The Malaysian economy is likely to be better in the second half of this year on improving sentiment towards the overall economic environment, says the Asian Strategy and Leadership Institute (Asli).

Its CEO, Michael Yeoh, said the cut in the overnight policy rate (OPR) by Bank Negara Malaysia (BNM) would help spur business confidence and lead to faster loan growth.

BNM cut the OPR by 25 basis points to three percent on July 13.

Yeoh said the economy was likely to grow by between 4.2 percent and 4.5 percent this year.

"The first half of the year was probably clouded by global economic uncertainties with the 'Britain exit' referendum adding on to it.

"Many businesses are optimistic of the second half," he told reporters after announcing the 13th Asean Leadership Forum in Kuala Lumpur today.

Also present was Axiata Group Bhd chief corporate officer, Mohd Idham Nawawi.

On whether the Goods and Services Tax (GST) rate should be reduced, Yeoh said the six percent rate should stay for the time being as the revision would create more uncertainties in the market.

"I think our rate is reasonable compared to our neighbours. The businesses have factored in the GST into their business planning processes. The consumers have also accepted the GST," he said.

Meanwhile, Yeoh said, the forum would discuss a number of challenges, including leadership for Asean and the Regional Comprehensive Economic Partnership agreement negotiations.

"Asean needs bold and strategic leadership from government, business and civil society. I have been talking to a lot of officials about the need to strengthen the unity in Asean," he said.

Asli, Laos' Ministry of Industry and Commerce and the Laos National Chamber of Commerce and Industry will be organising the 13th Asean Leadeship Forum in Vientiane on Aug 6-7.

Laos Prime Minister Thongloun Sisoulith will deliver his opening speech on the first day of the forum.

The Asean Leadership Forum is a high-level annual forum, bringing together leaders from government, business, academia and civil society to deliberate challenges, key trends, strategic issues and opportunities in the region.

Axiata is the title sponsor of the Asean Leadership Forum for the seventh year.

Deputy Prime Minister Ahmad Zahid Hamidi will be one of two recipients of the Lifetime Achievement Award at the forum.

- Bernama