The reasons why good infrastructure projects are good for development is because it brings many economic benefits. Connectivity between more towns and cities meant that economic growth will be wider instead of just that one major city for example. So, this is where we reap the multiplier effects. We do not need to look to those super huge developments. Just look at Sintok (just one row of shops) before Universiti Utara Malaysia (UUM) campus there and Sintok after the student population grew. More jobs, more shops and more population. Suddenly, it seems like UUM campus was a good decision even though it was criticised as being too far inside long long time ago. A much bigger development would be our KLIA built in Sepang which recently was in the news for the wrong reason. Earlier article here. Now, there’s that Aeropolis being mentioned even not much is heard of it recently. We have some positive news recently for ECRL and Bandar Malaysia.
Article in edgeprop.my here The World Bank Group is positive about the revival of the East Coast Rail Link (ECRL) and Bandar Malaysia projects. It said that these would have a positive impact on the country’s economic growth in the medium term. World Bank lead economist for Malaysia, Richard Record said, “Certainly, public investment would be supportive of growth in the medium term from a Gross Domestic Product perspective.” He however added a caution too, “Once projects are under implementation, the government needs to think very carefully and work hard to ensure careful project management, competitive selection, public procurement and efficient management to ensure the maximum returns on public invested asset.”
With regards to the ringgit’s movement, he shared about underlying economic fundamentals of Malaysia. He said a diversified economy benefited from various sources of growth, domestic and foreign, manufacturing for export, domestic consumption as well as a range of sectors and areas. Thus, he said this of Malaysia. “Perhaps, the focus there is on strengthening those fundamentals and how Malaysia can improve its productivity and competitiveness over the medium term, and that would drive the exchange rate over the medium term.” As for the benefits (for a short period) of a weaker currency, he said, “An exchange rate that has weakened somewhat helps in terms of external competitiveness in times of slowing global growth. It doesn’t hurt to have a weaker exchange rate in terms of export performance.” Article in edgeprop.my here
The economic benefits may not show up just from these announcements of revival of continuation. However, it is important for the market to see the positives from all these positive developments instead of the ‘everything postponed’ or ‘everything cancelled’ mentality that was prevailing for past many months. Let’s understand that when sentiment is too negative, decisions could not be objective enough and when the investment and buying stops, then it becomes a self-fulfilling prophecy of a bad economy. Domestic consumption is a huge part of the economy and a positive sentiment will help tremendously. When we view some properties which are attractively priced, let’s view it as an opportunity yeah. Happy following.
<Featured Image is courtesy of Stock Photos from Khakimullin Aleksandr >
Article written and edited by Charles. News article summarised by Dina Batrisyia.
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