06/03/2026

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FRIDAY | MAR 6, 2026

Unchanged OPR supports domestic demand: Experts

Ű BY HAYATUN RAZAK sunbiz@thesundaily.com

PETALING JAYA: Bank Negara Malaysia (BNM) has opted for policy continuity by keeping the Overnight Policy Rate (OPR) at 2.75%, a move economists say should help maintain stability for borrowers and businesses facing persistent global headwinds. Bank Islam Malaysia Bhd chief economist Imran Nurginias Ibrahim said the unchanged rate provides a degree of certainty for the market. “With borrowing costs remaining un changed, households and firms are able to plan their financial commitments with greater certainty. “Stable financing conditions are particularly important for sectors such as housing and small and medium-sized enterprises, where loan costs play a significant role in investment and spending decisions,” he told SunBiz . He said the steady policy rate should continue to support domestic consumption, which remains a key driver of Malaysia’s economic growth. “When interest rates are stable, households face fewer pressures from rising loan repayments, allowing them to maintain spending on goods and services. This helps sustain overall economic momentum and reinforces confidence among consumers.” For businesses and investors, Imran Nurginias said the unchanged OPR signals a predictable monetary policy environment. He said policy stability reduces uncertainty and encourages firms to proceed with investment plans, particularly in capacity expansion and productivity improvements. “In this context, the current policy stance supports a balanced economic environment where growth can continue while inflationary pressures remain contained.” MBSB Research chief economist Abdul Mui’zz Morhalim said the decision to keep the OPR unchanged ensures that the current monetary policy setting remains supportive of economic growth. “With inflation remaining stable and manageable, there is no urgent pressure for BNM to adjust the OPR.” As an open economy, he said, Malaysia’s growth outlook remains susceptible to downside risks from external developments. “Despite escalating tensions in the Middle East, the extent of the impact on the domestic KUALA LUMPUR: Malaysia’s sustainable furniture segment remains underdeveloped and risks missing out on growing global demand unless more manufacturers step up certification and green compliance, according to the Forest Research Institute Malaysia (FRIM). FRIM researcher and expert in wood and furniture technology Khairul Masseat ( pic ) said while global markets, particularly Europe and other advanced economies, are accelerating their shift towards eco-certified products, Malaysia’s green furniture ecosystem is still in its infancy. “For sustainable furniture in the global market, not yet,” he said, when asked about Malaysia’s competitiveness abroad. “Only three companies are listed under MyHijau for green furniture. We need more companies to register,” Khairul told SunBiz at the Malaysian International Furniture Fair 2026. MyHijau is managed by the Malaysian Green Technology and Climate Change Corporation (MGTC), which maintains a directory of certified green products and services eligible for government green procurement. Ű BY DEEPALAKSHMI MANICKAM sunbiz@thesundaily.com

“The impact of the US tariffs is not that significant. Still uncertain with the current ruling of the Supreme Court.” However, Aidil Rizal said uncertainty remains due to the war in the Middle East, which could affect oil and liquefied natural gas prices. “Further impact of the war is still uncertain. Two things about the war are important: whether it will escalate and how long it will last.” Economist Geoffrey Williams said that, based on BNM’s mandate, inflation remains low, the economy is growing well and the financial system is sound. He said uncertainty arising from the conflict in the Middle East is creating volatility, but this is precisely why the central bank is keeping interest rates steady. “It is not good policy to change rates in uncertain times because it just adds to the uncertainty and makes life more difficult.” BNM’s Monetary Policy Committee (MPC) decided to maintain the OPR at 2.75% at its meeting yesterday. In a statement, the MPC said building on the strengths of 2025, global growth would continue to be supported by sustained domestic demand, moderating inflation, robust tech investments and supportive fiscal and monetary policies. However, the committee also said the conflict in the Middle East has raised uncertainty in the global economy. “The impact on the global economy will depend on the length and severity of the conflict,” it said. In light of recent developments, the MPC said, downside risks have risen, arising from further escalation in geopolitical tensions and heightened volatility in global financial markets. “Additionally, there are continued concerns over potentially higher tariffs and elevated valuations in financial markets,” it said. The MPC said upside potential includes stronger technology spending, a milder impact of tariffs on economic activity and pro-growth policy measures in key economies. durability, structural strength, fire resistance and volatile organic compound (VOC) emissions. “We focus on sustainability and sustainable raw materials, green raw materials,” Khairul said. FRIM’s facilities include a large-scale emission chamber capable of testing full furniture sets, such as a queen-sized bed, for VOC emissions, going beyond standard small-sample testing. FRIM’s product certification is valid for three years, with annual surveillance audits and random sampling to ensure ongoing compliance. Certified companies can then apply for MyHijau listing, strengthening their eligibility for green procurement and export positioning. Market trends, meanwhile, are evolving. Khairul said rising urbanisation, smaller living spaces and lifestyle changes in Kuala Lumpur, Penang and Johor Baru are driving demand for smart, multifunctional and space-saving furniture segments that can align naturally with sustainable design principles. At the same time, export markets are placing stronger emphasis on ESG and environmentally responsible sourcing, mirroring regulatory tightening seen in sectors such as timber and palm oil. For Khairul, the way forward is clear – scale, certification and awareness.

o Bank Negara Malaysia keeps policy rate at 2.75%, warns downside risks have risen on global geopolitical developments

A pumpjack operating in the Montebello Oil Field in Montebello, California. An economist says uncertainty remains due to the war in the Middle East, which could affect oil and liquefied natural gas prices.– AFPPIC

that should avoid creating further distortions in the structure of production.” Ferlito said interest rates are not merely the “cost of money”; they are signals that coordinate saving, investment and intertemporal decisions across the economy. “When policy rates are pushed too far away from underlying market conditions, they risk encouraging malinvestment, excessive leverage and artificial sectoral expansion.” University of Malaya senior lecturer Dr Aidil Rizal Shahrin said the OPR at 2.75% suggests that economic growth remains on the right trajectory. He said both core and headline inflation are currently mild at 2.3% and 1.6%, respectively.

economy remains uncertain. “Malaysia may benefit from higher oil prices; however, if the conflict significantly weakens global demand, BNM still has room to ease the OPR to support economic activity,” he added. Center for Market Education CEO Carmelo Ferlito said BNM’s decision to maintain the OPR at 2.75% is broadly understandable in the current Malaysian context, as inflation remains relatively contained and domestic growth, while moderating, does not yet justify abrupt monetary intervention. “From my perspective, however, the most important point is that the OPR should not be interpreted as a tool to actively stimulate growth, but rather as an administered reference

FRIM: Malaysia’s green furniture sector needs scale to compete globally

are not many green furniture products, the price is high because the demand for the material is still new. So the end user has to pay more.” Khairul acknowledged that

Khairul noted that while some Malaysian manufacturers already export extensively, many have yet to formally position themselves under

recognised green certification schemes. “There are companies doing sustainable practices, but they focus on the local market and do not necessarily apply for MyHijau listing,” he said. The challenge, he added, is not merely branding but structural, involving cost pressures, raw material consistency and fragmented supply chains. “The biggest challenges are price and sustainable or continuous supply, especially for solid wood,” Khairul said.

Malaysian consumers are not yet fully attuned to the value proposition of sustainable furniture, with many prioritising affordability, especially through online platforms.

“We need more campaigns to create awareness. Customers need to understand the importance of sustainable furniture,” he said, adding that policy support exists but may require stronger execution. “MGTC is the champion for green products, not just furniture. But I think it is not enough yet,” Khairul said. Beyond certification, FRIM is positioning itself as a full-cycle research and development platform to help manufacturers bridge capability gaps. Through its InnoFrame initiative, FRIM supports raw material research, sustainable material development, design specifications, prototyping, product testing and commercialisation. The institute operates ISO/IEC 17025-accredited laboratories capable of testing furniture

While engineered boards such as MDF (medium-density fiberboard) and particleboard already meet E1-grade emission standards and are considered relatively green, other components in furniture manufacturing, including plastics, metals, adhesives, foam, and fabrics, pose greater compliance hurdles. “Sponge and glue, for example, are more difficult. It is not only about wood,” Khairu said. Cost remains a key barrier, particularly in a price-sensitive domestic market. “When there