Investment outlook to remain positive in 2008

MALAYSIA'S investment outlook in 2008 is expected to remain positive despite the challenges from rising inflation and external risk, said Alliance Finance Group’s chief executive officer Datuk Bridget Lai.

In a statement today, Lai said given the sustained economic growth and the government’s initiatives such as promoting the growth corridors — Iskandar Development Region, Northern Corridor Economic Region and Eastern Corridor Economic Region — the investment environment was expected to be optimistic.

“Growth for the coming year will be broad-based with the services sector expected to remain the key driver on the supply side, on the back of strong sub-sectors like business services, real estate, finance and insurance.

“On the demand side, private investment is expected to cushion the moderation in consumer spending, while the announcement of corridors and implementation of Ninth Malaysia Plan should sustain the public spending momentum,” she said.

Lai, however, said rising inflation risk remained a key risk to the current robust picture.

“While Malaysia has been building up it resilience over the years, we are still susceptible to external environment.

“Inflation will also be a key concern in 2008 amid expected administrative price increases. High inflation may curb consumer spending,” she said.

She said Malaysia, as one the largest producers of crude palm oil in the world, was expected to benefit from the high prices of crude oil and crude palm oil underpinned by robust demand from China, India and Europe.

Lai said the global market was expected to face a challenging time with sub-prime worries expected to linger into next year.

“The global credit market is experiencing a credit squeeze arising from the sub-prime crisis to force more prudent lending by financial institutions and an increased risk premium on financial instruments,” she said.

By Bernama