Malaysia’s Economy Is Stronger Than It Was Two Decades Ago

Mahathir wins election
Mahathir Mohamad, former Malaysian prime minister and opposition candidate for Pakatan Harapan (Alliance of Hope) reacts during a news conference after general election, in Petaling Jaya, Malaysia, May 10, 2018. (Photo: REUTERS/Lai Seng Sin)

Following last year's shock election win by now Malaysian Prime Minister Tun Dr. Mahathir Mohamad, some citizens are worried about how the economy has been doing so far. Despite widespread concern, some economic experts said the country's economic fundamentals are actually stronger than they were two decades back.

According to the Malay Mail, Maybank Kim Eng Group CEO Ami Moris noted that the country's reformed economic fundamentals have improved compared to how it was during the Asia-wide financial crisis that shook global markets.

"Perhaps the question (of currency pegging) has not arrived at this point of time, as we are very different fundamentally from when we needed to peg the ringgit (to the US dollar) in 1998," Moris argued.

Moris further explained that Malaysia's external reserves in 1998 stood at $20 billion. It was at that time that Asian economies dropped rock bottom and Malaysia was among the countries heavily impacted by the crisis. As of April, the country's external reserves are at $103.4 billion, indicating a massive jump within the last 20 years.

Referring to worries about the ringgit's potential decline in the coming weeks, Moris said the Malaysian currency's issues at the moment are not limited to the country alone. She said other Asian nations are also suffering currency depreciation.

Moris' comments came amid increasing worries about the Malaysian economy following years of corruption and waning trust in the new administration. To help calm the storm, Moris pointed out that consumption and construction sectors will help drive the local economy forward.

According to Moris, ensuring that the two sectors are doing well should help improve the ringgit's strength against the U.S. dollar. She also expressed hopes over the offloading of stocks by foreign funds, saying she is looking forward to putting the issue "behind us."

On Monday, news emerged about global investors beginning to get impatient over Malaysia's slow development. According to The Star, foreign funds are being redirected to other nations and Malaysian stocks have been generally down.

Furthermore, the outlet noted that most portfolio managers think recovery is far from sight at this point. As of the first quarter of this year, the country's stock index has dropped over five percent, bagging the title of the world's worst-performing equity market.

Despite mixed reviews about the Malaysian economy under Mahathir's Pakatan Harapan (PH) government, tourism was a huge driving factor for growth in the troubled country in 2018, the New Straits Times reported.

Chinese tourists accounted for RM12.3 billion in tourism receipts in Malaysia. The overall amount that the local economy received through a surge in tourists last year hit RM84.1 billion, the highest figures yet in the sector.

Tourist consumption did increase significantly but the number of tourists visiting Malaysia dropped. Maybank Kim Eng Analyst Wong Chew Hann noted that the government should do better in promoting the nation's tourism industry and culture.

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