KUALA LUMPUR: The stronger ringgit indicates positive sentiment among investors and a recognition of Malaysia’s excellent economic and financial fundamentals, says Datuk Seri Najib Tun Razak.
The Prime Minister said on Tuesday the ringgit appreciated by 10.4% against the US dollar in 2017. On Jan 5, 2018, it closed at a 17-month high, breaking the four dollar psychological barrier.
Delivering his keynote address at the Invest Malaysia, he said while one factor was also due to the recovery in crude oil prices, the stronger economic fundamentals speak for themselves.
Malaysia, he said, has enjoyed years of strong growth – with figures that most developed economies could only dream of – even during times of global economic turmoil and uncertainty.
“In fact, last year Malaysia exceeded all expectations, with the World Bank having to revise its estimate for our growth upwards not once, not twice, but three times – to 5.8%,” he said.
Najib said investors and global institutions are right to have confidence in Malaysia.
He cited the country's total trade grew strongly by 20.8% from January to November 2017 – while in that month alone, gross exports reached double-digit growth of 14.4%, with the highest receipts ever recorded, at RM83.5bil.
“Our capital market, a key facilitator for financing business growth, has continued to grow from strength to strength.
“In 2017, foreign net fund inflow recorded a positive RM10.8bil, the highest since 2012,” he said.
Najib said corporate bond and sukuk new issuance rose to RM111.2bil in January-November, which was nearly 30% higher than the whole of 2016. Malaysia’s bond and sukuk market as a whole grew further to RM1.28 trillion.
As for the Malaysian Islamic Capital Market as a whole – of which Malaysia's sukuk market is the largest globally – he said that it grew 11.9% to RM1.9 trillion compared to RM1.7 trillion in the previous year.
He said total private investment approved by the Malaysian Industrial Development Authority in January to September was RM113.5bil. The investments involved 3,886 projects and would create about 91,500 jobs.
Najib also pointed out there was a need to ensure the Malaysian capital market remains regionally competitive, so that the market continues to evolve in order to sufficiently expand its depth and breadth to serve the needs of our growing economy.
“Our Securities Commission and Bursa Malaysia, as well as our central bank and the Ministry of Finance, have continuously introduced and supported measures to further increase the dynamism of our capital market. Towards this objective, I can assure you that we can expect the introduction of further measures in the near future,” he said.
He said the international business community knows that this is a government that provides stability, strength and the certainty that investors want and need.
He cited HSBC's plan to invest over RM1bil to build its regional headquarters at the Tun Razak Exchange.
As for Huawei, an ICT global solutions provider which serves more than a third of the world’s population, it has made Malaysia its global operations headquarters, data hosting centre and global training centre. The project cost of RM2.2bil will see the employment of more than 2,370 people.
Saudi Aramco is also investing US$7bil in Petronas’s Refinery and Petrochemical Integrated development in Johor.
“That’s Aramco’s biggest downstream investment outside the Kingdom, and this shows the confidence they have in us,” he pointed.
Najib also said the government had also some taken the tough but necessary decisions to protect the resilience of the economy especially when the price of oil fell sharply.
This saw the government embarking to diversify sources of government income. This move enabled Malaysia to pull through following the drop in the price of petrofuels.
The reliance on oil and gas revenues had been from 41% in 2009 to 14% today.
“That truly saved Malaysia. Imagine if we were still so reliant on oil and gas revenue. It would have been catastrophic.
“We also took the difficult but necessary and far-sighted decision to introduce the Goods and Services Tax, or GST. It was not popular, but it was the right thing to do. There is a reason that over 160 countries around the world implement a similar tax, and that is to ensure a wide enough tax base, one that can withstand fluctuations in the global economy,” he said.
Najib also said within Malaysia, there was a concentrated campaign to sabotage the economy for political gain.
“Challenges at certain state-owned institutions, and you will all know I am referring to 1MDB, were amplified and used as a tool to suggest that our economy was collapsing.
“Now, I am not going to brush over this issue. There were indeed failings at the company, there were lapses of governance. There was valid cause for concern.
“This is why I ordered one of the most comprehensive and detailed investigations in Malaysia’s corporate history, one that involved multiple lawful authorities, including a bipartisan parliamentary body. Their findings were taken on board – and the company’s board was dissolved, its management team changed, and its operations reviewed.
“1MDB rationalised its assets, and with the proceeds, took an aggressive approach in reducing the debts to its lowest possible levels, and the company concentrated their efforts on ensuring its two most valuable assets, Bandar Malaysia and Tun Razak Exchange, remain as attractive investment propositions to both its shareholders and its investors,” he said.