has a prudent balance between the economy, sustainability, the adoption of digital investments and the well-being of the rakyat,“ he said.

Kam noted the government’s revision of the gross domestic production (GDP) growth projection for 2024 to 4.8-5.3% from 4.0-5.0% previously.

For 2025, the government expects GDP growth of 4.5-5.5%, which reflects positive economic momentum.

The country’s economic growth rate is driven by healthy labour market conditions.

Malaysia’s unemployment rate in August 2024 declined further to 3.2%, while the labour force continued to increase, resulting in a high labour participation rate of 70.4%.

Malaysia unveiled Budget 2025 on Oct 25, which has the largest ever allocation of RM421 billion, compared to RM408 billion for 2024.

Budget 2025 is constructed based on the objectives of revitalising the economy, catalysing transformational changes and improving the overall well-being of the rakyat. It highlights the government’s proactive measures in narrowing down the fiscal deficit. It is forecasted at 3.8% in 2025 compared with 4.3% for 2024.

Further, Budget 2025 reflects the government’s intention to drive investments with initiatives such as the New Investment Incentive Framework, which will introduce a strategic investment fund of RM1 billion to enhance local capacity and encourage high-value activities.

In addition, government-linked investment companies have pledged to invest RM120 billion in domestic direct investments over the next five years.

Khazanah Nasional will establish a National Fund of Funds (NFoF) with RM1 billion to support venture capital fund managers’ investments in startup companies.

Recognising the importance of developing SMEs, government agencies will provide loan facilities and financing support for the segment. This includes a RM3.8 billion fund by Bank Negara Malaysia to support greater adoption of digitalisation and automation.

To advance the country’s net-zero ambitions, over RM300 million will be included under the National Energy Transition Facilitation in 2025, compared to RM100 million this year.

Overall,Alliance Bank said, Budget 2025 covers a broad spectrum of issues concerning people and businesses.

Budget 2025 has salient features that prioritise the rakyat’s welfare, accelerate the nation’s economy, attract more investments, help pave the way to new markets, and embrace digital adoption.