News of Malaysia

Think tank sees headwinds for economy this year

Ranjit Singh

January 17, 2019 12:54 PM

Malaysia is expected to see a decline in export sales, in line with the slower global economy, which will affect the country’s revenue. (Bernama pic)

KUALA LUMPUR: The economy is expected to moderate in 2019 in line with the slowdown in the global economy, according to Lee Heng Guie, executive director of think tank Socio Economic Research Centre (SERC).

The economy is projected to grow at 4.7% in 2019 compared to 4.8% in 2018. SERC’s forecast is lower than the government’s projection of 4.9%.

“The slower global economy will result in weaker exports for Malaysia in 2019. As Malaysia is heavily dependent on export revenue, the decline in export sales will translate into a drag on its revenue,” Lee said in a media briefing here today.

He added however that consumer spending, which has been the edifice of the economy for the last eight quarters, is expected to remain strong.

Consumer spending received a boost during the tax holiday period from June 1 to Sept 1 last year.

Lee said consumer spending would likely be further enhanced by stable employment and income growth.

According to the Malaysian Employers Federation salary survey for executives and non-executives, the projected salary increase for 2019 is 4.86%.

Lee said despite the introduction of the sales and services tax, inflation remained benign with the annual inflation rate hovering between 0.2% and 0.6% in September and November 2018 owing to the previous year’s high base effect.

Softer prices of food and housing coupled with a sharp decline in transport prices also contributed to keeping general prices in check.

“Fuel prices which have reverted to a weekly managed float system and will move to a targeted subsidy regime in the second quarter of 2019 will have a telling effect on general price levels. Prices will be dependent on global crude oil prices,” he added.

Interest rates are expected to be kept steady by Bank Negara Malaysia with the balance of risks tilting towards the downside. SERC expects the central bank to maintain the OPR at 3.25% for the whole of 2019.

Lee said the ringgit is expected to strengthen in 2019 as indicators such as surplus in the current account and strong foreign reserves remain healthy. Malaysia’s credit rating affirmation is also a vote of confidence in the strength of the ringgit.

SERC’s year-end target for the ringgit is RM3.95-RM4.00 against the US dollar.

Source: FMT

Economic Affairs Ministry developing blueprint for Malaysia’s future growth

PUTRAJAYA: The Economic Affairs Ministry (MEA) has begun preparing a post-2020 development framework to chart the long-term direction of the nation’s socioeconomic progress.

The ministry said it will spearhead several socioeconomic studies on future challenges, including a review of the Fourth Industrial Revolution in order to prepare the country for future technological impacts that are expected to transform lifestyles.

“The MEA is also in the midst of reviewing existing planning processes and mechanisms to improve the country’s development planning.

“The people’s aspirations will be considered in charting the development of the nation to ensure that economic growth continues to be meaningful, inclusive and holistic, as well as to enable Malaysia to shine once again on the global stage,” it said in a statement today.

The ministry said that within four months of its establishment, it formulated the first socioeconomic development policy document of the Pakatan Harapan (PH) administration in the form of the Mid-Term Review of the Eleventh Malaysia Plan (MTR 11MP) document, which was tabled by the prime minister in Parliament on Oct 18 last year.

“The MTR 11MP outlines six policy pillars to reform existing policies and review socioeconomic targets. The document also includes the aspirations of the new government, as well as current economic challenges and global trends,” it said.

The ministry said that the MTR 11MP also sought to address issues of gaps and inequalities that still exist across ethnic and income groups, as well as regions in a comprehensive manner to ensure inclusive economic growth.

“As part of efforts to ensure that all 66 strategies and 204 initiatives in the MTR 11MP are implemented effectively, the MEA published the Policy Implementation Plan (PIP) document on Dec 17 as a reference for all ministries and agencies.

“Periodical monitoring and reporting to the highest level of government will begin in 2019 to ensure that the 80 targets identified in the MTR 11MP are achieved,” it said.

The MEA added that it has undertaken a review of MTR 11MP projects and programmes to reduce the financial and debt burden of the government, including negotiating the postponement of the Kuala Lumpur-Singapore High Speed Rail (HSR) project.

“Among the priorities of the MEA in 2019 is the completion of the White Paper on the Felda turnaround plan. At the same time, the MEA has ensured that the commitment of the government to Felda settlers is fulfilled by continuing to provide the Living Allowance Assistance to them.

“Together with the Ministry of Finance, the MEA is also involved in the recovery plan of Lembaga Tabung Haji to rebuild the iconic institution. In addition, we have begun efforts to assess the position of BPMB and address the challenges within the institution,” it added.

The ministry also said its role to launch and monitor policies will be supported by 32 agencies, particularly those directly involved in the wealth redistribution agenda to reduce long-standing disparities and inequalities. They include ARB, Ekuinas, Felda, FGV, Risda, Teraju, three Bumiputera foundations and the 13 State Economic Development Corporations.

It said specialised agencies were placed under the MEA, such as BPMB, Felcra, HDC, HSR Corp, and Yayasan Ekuiti Nasional, adding that the Statistics Department also comes under its purview to boost policy formulation.

“After 13 Five-Year Development Plans, the economy has recorded an average growth of 6.2 per cent per annum over the last four decades (1971-2017), outpacing the world economy as well as emerging economies. This rapid growth was accompanied by low and stable inflation, which averaged less than 3 per cent during the same period. The country has also enjoyed full employment since 1992, with the unemployment rate below 4 per cent,” it added.

Source: New StraitsTimes

Malaysian firms are planning to expand their investment in business

KUALA LUMPUR: Malaysian firms are more confident of investing in expanding business this year, according to business information and business information researcher Dun & Bradstreet Malaysia (D & B).

Based on the Business Confidence Index (BOI) survey conducted by him, investment prospects among firms in the country rose to 26 percent this year, compared with 18 percent in 2018.

Meanwhile, the number of firms anticipating investments will decline down from 15 per cent in 2018 to seven per cent this year.

The majority of local firms expecting investment to remain unchanged are 67 percent.

D & B Malaysia Sdn Bhd chief executive Audrey Chia said the results of the study found that the main investment areas for 2019 were in machinery and capital equipment which contributed to 35 per cent of the entire company surveyed.

“Investment in information technology represents the second most important segment for the year which contributes to 30 percent of the research findings.

“At the same time, we found a firm in Malaysia to allocate investments to increase the skills of employees representing 15 per cent; new product development (10 percent); research and development (six percent) and intellectual property (four percent), “he said.

Chia said increased competition was among the key challenges faced by local firms, as well as higher business costs and the uncertainty of the global economic situation.

“The company is also expected to face the problem of lack of access to financing and foreign labor issues,” he said.

The results of the BOI study also expects business prospects among firms in Malaysia to continue to show a bearish trend for the second consecutive quarter period for the first quarter of 2019.

Overall, the BOI dropped from 12.99 percentage points in the fourth quarter of 2018 to 8.92 percentage points in the first quarter of 2019.

“On a year-on-year basis, BOI experienced a slight increase from 7.25 percentage points in the first quarter of 2018 to 8.92 percentage points in the first quarter of 2019.

“The study includes six business indicators including sales volume, net profit, selling price, inventory level, new employee and order,” he said.

Source: BH online

Malaysia’s economic fundamentals remain strong, says World Bank

KUALA LUMPUR: Malaysia’s economic fundamentals remain strong due to its diversified economy, despite the recent downgrade by Nomura Global Markets Research on the Malaysian equity market, says the World Bank.

World Bank Group’s macroeconomics, trade and investment lead economist Richard Record said Malaysia’s diversified income stream such as electrical and electronic manufacturing, commodities, natural resources, agriculture, as well as external and domestic demand, would give strength to Malaysia.

“In the medium-term, there are challenges around human capital, productivity and governance.

“However, we have seen a lot of movement in the 11th Malaysia Plan Mid-Term Review for 2019-2020 whereby the government is setting out new plans to tackle those issues over the next few years,” he told reporters on the sidelines of the World Bank’s Conference on “Globalisation: Contents and Discontents” here today.

Record said Malaysia’s economic growth continued to be stable and the World Bank has projected it to grow at 4.7% for 2019.

Meanwhile, economist and Khazanah Research Institute visiting research fellow Prof Dr Jomo Kwame Sundaram said whether a country is doing well, especially an open economy like Malaysia, is subject to many things.

“Rating agencies are notoriously useless. I do not believe in rating agencies but a lot of people do or else they would be out of business,” he added.

Jomo was one of the chairpersons for a panel session at the conference here today.

On Jan 9, Nomura Global Markets Research downgraded the Malaysian equity market to “underweight” from “neutral” previously, on poor earnings growth prospects and higher fiscal deficit of 3.9% for 2018.

In response to the report, Finance Minister Lim Guan Eng issued a statement on Jan 10, saying that the government was confident of achieving 3.7% and 3.4% of fiscal deficit in 2018 and 2019 respectively.

“I have checked with the preliminary financial accounts that were closed last year and the government’s fiscal position is well within the 3.7% of gross domestic product (GDP) deficit target for 2018.

“Nomura’s report that the 2018 fiscal deficit would deteriorate to 3.9% of GDP is simply untrue,” he added

Source: FMT

Malaysian banking sector to see moderate growth this year

KUALA LUMPUR: The Malaysian banking sector is expected to see moderate growth this year, in line with the slowdown in global gross domestic product (GDP).

United Overseas Bank (Malaysia) Bhd (UOB) managing director and country head of personal financial services Ronnie Lim said the ongoing US-China trade war was not doing any good to global markets and was among the main factors contributing to the slowdown.

He said the US economy was expected to grow at 2.6% this year and China at 6.2%, down from the earlier forecast of 6.6%.

“The United Kingdom, Japan, Europe and other developed countries, which grew by about 1% to 2% last year, are also expected to have moderate growth this year.

“With the US-China trade war truce ending in February, how these countries, including Malaysia, chart their next growth will depend on the result of the discussions taking place between the two countries.

“Hopefully, something good will come out at the end of February as the trade war is not doing anyone any good,” he told reporters after the launch of the UOB Visa Infinite Metal Card here today.

US President Donald Trump and Chinese President Xi Jinping had agreed to a 90-day trade war truce in Buenos Aires, Argentina, last December to enable the two sides to bridge the differences between their positions in key issues.

On the UOB Visa Infinite Metal Card, Lim said it was the first bronze metal credit card in Malaysia and would only be available by invitation to high net worth customers.

He said UOB Malaysia was the second largest card issuer on a monthly basis for the last three years, reaching a card base of almost one million, which contributed to over 30% of the bank’s top line revenue.

“For the new card, we are targeting our existing 60,000 Visa Infinite Credit Card members, who have a minimum annual income of RM300,000 and investable assets of above RM3 million placed with UOB Malaysia.

“We have identified some 100 customers from this group and we will invite more high net worth and ultra-high net worth customers for the card moving forward,” he said.

Lim said the new infinite card was designed to meet the travel needs and expectations of its affluent customers.

Its benefits included first-class travel privileges, a competitive miles redemption programme, accelerated reward points and a 24-hour worldwide concierge service.

According to UOB Malaysia’s data, travel-related expenditures among affluent cardholders had grown 35% since 2016. Last year alone, the group spent RM205 million on travel-related products and services, a 23% increase from 2017.

Visa country manager for Malaysia Ng Kong Boon said Malaysia continued to see strong growth in the number of affluent individuals at close to 20% year-on-year.

“We believe it is important to provide affluent cardholders a product tailored to their premium travel and lifestyle requirements,” he said.

Source: FMT

Financial security networks are important for capital flows – BNM

KUALA LUMPUR: Bank Negara Malaysia (BNM) welcomes any efforts to strengthen regional and global financial security networks to address the negative impact of financial globalization and to ensure safer capital flows.

On that basis, BNM Assistant Governor, Marzunisham Omar, said ASEAN + 3 countries (China, Japan and South Korea) had achieved significant milestone under the Chiang Mai Multilateral Initiative when the fund size was doubled to US $ 240 billion in 2014.

“For future progress, the important thing to consider is to include a wide range of regional financial security swaps and security networks with the International Monetary Fund’s safety net in a detailed framework that enhances complementary aspects.

“This will also enhance the country’s current economic effectiveness in addressing the uncertainty of short-term capital flows,” he said.

He said this when addressing the World Bank Conference titled ‘Globalization: Contents and Discontents’ here, today.

Commenting further, Marzunisham said the second aspect was the need for emerging economies to constantly streamline their respective policy mechanisms in addressing various risks and ensuring more flexible implementation.

“What is clear, the uncertainty of capital flows is a challenge for emerging economic policy makers to safeguard monetary and macroeconomic stability,” he said.

He also emphasized the importance of the policy change to be more pragmatic and based on the risks being addressed.

Marzunisham said financial globalization was also proven to record significant growth with global equity and cumulative equity market flows now 80 times greater than the figure in 2000 and far exceeded trading flows.

In fact, he said, if properly managed, financial integration efforts could spur more efficient allocation of productive capital as well as transfer of knowledge and related benefits.

However, Marzunisham stressed, financial globalization was accompanied by short-term portfolio flows with significant uncertainties and affecting the emerging financial markets of the economy.

“In Malaysia, capital outflows have almost tripled since the global financial crisis. We too, as with other developing countries, have also experienced some significant outflow episodes.

“However, we can handle the situation in a proper way based on strong macroeconomic fundamentals support and robust and widespread financial markets,” he said. – BERNAMA

Source: BH online

Think tank sees headwinds for economy this year

Ranjit Singh

January 17, 2019 12:54 PM

Malaysia is expected to see a decline in export sales, in line with the slower global economy, which will affect the country’s revenue. (Bernama pic)

KUALA LUMPUR: The economy is expected to moderate in 2019 in line with the slowdown in the global economy, according to Lee Heng Guie, executive director of think tank Socio Economic Research Centre (SERC).

The economy is projected to grow at 4.7% in 2019 compared to 4.8% in 2018. SERC’s forecast is lower than the government’s projection of 4.9%.

“The slower global economy will result in weaker exports for Malaysia in 2019. As Malaysia is heavily dependent on export revenue, the decline in export sales will translate into a drag on its revenue,” Lee said in a media briefing here today.

He added however that consumer spending, which has been the edifice of the economy for the last eight quarters, is expected to remain strong.

Consumer spending received a boost during the tax holiday period from June 1 to Sept 1 last year.

Lee said consumer spending would likely be further enhanced by stable employment and income growth.

According to the Malaysian Employers Federation salary survey for executives and non-executives, the projected salary increase for 2019 is 4.86%.

Lee said despite the introduction of the sales and services tax, inflation remained benign with the annual inflation rate hovering between 0.2% and 0.6% in September and November 2018 owing to the previous year’s high base effect.

Softer prices of food and housing coupled with a sharp decline in transport prices also contributed to keeping general prices in check.

“Fuel prices which have reverted to a weekly managed float system and will move to a targeted subsidy regime in the second quarter of 2019 will have a telling effect on general price levels. Prices will be dependent on global crude oil prices,” he added.

Interest rates are expected to be kept steady by Bank Negara Malaysia with the balance of risks tilting towards the downside. SERC expects the central bank to maintain the OPR at 3.25% for the whole of 2019.

Lee said the ringgit is expected to strengthen in 2019 as indicators such as surplus in the current account and strong foreign reserves remain healthy. Malaysia’s credit rating affirmation is also a vote of confidence in the strength of the ringgit.

SERC’s year-end target for the ringgit is RM3.95-RM4.00 against the US dollar.

Source: FMT

Economic Affairs Ministry developing blueprint for Malaysia’s future growth

PUTRAJAYA: The Economic Affairs Ministry (MEA) has begun preparing a post-2020 development framework to chart the long-term direction of the nation’s socioeconomic progress.

The ministry said it will spearhead several socioeconomic studies on future challenges, including a review of the Fourth Industrial Revolution in order to prepare the country for future technological impacts that are expected to transform lifestyles.

“The MEA is also in the midst of reviewing existing planning processes and mechanisms to improve the country’s development planning.

“The people’s aspirations will be considered in charting the development of the nation to ensure that economic growth continues to be meaningful, inclusive and holistic, as well as to enable Malaysia to shine once again on the global stage,” it said in a statement today.

The ministry said that within four months of its establishment, it formulated the first socioeconomic development policy document of the Pakatan Harapan (PH) administration in the form of the Mid-Term Review of the Eleventh Malaysia Plan (MTR 11MP) document, which was tabled by the prime minister in Parliament on Oct 18 last year.

“The MTR 11MP outlines six policy pillars to reform existing policies and review socioeconomic targets. The document also includes the aspirations of the new government, as well as current economic challenges and global trends,” it said.

The ministry said that the MTR 11MP also sought to address issues of gaps and inequalities that still exist across ethnic and income groups, as well as regions in a comprehensive manner to ensure inclusive economic growth.

“As part of efforts to ensure that all 66 strategies and 204 initiatives in the MTR 11MP are implemented effectively, the MEA published the Policy Implementation Plan (PIP) document on Dec 17 as a reference for all ministries and agencies.

“Periodical monitoring and reporting to the highest level of government will begin in 2019 to ensure that the 80 targets identified in the MTR 11MP are achieved,” it said.

The MEA added that it has undertaken a review of MTR 11MP projects and programmes to reduce the financial and debt burden of the government, including negotiating the postponement of the Kuala Lumpur-Singapore High Speed Rail (HSR) project.

“Among the priorities of the MEA in 2019 is the completion of the White Paper on the Felda turnaround plan. At the same time, the MEA has ensured that the commitment of the government to Felda settlers is fulfilled by continuing to provide the Living Allowance Assistance to them.

“Together with the Ministry of Finance, the MEA is also involved in the recovery plan of Lembaga Tabung Haji to rebuild the iconic institution. In addition, we have begun efforts to assess the position of BPMB and address the challenges within the institution,” it added.

The ministry also said its role to launch and monitor policies will be supported by 32 agencies, particularly those directly involved in the wealth redistribution agenda to reduce long-standing disparities and inequalities. They include ARB, Ekuinas, Felda, FGV, Risda, Teraju, three Bumiputera foundations and the 13 State Economic Development Corporations.

It said specialised agencies were placed under the MEA, such as BPMB, Felcra, HDC, HSR Corp, and Yayasan Ekuiti Nasional, adding that the Statistics Department also comes under its purview to boost policy formulation.

“After 13 Five-Year Development Plans, the economy has recorded an average growth of 6.2 per cent per annum over the last four decades (1971-2017), outpacing the world economy as well as emerging economies. This rapid growth was accompanied by low and stable inflation, which averaged less than 3 per cent during the same period. The country has also enjoyed full employment since 1992, with the unemployment rate below 4 per cent,” it added.

Source: New StraitsTimes

Malaysian firms are planning to expand their investment in business

KUALA LUMPUR: Malaysian firms are more confident of investing in expanding business this year, according to business information and business information researcher Dun & Bradstreet Malaysia (D & B).

Based on the Business Confidence Index (BOI) survey conducted by him, investment prospects among firms in the country rose to 26 percent this year, compared with 18 percent in 2018.

Meanwhile, the number of firms anticipating investments will decline down from 15 per cent in 2018 to seven per cent this year.

The majority of local firms expecting investment to remain unchanged are 67 percent.

D & B Malaysia Sdn Bhd chief executive Audrey Chia said the results of the study found that the main investment areas for 2019 were in machinery and capital equipment which contributed to 35 per cent of the entire company surveyed.

“Investment in information technology represents the second most important segment for the year which contributes to 30 percent of the research findings.

“At the same time, we found a firm in Malaysia to allocate investments to increase the skills of employees representing 15 per cent; new product development (10 percent); research and development (six percent) and intellectual property (four percent), “he said.

Chia said increased competition was among the key challenges faced by local firms, as well as higher business costs and the uncertainty of the global economic situation.

“The company is also expected to face the problem of lack of access to financing and foreign labor issues,” he said.

The results of the BOI study also expects business prospects among firms in Malaysia to continue to show a bearish trend for the second consecutive quarter period for the first quarter of 2019.

Overall, the BOI dropped from 12.99 percentage points in the fourth quarter of 2018 to 8.92 percentage points in the first quarter of 2019.

“On a year-on-year basis, BOI experienced a slight increase from 7.25 percentage points in the first quarter of 2018 to 8.92 percentage points in the first quarter of 2019.

“The study includes six business indicators including sales volume, net profit, selling price, inventory level, new employee and order,” he said.

Source: BH online

Malaysia’s economic fundamentals remain strong, says World Bank

KUALA LUMPUR: Malaysia’s economic fundamentals remain strong due to its diversified economy, despite the recent downgrade by Nomura Global Markets Research on the Malaysian equity market, says the World Bank.

World Bank Group’s macroeconomics, trade and investment lead economist Richard Record said Malaysia’s diversified income stream such as electrical and electronic manufacturing, commodities, natural resources, agriculture, as well as external and domestic demand, would give strength to Malaysia.

“In the medium-term, there are challenges around human capital, productivity and governance.

“However, we have seen a lot of movement in the 11th Malaysia Plan Mid-Term Review for 2019-2020 whereby the government is setting out new plans to tackle those issues over the next few years,” he told reporters on the sidelines of the World Bank’s Conference on “Globalisation: Contents and Discontents” here today.

Record said Malaysia’s economic growth continued to be stable and the World Bank has projected it to grow at 4.7% for 2019.

Meanwhile, economist and Khazanah Research Institute visiting research fellow Prof Dr Jomo Kwame Sundaram said whether a country is doing well, especially an open economy like Malaysia, is subject to many things.

“Rating agencies are notoriously useless. I do not believe in rating agencies but a lot of people do or else they would be out of business,” he added.

Jomo was one of the chairpersons for a panel session at the conference here today.

On Jan 9, Nomura Global Markets Research downgraded the Malaysian equity market to “underweight” from “neutral” previously, on poor earnings growth prospects and higher fiscal deficit of 3.9% for 2018.

In response to the report, Finance Minister Lim Guan Eng issued a statement on Jan 10, saying that the government was confident of achieving 3.7% and 3.4% of fiscal deficit in 2018 and 2019 respectively.

“I have checked with the preliminary financial accounts that were closed last year and the government’s fiscal position is well within the 3.7% of gross domestic product (GDP) deficit target for 2018.

“Nomura’s report that the 2018 fiscal deficit would deteriorate to 3.9% of GDP is simply untrue,” he added

Source: FMT

Malaysian banking sector to see moderate growth this year

KUALA LUMPUR: The Malaysian banking sector is expected to see moderate growth this year, in line with the slowdown in global gross domestic product (GDP).

United Overseas Bank (Malaysia) Bhd (UOB) managing director and country head of personal financial services Ronnie Lim said the ongoing US-China trade war was not doing any good to global markets and was among the main factors contributing to the slowdown.

He said the US economy was expected to grow at 2.6% this year and China at 6.2%, down from the earlier forecast of 6.6%.

“The United Kingdom, Japan, Europe and other developed countries, which grew by about 1% to 2% last year, are also expected to have moderate growth this year.

“With the US-China trade war truce ending in February, how these countries, including Malaysia, chart their next growth will depend on the result of the discussions taking place between the two countries.

“Hopefully, something good will come out at the end of February as the trade war is not doing anyone any good,” he told reporters after the launch of the UOB Visa Infinite Metal Card here today.

US President Donald Trump and Chinese President Xi Jinping had agreed to a 90-day trade war truce in Buenos Aires, Argentina, last December to enable the two sides to bridge the differences between their positions in key issues.

On the UOB Visa Infinite Metal Card, Lim said it was the first bronze metal credit card in Malaysia and would only be available by invitation to high net worth customers.

He said UOB Malaysia was the second largest card issuer on a monthly basis for the last three years, reaching a card base of almost one million, which contributed to over 30% of the bank’s top line revenue.

“For the new card, we are targeting our existing 60,000 Visa Infinite Credit Card members, who have a minimum annual income of RM300,000 and investable assets of above RM3 million placed with UOB Malaysia.

“We have identified some 100 customers from this group and we will invite more high net worth and ultra-high net worth customers for the card moving forward,” he said.

Lim said the new infinite card was designed to meet the travel needs and expectations of its affluent customers.

Its benefits included first-class travel privileges, a competitive miles redemption programme, accelerated reward points and a 24-hour worldwide concierge service.

According to UOB Malaysia’s data, travel-related expenditures among affluent cardholders had grown 35% since 2016. Last year alone, the group spent RM205 million on travel-related products and services, a 23% increase from 2017.

Visa country manager for Malaysia Ng Kong Boon said Malaysia continued to see strong growth in the number of affluent individuals at close to 20% year-on-year.

“We believe it is important to provide affluent cardholders a product tailored to their premium travel and lifestyle requirements,” he said.

Source: FMT

Financial security networks are important for capital flows – BNM

KUALA LUMPUR: Bank Negara Malaysia (BNM) welcomes any efforts to strengthen regional and global financial security networks to address the negative impact of financial globalization and to ensure safer capital flows.

On that basis, BNM Assistant Governor, Marzunisham Omar, said ASEAN + 3 countries (China, Japan and South Korea) had achieved significant milestone under the Chiang Mai Multilateral Initiative when the fund size was doubled to US $ 240 billion in 2014.

“For future progress, the important thing to consider is to include a wide range of regional financial security swaps and security networks with the International Monetary Fund’s safety net in a detailed framework that enhances complementary aspects.

“This will also enhance the country’s current economic effectiveness in addressing the uncertainty of short-term capital flows,” he said.

He said this when addressing the World Bank Conference titled ‘Globalization: Contents and Discontents’ here, today.

Commenting further, Marzunisham said the second aspect was the need for emerging economies to constantly streamline their respective policy mechanisms in addressing various risks and ensuring more flexible implementation.

“What is clear, the uncertainty of capital flows is a challenge for emerging economic policy makers to safeguard monetary and macroeconomic stability,” he said.

He also emphasized the importance of the policy change to be more pragmatic and based on the risks being addressed.

Marzunisham said financial globalization was also proven to record significant growth with global equity and cumulative equity market flows now 80 times greater than the figure in 2000 and far exceeded trading flows.

In fact, he said, if properly managed, financial integration efforts could spur more efficient allocation of productive capital as well as transfer of knowledge and related benefits.

However, Marzunisham stressed, financial globalization was accompanied by short-term portfolio flows with significant uncertainties and affecting the emerging financial markets of the economy.

“In Malaysia, capital outflows have almost tripled since the global financial crisis. We too, as with other developing countries, have also experienced some significant outflow episodes.

“However, we can handle the situation in a proper way based on strong macroeconomic fundamentals support and robust and widespread financial markets,” he said. – BERNAMA

Source: BH online