“The domestic banking assets of RM2.4 trillion and the capital market’s RM2.38 trillion will provide support to the economy.”
DATUK SERI JOHARI ABDUL GHANI,
Second Finance Minister
KUALA LUMPUR: The strength of the financial system and capital market will help Malaysia cope with any foreign fund outflows, said Second Finance Minister Datuk Seri Johari Abdul Ghani.
The domestic banking assets, at RM2.4 trillion, together with the capital market’s RM2.38 trillion, including RM1.3 trillion of the equity market, would provide support to the economy, he said.
“Our banking assets and capital market will be able to sustain money flowing out of the country. This is the strength of our fundamentals,” said Johari after presenting a luncheon talk on “Malaysia’s Economy: Challenges and the Way Forward”, here, yesterday.
Malaysia’s economic resilience against capital flight was tested when some RM32 billion worth of foreign funds were taken out in the first quarter, he said.
Since then, the local equity market has continued to enjoy steady foreign capital inflows in the second quarter on the back of improved corporate earnings as exports and economic growth rebounded strongly, said Kenanga Investment Bank Bhd.
“The domestic equities saw a second consecutive quarter of net foreign fund inflows of RM4.4 billion,” it said in a report yesterday.
Johari reiterated that being a highly open economy, Malaysia was in a stronger position to persevere through challenges.
They include the slowdown in the Chinese economy, lingering geopolitical uncertainties such as the crisis in the Middle East as well as uncertainties in the United States’s interest rate policy normalisation.
“Malaysia has over several decades demonstrated time and time again the ability to emerge stronger from commodity price shocks, financial crises and spillovers from disruptions in other parts of the world.”
He said Malaysia’s next growth phase was about enhancing productivity and inclusiveness.
Hence, the government has undertaken strategic initiatives such as embarking on infrastructure projects and promoting digital economy.
He said ongoing infrastructure projects such as the Mass Rapid Transit, Light Rail Transit , Kuala Lumpur-Singapore high-speed rail and Pan-Borneo Highway would not only stimulate economic activities, but promote a greater sense of inclusiveness.
As for the Internet of Things, or what has now been coined as the “Fourth Industrial Revolution”, it was now more imperative for the government to catch up or risk falling behind this evolution sweeping through global markets, he said.