Economists say funding for the projects must come in fast
PETALING JAYA: For the economy to benefit from the investments announced by the Government under the Economic Transformation Programme (ETP), approvals must be fast-tracked, economists said.
They told StarBiz that the projects must be approved as soon as possible for them to have an impact in the first-half of the year which is showing signs of a slower growth compared with last year.
They pointed out that these investments would give a boost to domestic demand, which would have to support growth since external demand has been dropping from early last year.
Prime Minister Datuk Seri Najib Tun Razak announced 19 projects valued at RM67bil yesterday with impact coming from the RM36bil generated in gross national income and 35,000 new jobs.
This was a follow-through from the 18 projects announced last Oct 25 during the launch of the ETP.
While the projects would take some years to complete, economists pointed out that the funding from this project would have to come in as soon as possible in order for the impact to be felt.
AmResearch Sdn Bhd senior economist Manokaran Mottain said investments would usually be spread over five years.
“The bulk of the investments will come in the third year after the approval is given but now with the fast-track approvals, the process may be different and the bulk may come in the second year,” he said.
Manokaran said the value of the projects gave a clearer picture of the incoming investments as well as the overall health of the economy.
“These numbers are helping us to gauge how well the domestic economy can hold up since external demand has fallen,” he said.
Meanwhile MIDF Research chief economist Anthony Dass said the key issue remained when the projects would take-off.
“Once these projects begin, the investments will be continuous,” he said, adding that after approvals were given, the funds would flow in within three months.
Dass said the faster the projects were rolled out, the faster the positive impact would be felt.
“Since the economy is experiencing slower growth due to the drop in exports, the Government will have to boost domestic demand and part of this will come from the investments,” he added.
Dass said if these projects were rolled out in the middle of the year, then the impact would only be felt at year-end or next year.
RHB Research Institute Sdn Bhd economist Peck Boon Soon said there might not be much concerns over investment flows into the oil and gas industry.
“Investments will be easier to realise in oil and gas especially with the higher price of oil and the presence of foreign joint venture partners,” he said.
Peck said the Government might have realised this and pushed for these projects to be implemented first over other projects.
Source : The Star