PRIVATE investment (PI) remains a concern for Malaysia as it pulled back sharply to 0.4% year-on-year in the first quarter of 2019, said the Socio-Economic Research Centre (SERC).

PI in 4Q2019 was 5.8% and 4.3% in 2018 vs 9% in 2017.

Malaysian private investment growth has shown a weakening trend in recent years, moderating from 12.1% per annum (2011-2015) to 5.9% in 2016-2018, said SERC.

However, the private investment indicators were mixed, said SERC executive director Lee Heng Guie during a press briefing at Wisma Chinese Commerce today.

Although, sales of commercial vehicles contracted to 9.3% in April, narrowing from 14.9% in 1Q2019.

“Import of capital goods has also turned around to grow by 5.7% in April compared to a sharp decline in 1Q,” said Lee.

However, Lee said that PI would need to pick up drastically over the rest of the year to meet Bank Negara Malaysia’s forecast of 4.9%. SERC is predicting PI to reach 4.3% for 2019.

Lee said that caution on the part of investors regarding capital spending was due to uncertainties surrounding the external environment, especially the US-China trade tensions and domestic policy landscape.

“Part of this hesitance from domestic investors comes from the absence of an economic narrative. Private investors are also waiting for domestic politics to settle,” said Lee.

He said that the new government must enhance economic resilience and implement co-ordinated policy reforms to ensure medium-term growth sustainability.

“The priorities would be to formulate an appropriate incentive framework based on clear, transparent and predictable business and investment climate.

“The government also needs to improve education and strengthen the Malaysian workforce to that it can move up the value chain,” said Lee. – June 24, 2019.