Malaysia likely to hit RM113b private investment target

Since the first launch of the ETP two years ago, the government has unveiled 138 key projects and initiatives.

THE government is likely to achieve the private investment target of RM113 billion this year, with the latest rollout of seven new projects under the Economic Transformation Programme (ETP).

Affin Investment Bank economist Alan Tan expects an additional RM20 billion to RM30 billion of committed investment to be announced in the months ahead.

This will bring the total to around RM55 billion to RM60 billion for 2012 against RM163.8 billion unveiled last year.

In 2012, 28 projects have been announced under the NKEAs with RM26.07 billion in investments.

Tan, however, said that the market looks forward to details of the actual investment of each project by the Performance Management and Delivery Unit (Pemandu) of the Prime Minister's Department, to better gauge the contribution of private investment on economic growth.

Manokaran Mottain of Alliance Research said although the announcements now come on a quarterly basis, it would still provide positive outlook for the economy.

"It would be better for our analysis, if Pemandu could provide more updates on the implementation progress of projects previously announced.

"They could add more light into the amount of disbursement so far, similar to schedule released last year," he said, adding that the details should help the market players to digest more on implementation success rate.

CIMB Investment Bank chief economist Lee Heng Guie cautioned that while the ETP is progressing well, the lack of progress in fiscal reform - one of the six strategic reform initiatives - is a concern.

It is this lack of progress which has prompted rating agencies to warn that fiscal slippage, or a failure to deliver the promised reforms, could trigger negative rating action.

On the progress update on Thursday, Lee said it showed that private investment made a strong return, largely spurred by the swift progress in implementation of the ETP.

"A key downside risk is a sharp downturn of the global economy," he warned.

The fragile external conditions will dampen investor sentiment and the upcoming domestic general election may distract attention from economic reforms.

Prime Minister Datuk Seri Najib Razak unveiled on Thursday seven new projects with a total committed investment value of RM5.6 billion that will generate RM2.4 billion in gross national income and create 18,522 jobs by 2020.

The projects encompass oil, gas and energy (RM4.1 billion), business services (RM947.1 million), electrical and electronics (RM270 million), healthcare (RM213.6 million) and palm oil (RM96.3 million).

"Low interest rates, healthy corporate balance sheets and the catalytic push from the ETP are starting to fuel an upturn in the private investment cycle," Lee said.

Private investment, he remarked, is enjoying by far the swiftest growth, jumping 22.4 per cent year-on-year in the first half of the year, underpinned by strong corporate profits, which are being recycled into spending on machinery and equipment.

"We estimate private investment to grow 15.8 per cent in 2012 and 10.2 per cent in 2013," he added.