Posted on 20 Mar 2015
Foreign investors remain optimistic about the country's economic and business prospects despite Fitch Ratings’ possible downgrade of Malaysia’s sovereign rating.
Malaysian-German Chamber of Commerce and Industry (MGCC) executive director Alexander Stedtfeld said the chamber’s recent survey found almost all of the respondents said Malaysia’s economy is satisfactory or good for the German businesses.
More than half anticipate their businesses to grow and only 8.3 per cent see their situation to be worsen.
“This is a clear indication that German companies will not reduce their investments but rather increase their engagement in Malaysia,” Stedtfeld said.
“We also see a constant influx of new investments, bringing Germany up to the fourth largest investor in 2014.
“Especially encouraging is that among the newcomers there are many German small-and-medium enterprises who are confident in Malaysia’s attractiveness as an investment destination,” he told Business Times.
Without downplaying the influence of macroeconomic factors relevant for Malaysia’s credit rating, Stedtfeld said MGCC does not see a shift in the overall attractiveness of the country for German companies.
“We see a strong commitment of the Malaysian government to a prudent financial management, which is for example reflected by the introduction of the goods and services tax from April 1 2015 or in the ongoing reduction of subsidies,” he said.
He added reducing the reliance on revenues from oil and gas, broadening the tax base and balancing the costs of social infrastructures will have additional positive effects on Malaysia’s economy.
Japan External Trade Organisation (Jetro) Kuala Lumpur managing director Akira Kajita said said Japanese manufactures and services sectors are mainly watching real business markets like Malaysian's consumer demands and world market demands rather than financial market fluctuations.
“That's why I do not think the downgrade will have any effects on Japanese companies’ direct investmentz in Malaysia because there is still strong demand in Malaysia and no observation of clear deterioration of investment environment, which include laws, infrastructures and labours,” he said.
“I believe Malaysia will be still attractive after a minor downgrade,” he added.
Kajita said in general, sovereign rating affects the financial market such as government bonds, stocks and foreign exchange.
“So, Japanese financial institutions including investment funds may change their investment plan if there is a downgrade,” he said.
