Structural Reforms Increasingly Key To Malaysia’s Growth As BNM Maintains OPR
By Nurunnasihah Ahmad Rashid
KUALA LUMPUR, July 9 (Bernama) -- Bank Negara Malaysia’s (BNM) decision to maintain the overnight policy rate (OPR) highlights the growing importance of structural reforms and investment policies in driving Malaysia's long-term growth, with monetary policy providing a stable backdrop for economic expansion, according to an economist.
Today, the central bank maintained the benchmark interest rate at 2.75 per cent during the seventh consecutive Monetary Policy Committee (MPC) meeting, saying that the current monetary policy stance remains appropriate and consistent with the outlook for continued price stability and sustainable economic growth.
IPPFA Sdn Bhd director of investment strategy and country economist, Mohd Sedek Jantan said while the OPR remains an important tool for preserving macroeconomic stability, reforms aimed at strengthening productivity, competitiveness and the investment ecosystem will play a bigger role in determining Malaysia’s long-term growth potential.
“The OPR remains an important macroeconomic tool for maintaining price stability and supporting sustainable growth.
“However, Malaysia’s medium- to long-term growth increasingly depends on structural reforms rather than monetary policy alone,” he told Bernama.
He said initiatives such as strengthening the investment ecosystem, accelerating the National Semiconductor Strategy, enhancing infrastructure and workforce skills, implementing fiscal reforms and attracting high-value foreign direct investment would have a greater influence on Malaysia’s productivity and economic transformation than monetary policy alone.
Mohd Sedek said a stable interest rate environment also complements Malaysia’s efforts to attract investments into capital-intensive industries -- including artificial intelligence (AI), semiconductors and advanced manufacturing -- by providing greater certainty over financing costs.
At the same time, he said investors also assess factors such as infrastructure quality, skilled talent, regulatory efficiency, energy reliability and government incentives before making investment decisions.
“Stable interest rates provide investors with greater certainty regarding financing costs and investment returns, particularly for long-term capital-intensive sectors such as AI, semiconductors and advanced manufacturing.
“In that respect, OPR stability complements Malaysia’s broader investment ecosystem rather than serving as the primary attraction,” he added.
On the policy outlook, Mohd Sedek said BNM is expected to remain cautious and continue assessing incoming economic data amid uncertainties surrounding global geopolitics and commodity prices.
He said inflation remains the most important indicator that could influence any change in monetary policy, adding that the central bank would likely maintain the OPR for the rest of the year if price pressures remain contained and economic growth stays resilient.
“Given the elevated uncertainty surrounding global geopolitics and commodity prices, there is little justification for either tightening or easing policy at this stage, and BNM is therefore likely to remain data-dependent, carefully assessing incoming economic developments before making any policy adjustments.
“As long as inflation remains anchored and growth stays resilient, we expect the OPR to remain unchanged at 2.75 per cent through to year-end,” he said.
BNM is scheduled to hold two remaining MPC meetings this year to review the OPR, which has been maintained at 2.75 per cent since July 9, 2025.
-- BERNAMA