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Indicators positive for Malaysia’s economy [08-03-2011]  
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Strong growth in the stock market and the rally in commodity prices should augur well for the country's economy this year, said Asian Strategy and Leadership Institute (Asli) chief executive officer and director Datuk Michael Yeoh.

He said the country's gross domestic product was expected to grow at 6% due to the prices of crude palm oil and rubber as well as the recovery in the export sector.

“More important, Bursa Malaysia is showing strong, resilient growth where it has crossed historical highs in January. This could create a wealth effect on the economy.

“The bourse slid in February possibly due a short-term external impact and the crisis in the Middle East.

“Driven by strong domestic consumption, commodities export and increase in foreign participation, there's a strong possibility that we could reach the 1,700-point level by year-end. Also by year-end, it's not impossible that foreign investors' participation in our local stock market will increase to between 30% and 40% from the current 25%,” he told reporters on the sidelines of the Greater KL: smart city of the future conference organised by Asli and IBM yesterday.

But the more worrisome factor would be the level of inflation which was brought on by the increase in oil, transport and food prices.

“Inflation will likely grow more than the current level of 3% this year,” he said.

Yeoh stressed that if oil prices remained above US$100 per barrel for more than three months, the Government might have to consider increasing the consumer oil price.

“This is despite its commitment to retain RON 95 at the current price. But, if the Government does not want to increase the level of oil subsidy, it will have to increase the oil price,” he said.

Yeoh said the current high oil prices could be temporary due to the crisis in Libya and the Middle East.

“There's a posibility that prices will drop if the crisis is resolved,” he said.

On Greater KL, Yeoh said the projects planned were comprehensive but he hoped the Government would conduct more regular open dialogues with the stakeholders for transparency.

“The stakeholders, the public and business community, must know the process of implementing these projects for greater transparency. People should know what is in store for them arising from these projects as their input could help enhance the implementation of these projects,” he said.

It is reported that an estimated RM172bil would be required over the next 10 years to ensure the success of Greater KL to make it one of the top 20 cities in the world.

The Greater KL project included the 100-storey Warisan Merdeka, Kuala Lumpur International Financial District, mass rapid transit system as well as revitalisation of rivers and waterfront in Selangor.

IBM Singapore Pte Ltd director (government & education, healthcare & life sciences and growth market unit) Madhav Ragam said the time was right for Malaysia to move towards Greater KL as it could learn from others' knowledge and experiences in growing a city.

“IBM has been part of this development elsewhere and is looking forward to its participation in Greater KL here,” he said.

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