25/03/2025

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TUESDAY | MAR 25, 2025

Rising US tariffs could affect growth rates, price dynamics

BNM assets at RM621.5b in 2024, dividend to govt totals RM5.25b KUALA LUMPUR: Bank Negara Malaysia’s (BNM) total assets as at Dec 31, 2024 decreased 1.61% to RM621.54 billion from RM631.74 billion in the previous year, with international reserves continuing to account for the bulk of assets at 84% (2023: 82%). Liabilities comprised mainly currency in circulation and deposits by financial institutions, amounting to RM170.72 billion and RM131.92 billion, respectively, as at end 2024 (2023: RM161.82 billion and RM176.66 billion, respectively), BNM said in its Annual Report 2024 released here yesterday. For the financial year ended Dec 31, 2024, BNM recorded a net profit after tax of RM13.16 billion (2023: RM7.16 billion) on the back of a higher total income of RM14.98 billion (2023: RM8.77 billion), net of costs associated with managing the reserves portfolio and monetary operations. The higher income was largely contributed by stronger investment returns of the international reserves and portfolio activities in the foreign exchange and global securities markets. Organisational expenses amounted to RM1.78 billion in 2024 (2023: RM 1.57 billion), with staff costs accounting for about half of the expenses, it said. Of the RM13.16 billion net profit, RM7.91 billion (2023: RM4.31 billion) will be transferred to the Risk Reserve, which stood at RM147.90 billion as at end-2024 (2023: RM151.25 billion). “As our international reserves are in foreign currency, building sufficient financial buffers is important to cushion against future financial market volatility and shocks as well as managing the risk of exchange rate fluctuations in an uncertain global landscape,” said the central bank. The remaining net profit of RM5.25 billion will be paid as a dividend to the government (2023: RM2.85 billion). Meanwhile, Malaysia’s international reserves eased to US$118.0 billion (RM523 billion) as at March 14 from US$118.3 billion on Feb 28. The central bank said the reserves position is sufficient to finance five months of imports of goods and services and is 0.9 times the total short-term external debt. – Bernama

Ű BY JOHN GILBERT sunbiz@thesundaily.com

2.5%, respectively. Inflation is expected to trend higher but will remain manageable, amid easing global costs and the absence of excessive demand pressures. In 2024, Malaysia’s economy recorded solid growth of 5.1%, with inflation remaining moderate at 1.8%. The ringgit strengthened by 2.7% against the US dollar and rose 7.5% against major trading partners. BNM also reinforced its regulatory framework to maintain financial stability and protect consumers. In 2024, the central bank introduced eleven key prudential and market conduct policies to enhance capital framework reforms, improve risk management standards, and ensure fair financial practices. Abdul Rasheed said that when BNM developed its forecast, the central bank adopted a balanced approach that reflected optimism and realism. Elaborating on the impact on the domestic economy, he said domestic demand is expected to remain stable. “It is important to recognise that we are starting from a position of strength. With a solid foundation in domestic demand, we anticipate it will continue to drive economic growth.” On economic growth, Abdul Rasheed said BNM’s primary objective in market policy is to ensure price stability while fostering sustainable and conducive growth. “These two elements – growth and inflation – are at the core of our policy considerations. In our assessments, we carefully evaluate the

o Bank Negara mindful of uncertainties, governor says critical question is how duties will impact countries that are subject to them

KUALA LUMPUR: Bank Negara Malaysia (BNM) is mindful of the considerable uncertainties sur rounding various countries’ tariff policies, with particular focus on which nations will impose tariffs, the extent of their coverage and how they will be applied. Governor Datuk Seri Abdul Rasheed Ghaffour said the critical question is how these tariffs will impact the countries that are subject to them. “To explore this, we analysed the current effective tariff rates the US imposes on its imports and then projected a significant increase, effectively tripling those rates. This would result in tariffs ranging from 10% to 20% for countries like Canada, China, Mexico, and even the UAE (United Arab Emirates),

with tariffs potentially covering anywhere from 50% to 100% of their imports. “We also considered the conditions within these countries, as these will inevitably influence US growth. This, in turn, will impact overall growth rates and price dynamics. All of these factors have been incorporated into our baseline forecast,” he told reporters during the release of BNM’s flagship publications yesterday. The central bank released its Annual Report 2024, Economic and Monetary Review 2024, and Financial Stability Review for the

Second Half of 2024. In its Economic and Monetary Review, it reaffirmed its outlook for steady economic growth this year, citing strong domestic demand despite increasing external challenges. BNM has also maintained its forecast for Malaysia’s gross domestic product (GDP) to grow between 4.5% and 5.5% in 2025. This projection aligns with the Ministry of Finance’s estimates in Budget 2025. For 2024, the economy recorded growth of 5.1%. In 2025, headline and core inflation are expected to average between 2% and 3.5% and 1.5% and

balance of inflation and economic expansion risks. This approach helps us navigate potential challenges and uncertainties.

See also page 14

Abdul Rasheed (centre) and other Bank Negara Malaysia officials displaying the central bank’s flagship publications yesterday. – BERNAMAPIC

Agrobank projects 75% increase in loan disbursements this year

in several areas, such as loan disbursements to customers. We exceeded RM10 billion in disburse ments last year. Our net growth last year was more than 70% higher than the year before,” he told SunBiz in an interview. For the year, Tengku Ahmad Badli Shah said he anticipates the growth to continue as it focuses more on SMEs and products related to micro financing and SMEs involved in national food production activities. “Together with the Ministry of Agriculture and Food Security, we are crafting a strategy based on the National Agrofood Policy to boost local food production and achieve a higher level of self-sufficiency,” he added.

Tengku Ahmad Badli Shah said there are still many areas where the country needs to intervene financially to boost food production in line with their national food security goals. “To increase food production so it is accessible to Malaysians; and to ensure that food is produced in sufficient quantities so prices remain within the affordability range of the average Malaysian,” he added. Several food segments still have high import dependency, including ruminant cattle, chicken and poultry, he noted. “As such, we will prioritise loan disbursements to areas with high import reliance. There’s still a significant need for financial inter

vention to increase local food production and support national food security goals.” Tengku Ahmad Badli Shah said the government has mapped out clear strategic directions for the develop ment of the agriculture industry with the National Agrofood Policy 2021 2030 and the National Commodity Policy as well as in the financial sector, with the Financial Sector Blueprint 2022-2026. “Such national-level policies provide clarity on the expectations and strategic priorities of the government in the delivery of the developmental agenda for both industries.” This in turn provides guidance to

developmental agencies such as Agrobank as to how it is expected to execute its mandated role, Tengku Ahmad Badli Shah said, adding that the direction of these policies is encapsulated in its Strategic Business Plan 2021-2025 (SBP 2021-2025). “We stand guided by our SBP, a five-year roadmap that charts our progressive journey towards the delivery of strategic outcomes that support the developmental agenda of our key stakeholders. Our SBP ensures our keen focus on the things that matter as we continue to develop our unique value proposition and competitive advantages in the agriculture industry development ecosystem.”

Ű BY HAYATUN RAZAK sunbiz@thesundaily.com

KUALA LUMPUR: Agrobank (Bank Pertanian Malaysia Bhd) has projected a 75% increase in loan disbursements this year, with expected net growth of around RM1.5 billion, driven by its SME segment and the national food security initiatives. Agrobank president and CEO Datuk Tengku Ahmad Badli Shah Raja Hussin said the focus will be heavily on small and medium enterprises – 70% for SME development, and 30% for microenterprises. “For the year 2025, we expect our achievements to improve further because in 2024, we recorded a high