Malaysia will remain a net lender in 2018

PETALING JAYA: Public Investment Bank Research (PublicInvest) opines that Malaysia is poised to maintain its position as a net lender in 2018 due to stronger fundamentals in terms of balance of payments.
"Malaysia maintained its position as a net lender in 2017 and looks set to repeat this in 2018 looking at current fundamentals," it said.
Malaysia saw an improvement in its balance of payments for 2017 following better financial accounts performance which was supported by improving sentiments in the equity market, which in turn lifted the country’s performance.
The widening of the current account surplus to RM118 billion in 2017 from RM101 billion due to further expansion of goods account, reinforced the country’s position as a net lender.
Meanwhile, the financial account, turned around from a net outflow of RM1.1 billion in 2016 to a net inflow of RM2.2 billion in 2017 for the first time in the last few years.
Foreign Direct Investment (FDI) hit RM39.2 billion which was lower than the RM47.2 billion recorded in 2016 due to lower approvals on foreign investment.
The ringgit ended with an average of RM4.30 per dollar as compared to the RM4.11 against the dollar, in the year before. The competitive position of the ringgit provided the impetus for investors to dig deeper into financial instruments given prospective currency gains and also aided demand for exports.
“This cements our view that the ringgit is likely to perform better this year thanks to a multitude of factors that will ensure its steady rise. This includes, but not limited to, steady growth in exports and sustained rise in financial markets,” the research house said of its outlook.