Clarify long-term development plans, Putrajaya told

PETALING JAYA: News of a heavy flow of foreign funds from the country has prompted an economist to call for clarity in the government’s long-term plans for economic development.

A sharp elucidation of the plans would enhance efforts to boost investors’ confidence in Malaysia, said Yeah Kim Leng, a professor of economics at Sunway University.

He was reacting to a news report that Malaysia has, so far this year, recorded the highest foreign fund outflow among seven Asian countries tracked by MIDF Research. The other countries are Thailand, Indonesia, the Philippines, India, Taiwan and South Korea.

The research house was quoted as saying in its weekly fund note yesterday that US$2.39 billion (RM9.93 billion) had flowed out of the country.

Speaking to FMT, Yeah said the underperformance of the ringgit and the weakness of current and prospective earnings had made Malaysia less appealing than the other countries and its equities less attractive.

“In the short term, the poor stock market performance has little impact on the economy although the reverse wealth effects could crimp consumer confidence and spending,” he said.

“It is unfortunate that the market hasn’t been able to reap the kleptocracy-free dividends under the new government.”

He added that political issues had also affected investor confidence.

However, he also attributed the dampening of sentiments partly to external uncertainties.

Carmelo Ferlito, a fellow at the Institute for Democracy and Economic Affairs, spoke of a “general climate of uncertainty” at the international level, saying this could have caused the high outflow of funds.

He said it was not clear how Malaysia would navigate such issues as the US-China trade war.