Rehda Institute’s CEO Series 2025: Economist forecasts continued stable OPR, boosting property market

• The current rate of 3% is already lower than the 3.25% observed in early 2019, indicating a relatively comfortable interest rate environment. Furthermore, the recent strengthening of the ringgit against the US dollar has diminished the need for any rate increases, said Sarah.

PETALING JAYA (Jan 20): Bank Negara Malaysia (BNM) will most likely maintain the overnight policy rate (OPR) at 3% this year, and this stable and relatively low interest rate environment will free up capital for people to borrow, especially for things like property, said an economist at the CEO Series 2025 Economy & Business Forum.

Hosted by the Real Estate and Housing Developers' Association Malaysia (Rehda)’s training and research arm, Rehda Institute, this annual gathering of property developers was held last Thursday (Jan 16) at Le Meridien Hotel here.

This year, it brought together nearly 400 business leaders to discuss the economic outlook and its impact on the real estate market. The forum also featured international speakers and delegates from Singapore, Vietnam, Hong Kong and Australia, representing not just property, but a diverse range of sectors including manufacturing, banking, construction and technology.

According to Moody's Analytics Singapore economist Sarah Tan, the stable interest rates will be important to maintain the affordability of mortgages and development financing.

"We expect rates to be on hold. The current rate today at 3% is actually already lower than the early-2019 rate of 3.25%. So I'd say we're at a rather comfortable position now in terms of interest rates. At the same time, the ringgit recently regained some strength against the US dollar, and the pressure to raise rates has ceased," said Sarah.

Malaysia to gain from Trump’s new tariffs on China

Regarding the impact of recently-reinaugurated US President Donald Trump's new tariffs imposed on China, Affin Group chief economist Alan Tan said that Malaysia will continue to benefit from trade diversion, where some Chinese exporters may re-export their goods to the US through intermediary countries such as Malaysia.

"The countries that run significant trade deficits with the US, such as China, Mexico and Vietnam, are the ones most likely to be affected by Trump's tariffs. However, Malaysia's trade deficit with the US is not as alarming compared to other countries. Additionally, we are not on the so-called currency manipulator watch list, so Malaysia is likely to benefit from Trump’s tariffs," Alan added.

JS-SEZ a game-changer for regional economic cooperation

Socio-Economic Research Centre (SERC) executive director Lee Heng Guie believes that, given the close collaboration between the Johor and Singapore governments, the Johor-Singapore Special Economic Zone (JS-SEZ) is poised to be a game-changer in regional economic cooperation. The development of the RTS (Rapid Transit System) Link, together with existing transportation infrastructure, will further solidify the foundation for the SEZ's success.

"Businessmen, investors and SMEs (small and medium enterprises), you must seize this opportunity. Collaborate with your existing partners or actively seek new ones, whether they are from China or other countries. Leverage the investment opportunities presented within the property and private investment sectors outlined in the SEZ's plan," Lee urged.

EU-Malaysia Chamber of Commerce and Industry (Eurocham) chairman Peter Lenhardt stated that Malaysia's prime location at the heart of ASEAN (Association of Southeast Asian Nations) provides unparalleled access to a vast consumer market of nearly 700 million people. Moreover, Malaysia serves as a strategic location in Southeast Asia, making it an ideal base for businesses seeking to establish a regional presence with global reach.

"Malaysia offers competitive operational costs compared to its regional peers, making it an attractive proposition for businesses looking for efficiency without compromising on quality. The average labour costs in Malaysia are about 40% below China's. The blend of strategic location, skilled talent, pro-business policies, and cost efficiency solidifies Malaysia's position as a preferred investment destination and trading partner for Europe," he stressed.

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