‘FOREIGN INVESTORS LIKE MALAYSIA’S ROBUST ECONOMY’
Exports to China, gains in commodity marts and uptick in global economy have helped country’s recovery, says CIMB chairman
KUALA LUMPUR
MALAYSIA’S robust economic recovery is drawing foreign investors back to its markets but investment activity may only gain momentum after the general election, said the chairman of Malaysia’s second largest CIMB Bank.
Datuk Seri Nazir Razak, a prominent industry figure and the younger brother of Prime Minster Datuk Seri Najib Razak, said exports to China, recovery in commodity markets and the uptick in the global economy have helped the country grow faster.
But foreign investors are holding off due to uncertainties created by the impending election.
“Investors generally don’t like uncertainty,” said Nazir.
“The general election does bring an element of uncertainty. So the earlier election takes place, the better in terms of the overall operating environment,” he said. “I’m sure after elections, there will be greater momentum on deal front,” said Nazir.
Najib is looking to call elections as early as this year, government sources have said, to take advantage of the economic recovery and a weak opposition.
Speculation about an early election increased last week when Malaysia recorded its fastest growth in more than two years.
Nazir said investor interest in Malaysia had improved because of the economic comeback, and also as investors became less judgmental about non-economic matters.
“When you compare Malaysia and other countries like Turkey, the Philippines and even the United States, there is a sense that countries have their own domestic political dynamics which is very difficult for investors to understand,” said Nazir.
“There is a feeling now (among investors) that every country needs to make up its own political processes and deal with its own domestic issues.”
On the country’s banking sector, Nazir said further consolidation would be good, but the economics of such deals must change.
A US$9 billion (RM38.44 billion) deal to merge two big local banks RHB Bank and AMMB Holdings was dropped earlier last month as the banks could not agree on the terms.
“The real issue is the economics of banking has changed tremendously and I think until the sellers recognise that in reality its quite difficult to make it work,” said Nazir.
“The reality of the human cost of a merger is a great deal more painful... What do we do with excess people? What do we do with displaced people?”
CIMB was in talks few years ago to merge with RHB Bank and Malaysia Building Society Bhd but the deal was eventually scrapped.
When asked if the bank would still consider a merger in the future, he said: “As it stands, it is not a path we would bother with.” Reuters