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Malaysia's long-term economic prospect favorable: Moody's

KUALA LUMPUR, Sept 17 (Bernama) -- Malaysia's long-term economic prospects remain favourable given its combination of well-developed infrastructure, substantial natural resources, globally competitive services sector, and a competitive manufacturing base that has room to adapt in several areas.

In its report "Credit Analysis on Malaysia" released today, Moody's said the abundant energy supply has enabled the recent expansion of energy-intensive activities, such as aluminium smelting, in eastern Malaysia.

"The financial sector is characterised by the world's biggest Islamic finance market, the third largest local-currency bond market in emerging Asia, and strong domestic banks that are emerging as key regional players in line with government strategy.

"Tourist arrivals - the 10th largest in the world in 2012 according to the World Tourism Organization - have also boosted the services sector," it said.

Moody's said in the World Economic Forum (WEF) 2014-15 Global Competitiveness Report, Malaysia's ranking rose to 20th out of 144 countries from 24th the previous year, and above Israel, the next highest A-rated country, in 27th place.

"The World Bank's 2014 Logistics Performance Index ranks Malaysia 25th out 160 countries based on the quality of its trade-related activities and infrastructure.

"That puts it top among A-rated sovereigns – the next highest was Poland in 31st place – and marks an improvement on its ranking of 29th in 2012," it said.

Moody's said regional economic integration and trade liberalisation were expected to proceed steadily as Malaysia and other Southeast Asian countries are moving towards establishing an Asean Economic Community by late 2015.

This, it said, would further liberalise trade in services, improve trade facilitation, and remove barriers to investment.

Malaysia also continues to negotiate bilateral free trade agreements (FTAs), with the latest being the Malaysia-Australia FTA which came into effect in 2013, the report said.

"Malaysia has also forged closer economic ties with its second largest trading partner, Singapore. That culminated in the February 2013 announcement of the construction of a high-speed rail link between Kuala Lumpur and Singapore.

"The rail link is due to come into operation by 2020 and to connect five Malaysian cities with Singapore," it said.

 

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