M’sia to see short-term volatility in foreign capital investments

PETALING JAYA: Malaysia is likely to see short-term volatility in movements of foreign capital investment in view of the temporary lack of clarity in the new government’s economic policies and direction.

RHB Research Institute Sdn Bhd chief Asean economist Peck Boon Soon told SunBiz that while Pakatan Harapan’s leadership experience in forming and running a government along with the smooth transition of power are positive when it comes to assuring foreign investors, the lack of clarity in economic policies for the time being may result in some volatility.

Echoing a similar sentiment, Sunway University Business School Professor of Economics Dr Yeah Kim Leng said there could be a short-term “hot money” movements and there may be pullouts as investors react to developments in the wake of the 14th general election.

However, he said inflows and outflows are not a matter of concern as it is a norm for countries with open capital markets to experience.

“(The) more important focus is we should focus on building the resilience of the economy and that will mean attracting longterm capital flows and foreign direct investments rather than be concerned about short-term outflows ... as long we can manage that without affecting our financial markets and domestic liquidity,” he said.

Yeah noted that investments in high-value technology will facilitate in transforming Malaysia into a high-income nation.

Upon being sworn in as the seventh prime minister of Malaysia, Tun Dr Mahathir Mohamad said the government will remain a business friendly economic nation.

He added that the new government intends to build the nation’s economy with the help of investors from in and outside the country.

PH made history after winning the mandate to form the government during the May 9 polls, defeating Barisan Nasional, which had governed the nation for over six decades.