ID :
22098
Wed, 10/01/2008 - 16:43
Auther :
Shortlink :
http://m.oananews.org//node/22098
The shortlink copeid
M'SIA WELL-POSITIONED TO WEATHER DEVELOPMENTS IN U.S. ECONOMY, SAYS M'SIAN DPM
PUTRAJAYA, Sept 30 (Bernama) -- Malaysia has the capacity to weather the destabilising consequences of the development in the US economy and the international financial market, Deputy Prime Minister Najib Razak said Tuesday.
Reiterating that the country's economic fundamentals were strong, Najib,
who
is also Finance Minister, said: "Our banking system today is sound and strong
with buffers to withstand the current financial turbulence."
"The strengthened financial infrastructure and more developed financial
market have increased the resilience of our financial system to external
shocks," he said.
Najib said liquidity in the banking system remained ample and funding to
the private sector, which grew 13 per cent in August, has continued to
expand.
Non-performing loans is now at 2.5 per cent and has declined steadily since
2003.
Global fears have mounted since the Wall Street plunged overnight following
the rejection of a US$700 billion financial bailout plan by US
lawmakers.
Asked on the government's biggest concern, he said, the government was
confident of the country's financial institutions and the stock market is being
monitored.
"Today, the drop in Malaysia is less significant as compared with the Dow
Jones in London and some of the Asean markets.
"We are quite confident we can manage the situation although there are
obviously areas of concern with respect to growth but we are confident we won't
be that badly off in Malaysia as compared with other parts of the world," he
said.
Hence, he said, the GDP growth target remains at 5.5-5.7 per cent.
"However, if there are more bad news from the U.S. and the current
situation
leads to significant downturn, the government will need to re-evaluate the
situation, he said.
The government would do whatever necessary within its means, he said when
asked if the government would come up with any stimulus package if the
situation warrants it.
Asked if there will be a cut in interest rates, he said, it was under the
purview of the Bank Negara and the government would be guided by the central
bank's views.
"So far they have maintained the correct posture. When people ask for
interest rates to be raised, they did not raise as they anticipated the
threat to economic growth will be more serious.
"So, they have taken the right position so far," he said.
The government, he said, is also monitoring the Ringgit which has reflected
the true fundamental value of the economy.
He also said there was no shortage of the US dollar in the domestic market.
He said Malaysia's international reserves were high at US$119 billion while the
current account surplus was still large.
Gross inflows of foreign direct investments have remained significant,
totalling RM31 billion in the first half of 2008.
"While the economy is affected by the global economic slowdown, the more
diversified economy and its stronger link to Asia will allow us to be in a
better position to weather this challenging period.
For example, he said, while the country's exports have increased, but the
proportion of export to the U.S. had declined from 20 per cent to 16 per cent in
the same period.
Najib also said Asean is fast becoming a more significant trading partner,
with China and India emerging strongly, he said.
Najib said export performance continues to benefit from new markets and
products as well as from rising intra-regional trade (among Asean countries).
New linkages with fast-growing regions in the Middle East, Eastern Europe
and Latin America had also given the boost to the export sector, he said.
In terms of approved FDI projects in 2007, he said, while the U.S. has
traditionally been an important investment partner, Japan (19.5 per cent) and
the non-OECD (41.7 per cent) have become more significant investors in Malaysia
compared with the U.S. (nine per cent).
Other important aspects of the country's economy is domestic demand,
the main driver of growth, he said.
"We hope the U.S. will find an appropriate and timely solution to the
current impasse between its lawmakers and the administration," said Najib.
Malaysia, he said, had long called for an overhaul and re-examination of
the global financial system.
"We will have to operate more responsibly and with risk. We hope the
international community led by the U.S. will now respond positively to this
urgent need," he added.
Reiterating that the country's economic fundamentals were strong, Najib,
who
is also Finance Minister, said: "Our banking system today is sound and strong
with buffers to withstand the current financial turbulence."
"The strengthened financial infrastructure and more developed financial
market have increased the resilience of our financial system to external
shocks," he said.
Najib said liquidity in the banking system remained ample and funding to
the private sector, which grew 13 per cent in August, has continued to
expand.
Non-performing loans is now at 2.5 per cent and has declined steadily since
2003.
Global fears have mounted since the Wall Street plunged overnight following
the rejection of a US$700 billion financial bailout plan by US
lawmakers.
Asked on the government's biggest concern, he said, the government was
confident of the country's financial institutions and the stock market is being
monitored.
"Today, the drop in Malaysia is less significant as compared with the Dow
Jones in London and some of the Asean markets.
"We are quite confident we can manage the situation although there are
obviously areas of concern with respect to growth but we are confident we won't
be that badly off in Malaysia as compared with other parts of the world," he
said.
Hence, he said, the GDP growth target remains at 5.5-5.7 per cent.
"However, if there are more bad news from the U.S. and the current
situation
leads to significant downturn, the government will need to re-evaluate the
situation, he said.
The government would do whatever necessary within its means, he said when
asked if the government would come up with any stimulus package if the
situation warrants it.
Asked if there will be a cut in interest rates, he said, it was under the
purview of the Bank Negara and the government would be guided by the central
bank's views.
"So far they have maintained the correct posture. When people ask for
interest rates to be raised, they did not raise as they anticipated the
threat to economic growth will be more serious.
"So, they have taken the right position so far," he said.
The government, he said, is also monitoring the Ringgit which has reflected
the true fundamental value of the economy.
He also said there was no shortage of the US dollar in the domestic market.
He said Malaysia's international reserves were high at US$119 billion while the
current account surplus was still large.
Gross inflows of foreign direct investments have remained significant,
totalling RM31 billion in the first half of 2008.
"While the economy is affected by the global economic slowdown, the more
diversified economy and its stronger link to Asia will allow us to be in a
better position to weather this challenging period.
For example, he said, while the country's exports have increased, but the
proportion of export to the U.S. had declined from 20 per cent to 16 per cent in
the same period.
Najib also said Asean is fast becoming a more significant trading partner,
with China and India emerging strongly, he said.
Najib said export performance continues to benefit from new markets and
products as well as from rising intra-regional trade (among Asean countries).
New linkages with fast-growing regions in the Middle East, Eastern Europe
and Latin America had also given the boost to the export sector, he said.
In terms of approved FDI projects in 2007, he said, while the U.S. has
traditionally been an important investment partner, Japan (19.5 per cent) and
the non-OECD (41.7 per cent) have become more significant investors in Malaysia
compared with the U.S. (nine per cent).
Other important aspects of the country's economy is domestic demand,
the main driver of growth, he said.
"We hope the U.S. will find an appropriate and timely solution to the
current impasse between its lawmakers and the administration," said Najib.
Malaysia, he said, had long called for an overhaul and re-examination of
the global financial system.
"We will have to operate more responsibly and with risk. We hope the
international community led by the U.S. will now respond positively to this
urgent need," he added.
