THE financial services sector, which grew at an average of 10 per cent in the past decade, is expected to continue the momentum by expanding more than 10 per cent this year.
Deputy Finance Minister Datuk Donald Lim said this would be driven by domestic borrowings and the inflow of foreign funds.
"This year, the sector will grow a minimum of 10 per cent ... because the foreign funds are coming into the stock market, insurance, bonds, sukuk and others.
"Rather than investing in slow-growing Europe or the US, large funds from the West would go to the high-growth region of Asia, especially Malaysia, due to the country's stability," he told a news conference after officiating at a forum on Economic Transformation Programme (ETP), organised by Malaysian Financial Planning Council (MFPC) in Kuala Lumpur yesterday.
Also present was MFPC president Kee Wah Soong.
Lim said the financial services industry is both a growth sector as well as an enabler to the growth of other sectors.
He said loans extended by financial institutions in Malaysia help local industries to expand and generate more businesses - thus help meet the government's target under the ETP.
Lim said a survey conducted by Bank Negara Malaysia found that employees in the financial services sector are paid 70 per cent more than their counterparts in other sectors.
"The government is looking at how to increase the salary of employees in other sectors," he said, adding that a minimum wage policy is a step towards that.
Lim also said that Malaysia's economic outlook for this year is positive and it is expected to grow between 5.5 per cent and 6 per cent.
"What is important is we have to ensure that the leakages are small and all plans and strategies are executed," he said.
Despite slower external demand, this year's growth would be supported by expansion in private domestic demand, favourable employment conditions, firm commodity prices and an accommodative policy environment.
Asked whether the rising inflation would have an impact on the growth this year, the deputy minister said although the rate would be higher than last year's 1.7 per cent, it is still manageable.