Monday, October 20, 2008

Malaysia not in any financial crisis

Deputy Prime Minister Datuk Seri Najib Tun Razak stressed that Malaysia is not in a financial crisis and should not be talked into one.

However, Malaysia’s real economy would inevitably be negatively impacted by the current financial challenges. Gross Domestic Product (GDP) growth for 2009 would be reviewed downwards from the projected 5.4% in view of the worsening global financial crisis, Najib said.

The Government would also inject RM5bil to double the size of ValueCap Sdn Bhd set up in 2003 to invest in undervalued companies. Foreign Investment Committee (FIC) guidelines would also be reviewed to attract more foreign investors especially in property and commercial sectors.

“While we are confident of the resilience of our financial sector, we are mindful that the financial turmoil in markets elsewhere will bear consequences on the real economies there as well as globally,” he said.

Najib said from the government’s perspective, managing the impact on the real economy was the top priority while it continued to ensure the integrity of the country’s financial system.

He said the global economic slowdown would have an impact on demand for discretionary consumption which formed a portion of Malaysia’s exports.

“Quite clearly, the tradable sectors of the economy will be negatively affected,” he said.

Najib said slower growth, which is beginning to be visible, would result in a slower demand for commodities as evidenced in the softening of commodity prices including crude oil prices.

“The decline in palm oil and rubber prices will affect both the bottom line of our plantation companies and smallholders’ income,” he said.

Therefore, he said, the drivers for sustained economic growth would have to come from domestic private investments and continued robust domestic consumptions.

1 comment:

Anonymous said...

Dr Mahathir said, "I hopes we are right in forecasting the effect on us of the collapse of the world's financial system. But I have a sneaking feeling that all is not well."

He said, "we are a trading nation which trades with all countries of the world. The United States and Europe are among the biggest of our trading partners. Roughly 40 per cent of our total trade is with them. I may be wrong but I believe that if our buyers cannot pay for what they import from us, we would not make the profit we had expected. In fact we would lose a lot of money as we will not recover the cost of the goods we sell even."

What he means?