Proactive measures a step in the right direction, says economist

The proactive measures announced by Prime Minister Datuk Seri Najib Tun Razak today to strengthen the economy is a step in the right direction, an economist said.

To a large extent, the measures have reflected the prevailing economic conditions and the desire to maintain the pace of fiscal consolidation, said Bank Islam Malaysia Bhd Chief Economist Mohd Afzanizam Abdul Rashid.

"Therefore, it is indeed a step in the right direction," he told Bernama.

Afzanizam said the reduction in import duties was deemed as a sensible measure as this would allow businesses to reduce their imported cost and maintain reasonable profit margins.

"This is especially true in the case of the automotive industry whereby some of the inputs were sourced from overseas markets.

"In addition, the increase in allocation for the tourism industry by RM80 million would allow the industry to take advantage of the weak ringgit and allure more tourists to come to Malaysia," said Afzanizam.

He said the latest number showed that tourist arrivals in the first quarter of 2015 fell 5.0 per cent, quarter-on-quarter.

"However, if we were to dissect the numbers based on region, it showed that tourists from America and Europe rose by 2.1 per cent and 10.8 per cent, respectively," he added.

Earlier in Putrajaya, Najib, who is also Finance Minister, announced specific and proactive economic measures to deal with the country's current economic development and financial situation.

The government adopted proactive measures as short- and medium-term initiatives to protect the real economy and sustain economic growth, said Najib, adding they were necessitated to stabilise the financial market and support business activities.