Published November 25, 2008

Malaysia faces tough road ahead, says Najib

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(LIMA, Peru) Malaysia's future prime minister Najib Razak vowed to sharpen the country's competitive edge and regain the ruling party's two-thirds majority in Parliament when he takes the helm, even as financial turmoil takes a toll on the resource-rich nation.

The country faces lower revenues due to plummeting prices for its petroleum and palm oil as well as a drop in its overall exports and foreign investments that have been driving moderately high economic growth, said Mr Najib, set to be in the saddle in March. 'It is going to be tough. I've got my hands full,' the current deputy prime minister told AFP in an interview on the sidelines of the 21-member Asia-Pacific Economic Cooperation (APEC) summit which he attended.

'Malaysia has solid fundamentals but what is hurting us is in terms of our export market, commodity prices falling and the lack of FDIs (foreign direct investments) flowing in next year,' Mr Najib said.

He said Malaysia had to compete hard for investments with countries such as China and India.

'So, we really have to make ourselves much, much more competitive and attractive and our best hope is to stimulate domestic demand by introducing our fiscal stimulus and implementing projects that are productive and have high multiplying effects,' he added.

Malaysia has joined countries such as China and Japan in introducing programmes to stimulate growth amid financial turmoil, allocating RM7 billion (S$2.9 billion) on 'high-impact' projects including roads, schools and low-cost housing.

The government has scaled down its growth target to 5 per cent for 2008 and 3.5 per cent next year although some analysts believe the figure next year could be lower.

Asked whether he was confident Malaysia could avert recession, he said, 'I still think so, provided our execution of these stimulus projects is on track.' - AFP