20100324 0937 Malaysian Economic News.

Malaysia’s Prime Minister Najib Razak said the economy may expand more than 5% this year as the country recovers from last year’s recession. “I’m on record to say I am looking at 5% and beyond,” Najib said in Hong Kong. “But that’s a general kind of goal for the government.” The central bank will release its official economic forecast tomorrow. The government is also considering whether to issue a global bond after fund managers indicated such a security would be “viewed very favorably,” Najib added. (Bloomberg)

The government is seriously considering a sovereign bond issue purely to gauge its credit worthiness and to get the right kind of signals from foreign fund managers, Prime Minister Datuk Seri Najib Tun Razak said. The reaction from foreign fund managers was that the market would be very receptive to the idea.

• Asked what the money would be used for if such a bond was issued, Najib said it was not so much for the money as there was enough liquidity in the domestic system for development purposes. (Bernama)

Malaysia needs to implement structural fiscal reforms like a goods and services tax to boost its credit rating, ratings agency Fitch said. “Disappointingly, fundamental reforms to budget revenues with the introduction of goods and services tax have been postponed. That kind of reform and structural improvements in the budget revenue is what we look for to restore positive pressure in the credit ratings,” it said. (BT)

PM Datuk Seri Najib Tun Razak said Malaysia should see higher foreign direct investment (FDI) this year after the government implements administrative reforms. The New Economic Model (NEM), to be announced later this month, will include unspecified administrative reforms that should result in a “marked improvement” in FDI. The government has been considering proposals to end its subsidy regime and phase in a new goods and services tax as it begins dismantling a four-decade race-based economic system that has deterred foreign investment.

• He has given the assurance that Malaysia will address the needs of foreign fund mangers for increased liquidity plus good and well-governed listed companies in making the local equity and capital markets more attractive to portfolio inventors. 
• “We don’t want the investments to be in labour-intensive industries. We want to look at backward linkage to the domestic economy and the creation of high value or paying jobs,” he added. (BT, Financial Daily, StarBiz)

PM Datuk Seri Najib Tun Razak said he would keep rolling back policies that give preferential treatment to ethnic Malays as he seek to lure investment and boost stockmarket liquidity. “Whether we will do away completely with affirmative action is something we have to consider very carefully. Affirmative action will be more market friendly, more transparent and will be more merit-based. These policies will be outlined in the New Economic Model (NEM) which will be announced next week,” he said. (StarBiz)