‘Yen credit re­quest makes good eco­nomic sense’

Econ­o­mist: Get­ting favour from Japan makes good eco­nomic sense

New Straits Times - - BUSINESS - AYISY YU­SOF bt@me­di­aprima.com.my

THE Ja­panese gov­ern­ment’s pos­si­ble ex­ten­sion of yen credit to Malaysia would fur­ther strengthen the re­la­tion­ship be­tween the two coun­tries.

Econ­o­mist Dr Yeah Kim Leng said there would not be con­cerns over Malaysia’s abil­ity to re­pay.

“From the na­tional per­spec­tive, Japan is al­ready im­port­ing size­able amounts of crude oil and nat­u­ral gas from Malaysia,” he said.

In his re­cent visit to Japan, Prime Min­is­ter Tun Dr Ma­hathir Mo­hamad had asked Japan to con­sider pro­vid­ing soft loans to help deal with the coun­try’s fi­nan­cial prob­lems.

Yeah said the yen credit ex­ten­sion was rel­a­tively safe based on Japan’s credit risk per­spec­tive.

“I think there is very lit­tle credit risk in terms of re­pay­ment, largely be­cause Malaysia has a size­able ex­port vol­ume to Japan. The coun­try will be able to gen­er­ate yen ex­port earn­ings to re­pay the debt,” he added.

Ja­panese Prime Min­is­ter Shinzo Abe, dur­ing Dr Ma­hathir’s cour­tesy call, said they would study the re­quest. How­ever, no spe­cific amount was dis­cussed.

Yeah said the Ja­panese gov­ern­ment had the fi­nan­cial ca­pac­ity to ex­tend loans for over­seas devel­op­ment or fi­nan­cial as­sis­tance.

“It makes good eco­nomic sense to sub­sti­tute more ex­pen­sive debts with cheaper yen credit,” said Yeah.

“The mea­sure will help to im­prove in­vestors’ con­fi­dence and make the gov­ern­ment’s fi­nan­cial ca­pac­ity to re­main in­tact.”

“There is a good chance of get­ting as­sis­tance from Japan, in­clud­ing the coun­try’s fi­nan­cial in­sti­tu­tions to as­sist Malaysia to re­duce its debt servicing bur­den by sub­sti­tut­ing with cheaper credit (loans with lower in­ter­est),” he said.

In­ter-Pa­cific Re­search head of re­search Pong Teng Siew said it was most likely the Ja­panese gov­ern­ment was po­si­tion­ing it­self to com­pete with China for in­flu­ence in this re­gion.

“This is a good time for Japan to win back in­flu­ence in Malaysia.”

He said it was a good op­por­tu­nity for Malaysia to take ad­van­tage on soft loans to re­fi­nance its ex­pen­sive debts.

Econ­o­mist Dr Yeah Kim Leng says there is very lit­tle credit risk in terms of re­pay­ment to Japan be­cause Malaysia has a size­able ex­port vol­ume to Japan.

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