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FRIDAY | JAN 16, 2026

M’sia ready to face external headwinds KUALA LUMPUR: Malaysia is on a relatively stable footing two weeks into 2026, with Bank Negara Malaysia expected to maintain a mildly accommodative Overnight Policy Rate at 2.75%. o Country on stable footing with accommodative monetary policy, AI-driven tech upcycle among supportive factors: Maybank IB chief economist Ű BY JOHN GILBERT sunbiz@thesundaily.com turing, as well as digitalisation initiatives, data centres and sup porting infrastructure, he noted. “Looking ahead, particularly in the first half of this year, a new catalyst is expected to help sustain momentum in the investment upcycle: the introduction of the New Investment Incentive Frame work (NIIF),” Suhaimi said.

Further, Suhaimi said, energy transition is the second investment cluster, extending beyond re newable generation to include grid upgrades and expansion, as well as battery energy storage systems, which are increasingly critical to supporting renewable energy de ployment. “Approved investments, parti cularly within domestic direct investment, also point to a sizeable property-related component, which is driven primarily by industrial real estate, notably the development of industrial parks,” he added. Suhaimi said the expansion of industrial parks is generating posi tive spillovers across supporting sectors, including connectivity, transport infrastructure and uti lities such as power and water. Importantly, indicators of invest ment realisation, such as bank loans for industrial buildings, factories, and land, continue to show strong momentum of around 11% to 12% year over year, he added. Down south, Suhaimi said, the Johor-Singapore Special Economic Zone has begun to yield tangible investment outcomes over the past year. “Based on nine-month 2025 investment approval data, Johor and Singapore rank at the top, with Johor by state-level investment approvals and Singapore as the leading source of foreign direct investment into Malaysia.

2026-2030. “We are seeing strong mo mentum building in the investment space and remain positive on the JS SEZ, supported by the rollout of Malaysia Vision Valley 2.0, which is expected to drive further infra structure upgrades, enhancements to industrial parks, and continued expansion of industrial property developments. “We also maintain a constructive view of Selangor,” Lim said. She noted that as Selangor enters the second phase of its development plan, focus is expected to intensify on aerospace, water infrastructure, and further expansion under the Carey Island development, while Sarawak should continue to see positive news flow in the renewable energy land scape. “Banks, as a key sector, are expected to continue investing in renewable energy and related development segments in 2026. “Within the consumer space, we see value in Nestle, which, despite appearing expensive on a price-to earnings basis, remains a key defensive proxy,” Lim said. - by JOHN GILBERT He noted that the NIIF was originally slated for announce ment in the third quarter of last year but the framework was postponed. The 2026 Budget indicated that the NIIF for manufacturing would be announced this quarter, followed by the NIIF for services in the next quarter. For 2026, Suhaimi stated that the outlook indicates moderate but resilient global growth, supported by policy measures, limited trade disruptions, and an AI-driven tech nology upcycle that provide signi ficant offsets to external uncer tainties. Malaysia’s growth continues to be underpinned by strong domestic demand, supported by healthy income growth, a tight labour market, robust tourism activity and a multi-year investment upcycle spanning technology, energy transition, industrial real estate and both private and public sector capital spending.

factured in Taiwan, he said. Suhaimi expressed his expectation for further clarity on the potential introduction of product-specific semiconductor tariffs over the next 90 days. He said the invest ment upcycle to Malaysia has been recurring since 2024, and recent data con tinue to reinforce this trend. “Based on avail able figures, ap proved investments

global semiconductor sales now expected to grow by 26% by 2026. This trend is parti cularly significant for the Asean-6 economies, including Malaysia, given their deep inte gration into the global electronics and electrical supply chain. “We see that strong global chip sales would therefore be supportive of Malay sia’s electronics sector, reinforcing export per formance. “Importantly, this

Maybank Investment Banking Bhd group chief economist Suhaimi Ilias ( pic ) said this stance provides a supportive domestic backdrop amid uneven global growth. More broadly, he said, the conti nuation of accommodative monetary policy, coupled with the prospect of additional interest rate cuts in the first half of 2026, should help Malaysia cushion downside risks to the global economy. “These conditions are expected to act as a mitigating force against external headwinds. What is parti cularly noteworthy is the resilience of global economic activity, despite last year’s tariff actions and trade policy uncertainty under the US President Donald Trump administration,” he said in his presentation at the Malaysia 2026 Macro and Market Outlook virtual conference yes terday. Suhaimi noted that a key factor has been the artificial intelligence driven investment cycle, which has released significant pent-up demand. The strong resurgence of major US technology firms has had positive spillover effects, most notably in global semiconductor sales, re inforcing growth momentum across the broader technology supply chain. “By the end of last year, forecasts were revised sharply upwards, with Maybank Investment Bank Bhd (Maybank IB) expects the FBM KLCI for 2026 to be a bearish scenario, pointing to a target of 1,730 points and a possible lift to 1,850, implying a 16 times multiple for the year, driven primarily by the banking sector, which remains the largest component of the benchmark index. Research head Lim Sue Lin ( pic ) said, however, the FBM KLCI could potentially bottom at around 1,550, while in terms of earnings growth – an important focus for fund managers and investors – the investment bank is projecting approximately 8% growth in 2026, driven once again by the banking sector. “While banking sector earnings growth may be a modest 5%, its roughly 50% share of total KLCI sector earnings gives it significant weight in our overall assessment. “We also expect sectors such as construction and healthcare to continue delivering strong earnings growth this year, although there are emerging signals of potential head winds from the utilities and telecom munications sectors,” she said in her presentation at a media briefing on KUALA LUMPUR:

themed “Malaysia 2026 Macro and Market Outlook” yesterday. In terms of infrastructure, Lim said, Malaysia continues to offer a robust pipeline of projects nationwide, spanning from the northern states to the south – particularly Johor, supported by momentum sur rounding the Johor-Singapore Special Economic Zone (JS-SEZ) – as well as extending to Sabah and Sarawak, where numerous projects remain available for tender. On the consumption front, household conditions have largely stabilised following concerns about subsidy rationalisation that materia lised mid-last year, providing a more supportive backdrop for consumer spending. Recently announced wage measures, such as increases in civil servant salaries and minimum wage adjustments, along with consistently strong employment trends, further support this resilience. “Collectively, these factors should underpin continued resilience in consumer staples, retail, and mass market discretionary spending. We have also taken the opportunity to assess trends within do-it-now service outlook is not merely about miti gating downside risks to growth; it also points to potential upside drivers that warrant close attention,” Suhaimi said. For Malaysia, he added, the growth narrative in recent years has been characterised by resilient domestic demand, offsetting periods of volatility in net external demand. “We continue to monitor de velopments around semicon ductor tariffs. The US has imposed a 25% tariff on advanced and AI related chips exported to China by companies such as Nvidia and AMD, including those manu

to Malaysia rose 13% in the first nine months of 2025, indicating that 2025 is shaping up to be another solid year, potentially matching or even exceeding 2024 levels. “More importantly, investment approvals serve as a leading indi cator for actual capital deployment, typically leading realised invest ment by 18 to 24 months. This suggests that the current mo mentum in approved investments could translate into sustained investment growth through 2027,” he said. Leading the investment upcycle is technology, encompassing semi conductors and chip manufac

“While external risks remain – particularly around trade policy, semiconductor tariffs and the durability of the AI cycle – current indicators suggest these are more likely to moderate growth rather than derail it, leaving Malaysia well positioned to sustain momentum into 2026 and beyond,” said Suhaimi. Maybank IB: Upside potential to 1,850 for FBM KLCI on bank-led growth

Lim said.

transactions,” Lim said. She said the macro economic optimism the bank research arm is seeing has led both businesses and in vestors to adopt a more constructive stance. Against this backd rop, Maybank IB has identified five key themes for 2026. The first theme is the infrastructure up swing, where Maybank IB sees growing mo mentum in real invest

The third theme centres on the green and energy transition, with a strong emphasis on renewable energy. Policy tailwinds and momentum since the National Energy Transi tion Roadmap 2050 launch in 2023 under pin a positive multi year outlook. The fourth theme is on domestic demand resilience, driven by supportive macro con

ments, such as rail projects, logistics related infrastructure, industrial parks, and data centres, with potential spillover benefits to the property sector. The second theme focuses on technology and industrial trans formation. “While near-term uncertainties persist, we remain cautiously con structive on Malaysia’s long-term technology prospects, supported by national initiatives such as NIMP 2030 (New Industrial Master Plan 2030) and the National Semiconductor Strategy,”

ditions by consumer-related sub-themes, where Maybank IB continues to see room for incremental improvement despite regulatory constraints. The fifth theme relates to tourism and state-driven activity, which cuts across multiple sectors. “We remain positive on Johor, increasingly constructive on Penang and Malacca amid renewed develop-ment momentum, and see further expansion opportunities in Greater KL and Selangor as the state enters the second Selangor Plan for and under-pinned