Malaysia needs lower interest rates

The Malaysian government needs to adopt a more accommodative policy such as a low interest rate regime in Budget 2012 to further spur the domestic economy, says Malayan Banking Bhd President and Chief Executive Officer Datuk Seri Abdul Wahid Omar.

Taking stock of what is happening in the United States and Europe, he said it was important for the government to address the issue especially in respect to higher cost of living.

"With what is happening in the US and Europe, we can expect slower growth in the economy for the coming months and coming years.

"Therefore, it is very important for a more accommodative policy to be adopted (so) it is our hope that the low interest rate environment, for example, will remain so that the economy will keep growing," he told reporters after the launch of Maybank's flagship branch in Kota Damansara here today.

Abdul Wahid was commenting on his expectation for the upcoming Budget 2012, to be tabled by Prime Minister Datuk Seri Najib Tun Razak on Oct 7.

"I think on our part as bankers, our role is basically to mobilise deposits, to be used to fund productive projects and to keep economic growth going (so) there's a need to keep interest rates low to further spur the economy," he said.

Abdul Wahid added with lower cost of funding, more entrepreneurs would be able to participate in the upcoming economic projects especially under the Economic Transformation Programme.

"I think it is our hope that the budget will provide further clarity and reinforcement of the many projects that have been launched earlier," he said.

On whether Budget 2012 would be able to boost the market, he said what was important was to continue to have a base that would continue to drive positive growth for Malaysia as an economy.

"I think one must appreciate that Malaysia is not isolated. We live in a global environment so whatever happens in the US and Europe will also affect us.

"So. I guess when you address the fundamentals, gradually the stock market will recover but I don't think we will be isolated in that sense," he said.

He added Malayan Banking Bhd expects its topline growth to be lower but remain profitable in the current financial year ending Dec 31, given the slower economic developments in the United States and Europe.

Abdul Wahid said the economic slowdown would naturally see the demand for credit tapering down hence resulting in the decline of capital market-related activities.

Abdul Wahid was commenting on whether the bank's current financial year results would be affected by the global economic slowdown.

For easy comparison of group results with other listed companies, Maybank recently changed its June 30 financial year-end to Dec 31.

The country's top financial and banking group recorded a revenue of RM13.4 billion at end-June.