LIM: ECONOMY STRONG, RESILIENT

‘With good governance and fiscal responsibility, the only way to go is up’

DESPITE uncertainty in global developments, Malaysia’s economy is fundamentally strong and resilient, said Finance Minister Lim Guan Eng.

Lim said coupled with good governance and fiscal responsibility, the only way to go for the country was up.

He said as a global trading nation, Malaysia was not immune to downside risks.

“Given its deep and open foreign exchange market, the ringgit was not spared from facing adjustments.

“However, it is necessary to note that the FTSE Bursa Malaysia Kuala Lumpur Composite Index is one of the best performers in Asia Pacific year-to-date with a slight increase of 0.13 per cent as at Sept 7.

“In comparison, the Singapore Straits Times Index and Nikkei 225 index decreased by 8.29 per cent and 1.72 per cent respectively over the same period,” he said yesterday.

Over the yearto-date, the ringgit remained one of the most resilient regional currencies against the US dollar, depreciating by 2.6 per cent against the US dollar since the start of the year.

He attributed the strength of Malaysia’s economy to eight factors — steady growth, highly-diversified economy, favourable labour market conditions, healthy current account surplus, flexible exchange rates, sufficient external buffers, low inflation rate, and the unique investment for Malaysia created by the trade conflict between China and the United States.

The tariff war between the world’s two largest economies has resulted in many companies, particularly large manufacturers — both from the US and China — seeking to relocate their plants and factories to Malaysia, which is seen as safe investment harbour.

“Our education levels, quality of hard and soft infrastructure, as well as the fluency in both English and Chinese, give us a natural edge over our neighbouring competitors, such as Thailand, Vietnam and Indonesia.

“We remain a significantly cheaper investment destination compared with Singapore and Hong Kong.” He said Malaysia’s international reserve position of US$104.4 billion (RM432 billion) was adequate to facilitate international transactions.

International reserves accounted for only a quarter of Malaysia’s total external assets, he added.

Banks and corporations hold threequarters of Malaysia’s external assets, at RM1.3 trillion as at the end of the second quarter of this year, which could be drawn upon to meet external debt obligations (RM740.9 billion) without creating claims on international reserves.

The country’s financial institutions remained well capitalised with sufficient liquidity to support intermediation within the economy, said Lim.

Citing the Malaysian Institute of Economic Research (MIER), he said the consumer sentiment index breached the 100-point optimism threshold at a 21-year high of 132.9 in July, which suggested that consumer spending in the next few months would remain strong.

Similarly, he said, the MIER business conditions index registered 116.3 points in July— its highest level since 2015.

He said the government would take measures to ensure that corruption and abuse of power were eradicated from the nation’s administration.

Our education levels, quality of hard and soft infrastructure, as well as the fluency in both English and Chinese, give us a natural edge over our neighbouring competitors, such as Thailand, Vietnam and Indonesia. LIM GUAN ENG Finance minister