Malaysia Economic Monitor, June 2015

After a strong finish in 2014, growth
moderated in early 2015. Malaysia’s economy expanded by 6.0
percent in 2014, accelerating to 7.3 percent q/q saar in
Q42014 due to resilient domestic demand and a pick-up of
exports. Growth moderated to 4.7 percent q/q saar in Q1 2015
on account of weaker external demand, but domestic demand
remained strong. To transform the planning and delivery of
urban transport, Malaysia may consider prioritizing the
following reforms: (a) Establish lead transport agencies at
the conurbation level that spearhead an integrated approach
towards the planning and delivery of urban transport across
different modes; (b) identify and implement sustainable
financing mechanisms for the lead agency. Introducing local
taxes on fuel would not only result in environmental gains
and trim the fiscal deficit (by RM10-19 billion), but also
fund transport (for example, 24 percent of Vancouver’s
transit system is funded by municipal gas taxes). Reviewing
impediments to transit-oriented development will be another
option, but should be considered alongside implications for
affordability and inclusion; and (c) align policies to
promote public transport with incentives to discourage the
usage of private transport in congested areas. Introducing
congestion pricing in areas well-covered by public transport
as is done inSingapore will be an example of such policies.