KUALA LUMPUR: The upcoming general election is not likely to pose a major shock to Malaysia’s economy, instead it will translate into continuity of current policies and investment inflows.
Maybank Investment Bank Bhd (Maybank IB) regional head of economic research Suhaimi Ilias said in the bank’s baseline scenario, the ruling coalition is likely to stay in power and ensure policy continuity, especially in Malaysia-China relations.
“When you look at the landscape of China’s investment in Malaysia, it is very diverse. People tend to have this perception that Chinese investments in Malaysia are concentrated in infrastructure and property. Actually, that is wrong.
“The investment is diversified. We have China’s FDI (foreign direct investment) in banking and finance, education, manufacturing and the latest being Geely’s (Zhejiang Geely Holdings Group) stake acquisition in Proton,” he said when met at the recent Invest Asean Singapore 2018, organised by Maybank.
In June last year, DRB-Hicom Bhd and Geely signed a final agreement which saw the latter’s acquisition of a 49.9% stake in Proton and 51% of Lotus, a luxury sports car brand, in a deal worth RM1 billion.
Maybank IB director and head of research for Malaysia Equity Markets Wong Chew Hann said the spin-off of the Geely-Proton deal could be great as the company was using Malaysia to penetrate the Asean market.
“Essentially, exports from Malaysia to the rest of Asean do not carry tariffs on a single market basis. We think that is the main reason why Geely came to Malaysia, apart from the infrastructure and support that Proton and the government are giving,” she added.
Overall, Suhaimi noted that China’s share of the total FDI stocks in Malaysia was small at 2.6% despite its strong investment growth in recent years.
He said for an economy of China’s size and stature, its share of FDI in Malaysia was pale in comparison to the EU (29.9%), Singapore (20.5%), Japan (12.7%) and the US (5.9%).
“We see that there is still an upside and room for growth in terms of China’s investments in the country,” he added.
Besides the baseline assumption on the outcome of the general election, which should lead to the continuation of Malaysia-China policy, Suhaimi said the other key takeaway was the recently concluded China’s National People’s Congress meeting.
“From the events and announcements, it is quite clear they are all about continuation, coordination and execution of policies in China, especially those relating to Xi Jinping’s policies and priorities, including the Belt & Road Initiative,” he added.