Malaysia’s debts not unusually high, can be sustained, says expert

World Bank lead economist Richard Record. (Bernama pic)

KUALA LUMPUR: World Bank lead economist Richard Record has said that “Malaysia’s debts are elevated but not unusually high”.

He said many countries had varying debt-GDP (gross domestic product) ratios.

Record added there was no “magic number” when it comes to a standard or ideal debt-GDP ratio.

What was important is to look at the resilience of Malaysia’s debt profile.

“In relative terms, Malaysia has held up very well compared with other regions,” he said during a panel discussion at an investment conference, “Malaysia: A New Dawn”, organised by the finance ministry, here today.

In terms of maturity profile, overall risk, currency risk or exchange-rate risk, Malaysia does not fare too badly, he added.

Recrod said although the debts are high, it can be repaid “with the right policies”.

“There are certainly other countries with higher debt,” he added.

Khazanah managing director Shahril Riza Ridzuan said he wanted to change the perception that Khazanah-owned companies face government interference.

“We want to shift away from the idea that just because you are a company owned by Khazanah, you are a GLC (government-linked company).”

He stated that through portfolio-driven activities, they will overcome this negative perception, adding that there will indeed be some portfolio restructuring which will take place in a three-year to five-year period.

Record, Shahril and the other panellists, Standard & Poor’s Tan Kim Eng and CIMB’s Michelle Chia, were overall positive about Malaysia’s debt repayment sustainability and overall economic potential.

They concluded that the country’s debts can be repaid with the various reforms set in place and growth will be boosted.

Tan said the highest-rated government can also be the most indebted.

“Credit rating doesn’t measure the amount of debt. Credit rating measures the amount of debt people are willing to buy.”

The government said at the end of last year, Malaysia had incurred RM687 billion in direct debts and RM199 billion in contingent liabilities.