Economy remains strong, fundamentals solid, says Guan Eng

KUALA LUMPUR: Newly-minted Finance Minister Lim Guan Eng has reiterated that the Malaysian economy remains strong with solid fundamentals despite the need to improve the current fiscal condition.

He said this when fielding questions by journalists on how the government intends to return confidence to investors given the recent announcement that the current debt-to-GDP ratio stood at 80%.

“In the financial sector, our capitalisation is high, non-performing loans are low and liquidity in the capital market is high. The fundamentals are there but we need to improve the fiscal condition,” he said.

“I'm confident that after we resolve the fiscal condition, we will be even stronger.”

There have been critics of the tone and manner in which Lim has made public the nation's finances. One Bloomberg columnist said Lim's “blunt” approach was risking "leaving investors with an uncertain fiscal outlook".

Bursa Malaysia had fallen sharply over the last two days as foreign funds continued their selldown of local equity. The FBM KLCI fell 69 points or 3.7% over the two sessions, erasing nearly all its gains so far this year.

However, Lim drew attention to the fact that it is not just Malaysia's equity market that has pulled back in recent days, but other stock exchanges in the region as well due to external factors.

“Whether this [transparency] is a cause is up to the stock market to determine. It is not only in Malaysia that the stock market has fallen. Look at Thailand, the US and other countries. There are other intenational factors. Let the stock brokers and analysts see if this is only in Malaysia or regionally and globally.

“We have to be truthful and transparent. If by being transparent we will be punished then there's nothing we can do about it. We will still continue to be transparent.”