Is Malaysia Heading To Bankruptcy? By Jason Chin

0
1217

By Jason Chin

Scandals and allegations with regards to fraudulence in funds have become a norm in the country today.People from all walks of life are heavily speculating on the fate of the country. Restaurants, bars and coffee parlors are buzzed with discussions on the alleged ‘misappropriation of funds’. Some have gone as far as predicting when Malaysia will be bankrupt and follow suit with Greece. Public sector servicemen express their fear of reduction or worse still, cessation of salary with the alleged plundering financial condition of the country

While one can understand the reason such fear has been instilled among the people by certain quarters of politicians, the big question remains “Should we be afraid? Is Malaysia heading to bankruptcy?”

6th in the Global Foreign Investors

Malaysia has been ranked 6th in the Global Foreign Investors’ Destination Attractiveness Index or Baseline Profitability Index (BPI) for the year 2015. BPI is published by the Foreign Policy Magazine, that rank markets for foreign investment based asset growth, preservation of value, and repatriation of capital. This ranking is done among 110 countries across 6 continents and reaffirms Malaysia as an attractive profit center for foreign investors.

Contrary to popular believe implanted into the minds of Malaysians by unscrupulous individuals, Malaysia has ranked up 5 spots compared to its position in 2014. This index compares how local conditions and policies affect the same investment in different countries. Malaysia and Singapore are the only two ASEAN countries in the top 10 of this highly prestigious ranking. In short, we can expect much more foreign investors into the country in the near future.

Growth in GDP

With regards to Gross Domestic Product (GDP), Malaysian economy has advanced by 5.60 percent in the first quarter of 2015 compared to the same quarter last year. The current GDP growth in Malaysia is above forecast and the Trading Economics speculate that Malaysian GDP is expected to remain on a steady growth path amid falling oil prices. Simply put, If GDP is rising, the economy is good and the nation is moving forward. If GDP is falling instead, the economy is in trouble and the nation is losing ground.

Global Competitiveness Report

The most recent World Economic Forum’s annual Global Competitiveness Report has been released. It evaluates the efficacy of 144 of the world’s governments on measures including the wastefulness of government spending, burden of regulation and transparency of policy making, to produce and overall global ranking. Malaysia is ranked 8th in this index by the World Economic Forum. Malaysia is given a ‘satisfactory’ position with regards to ethics and corruption index component. The World Economic Forum acknowledges that the region is plagued by corruption and red tape, but goes on to praise Malaysia as a ‘stand out country’ in this region as they have noted the country to be relatively successful at tackling both these issues as part of its regular economic and government transformation programmes.

Why is the Ringgit weak?

With all the upward trends as mentioned, then why is the Malaysian ringgit falling? Barclays regional economist Rahul Bajoria has stated that sharp drop in oil prices played a pivotal role in plummeting the value of the ringgit. From June 2014 till February 2015, crude oil price has fallen about 45.6%. Although Malaysia is technically a net crude oil importer, we still derive a large chunk of our income from oil-based revenue. Malaysia is a net energy exporter when liquefied natural gas is factored in and therefore lower receipts from those exports hits the current account as well.

The Trading Economics reported that the current inflation rate in Malaysia is 2.1% (May 2015). This is commendable when considering the average inflation rate in Malaysia between 1973 till 2015 is 3.68%. In an interview with Bloomberg TV, Forex Time’s Chief Market Analyst, Jameel Ahmad agrees that the ringgit in grossly ‘undervalued’ and this has led to the current weakness in the ringgit.Jameel also added that he expects the ringgit to stabilize and eventually gain strength in the near future.

Jaguhkampung

Comparing data released by internationally recognized traders, speculators and economists with verbal data released by jaguhkampung economist from the opposition coalition in Malaysia, it is pretty obvious that Malaysia is far from bankruptcy as it is being propagated by spinners from the opposition political coalition.

While the so-called leaders from the opposition coalition incite fear among Malaysians that the ringgit is falling due to alleged bad investments and money laundering involving 1MDB, the fact remains that it is just a big bubble of fallacy that they manufacture. Unfortunately, the vacuum they create is so strong that many Malaysians are being sucked into it without verifying their deceitful claims.

MyTimes News Portal is not responsible or does not accept any form liability for the contents and material portrayed in the article above. We publish articles and opinions without prejudice.

LEAVE A REPLY

Please enter your comment!
Please enter your name here