Malaysian economy holds up well despite uncertainties

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Xinhua, Kuala Lumpur :
Although some reforms measures carried out by Malaysia’s new government led by Prime Minister Mahathir Mohamad raised uncertainties in the country’s fiscal position, analysts here are generally positive on the economic outlook in the first half of its 100 days reforms.
The economic reforms included the removal of government service tax (GST) and re-introduction of fuel subsidy, among others.
“The long term outlook could be looking positive after clearing some inefficient usage of government’s resources in the past, resulting in better governance,” said Hong Leong Investment Bank in a report Friday.
The victory by Pakatan Harapan in the 14th general election (GE14) took the market by surprise last month and triggered some sell-off by foreign investors in Malaysia’s equities and bonds.
The country’s national debt, which is said to have spiked to 1 trillion ringgit (247.6 billion U.S. dollars), negative news flow on the 1MDB scandal, slowdown in construction sector after the new government review construction of mega projects and lower revenue following GST “zeroization” have weighed on the market sentiment.
While abolishing the GST has led to a revenue loss of 21 billion ringgit, the Malaysian government has also announced series of expenditure rationalization exercise which is projected to save 10 billion ringgit.
“We are of the view that the government is on the right path in addressing the country’s financial position and economic well being, rather than by merely being a change in administration. We believe that legal and regulatory reforms will be addressed, and thus setting Malaysia on a right footing once again,” Affin Hwang Capital Research said in its recent report.
“On the whole, we nevertheless remain mid to longer term positive and believe that the on-going reforms coupled with a more-transparent government with the right policies will steer the country in the right direction,” it said.
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