Petroleum sector still contributes significantly to government coffers

Although Malaysia has reduced the dependency on petroleum related revenue, the sector still contributes a significant amount to the government coffers, he said.

Malaysia University of Science and Technology, Business School Dean, Dr Yeah Kim Leng said 1MDB should be handled well, although the potential impact on the country’s fiscal situation is not credit-threatening.

“We need to be mindful of the longer term effects on investor confidence as its ramifications extend to the nation’s governance standards, institutional trust and integrity.

“We should therefore take this window of opportunity of not being downgraded to address the unresolved concerns as there are longer term costs and irreversible damage to confidence and trust if the 1MDB woes are left to fester,” he added.

On the impact of Moody’s assessment towards investor sentiment, Bank Islam Malaysia Bhd chief economist, Mohd Afzanizam Abdul Rashid said sentiments could change.

“Eventually, foreign investors would assess the country’s fundamental in searching for value. As it is, there are companies or sectors benefiting from the weak ringgit, such as electric and electronic as well as rubber gloves. This can be a good time to accumulate stocks in it, since the entry point is cheap,” he said.

He pointed out that foreign holdings in Malaysian Government Securities ( MGS) rose to 46.3 per cent in October compared to September’s 45.6 per cent and foreign funds have been net buyers in the past four out of five weeks. — Bernama