Bernama.com (Malaysian National News Agency), 14 August 2006 13:42 PM

M'sia Should Make Full Use Of Resources, Says Chief Economist

KUALA LUMPUR, Aug 14 (Bernama) -- Malaysia should make full use of its resources base and move up to the higher end of value-added chain, says Deutsche Bank Group's chief economist Profesor Dr Norbert Walter.

"You have particular endowment in terms of biomass. Biofuel is one of directions Malaysia should take," he said at a press briefing on "World Economy -- Longest Ever Recovery About To End" here.

"With palm oil base you can do a lot more in order to diversify to reduce the risk of gasoline supply," he said when asked to comment on Malaysia's move to "depend" more on the services sector in the future.

As Malaysia was developing biodiesel plants, Walter suggested that palm oil resources be developed and integrated into the development of its car engine industry.

"If you as a consequence can develop an engine that is particularly conducive to that new (biofuel) technology, you become the leading edge in manufacturing," he said.

On another developement, Walter said Malaysia was projected to grow below five per cent next year in line with the expected slowing down of the US economy.

The United States is Malaysia's largest trading partner.

He also said that the US was expected to increase interest rates by another 25 basis points in autumn to mitigate higher inflation due to the higher fuel prices and thus Malaysia was expected to follow the same move.

Malaysia is expected to register an economic growth of six per cent this year and five to 5.5 per cent next year.

-- BERNAMA