Its economist, Joseph Incalcaterra, said Malaysia was one of the few high-middle-income economies that had a good demographic profile with significant population growth.
“The use of infrastructure projects and growth in urban areas are interesting aspects for the future revenue generation in all the projects.
“We think there is a further need for Malaysia to diversify its economy, as it is weighing down growth in the short term,” he told reporters via teleconference from Hong Kong.
Incalcaterra said the reduction in revenue contribution from Petroliam Nasional Bhd due to the current subdued oil prices has hurt the Government’s ability to spend and support economic growth.
Apart from that, he said, the natural gas and palm oil would also have an impact on the economy as Malaysia was sensitive towards the commodity prices.
Meanwhile, on the financial side, he said, Malaysia had a sufficient range of strong equity and financial institutions that were able to provide funding to the infrastructure projects.
“Apart from having the support of international banks like us, Malaysia has a strong balance sheet and liquidity in its domestic banks as well, who understand and are prepared to support the space (infrastructure development).
“The most interesting point is that Malaysia has matured capital markets that can provide significant liquidity to the infrastructure space both in greenfield projects making the country to stand out from the rest the Asean region,” he said.
Incalcaterra said from a monetary policy perspective, HSBC also believed that further easing on interest rate cut by Bank Negara Malaysia was likely as the central bank maintained a dovish bias, after the surprise cut in July.
The central bank slashed the Overnight Policy Rate by 25 basis points to 3%.
Asean, he said, has a funding gap of US$1.3 trillion (RM5.3 trillion) through 2030 for the infrastructure development, with Malaysia needing an additional US$42bil (RM171.4bil) of US$109bil (RM444.9bil) for the projected total development. - Bernama
Did you find this article insightful?