PETALING JAYA: Finance Minister Lim Guan Eng has welcomed Moody’s Investors Service’s affirmation yesterday of Malaysia’s local and foreign currency issuer and senior unsecured debt ratings at A3 with a stable outlook.
He said in a statement today that Moody’s maintained the ratings despite recognising Malaysia’s fiscal strength has weakened with a 3.7 fiscal deficit to GDP in 2018, 3.4% in 2019, 3% in 2020 and less than 2.8% in 2021.
Lim blamed the fiscal weakness on the corruption scandals related to 1MDB of the previous Barisan Nasional government.
“The government recognises these economic challenges and will take steps to overcome them over a 3-year time frame to put Malaysia back on track.
“Moody’s confidence in Malaysia’s robust growth potential, deep domestic capital markets, a solid institutional framework, including strong monetary policy effectiveness, are strong credit positives,” he added.
Moody’s also said that in the longer term, Malaysia’s economic prospects are supported by well-developed infrastructure, substantial natural resources, globally competitive manufacturing and service sectors.
The global financial services company pointed to the resurgent growth in exports in October 2018 to a historic high in a single month of RM96.4 billion and a record trade surplus of RM16.3 billion.
The positive news follows the announcement by the Malaysian Investment Development Authority (MIDA) that approved foreign direct investments (FDI) in the manufacturing sector rose by RM35 billion, or 250%, to RM49 billion for the first nine months of 2018, from RM14 billion in the same period last year.
“What is noteworthy is that for the months from May to September 2018, total approved FDI in the manufacturing sector was RM35 billion compared to RM7.3 billion from May to September 2017.
“This demonstrates that foreign investors’ confidence in Malaysia is resurgent under the new leadership of Prime Minister Tun Dr Mahathir Mohamad, with a RM27.7 billion or 379% hike in the said figures, after the peaceful transition of power that took place on 9 May 2018,” Lim said.
He said the strong economic performance gave every reason for Bloomberg on Nov 28 to place Malaysia as No. 1 on the list of 20 emerging economies in the world.