Page 122 - Malaysia 2016
P. 122
2016
and 0.4%, respectively (2014: 6.3% and and were sufficient to finance 8.3
5.3%). There were two divergent trends months of retained imports and is 1.2
in external trade during the year. In the times of the short-term external debt.
first half of the year, the external trade The progressive liberalisation of foreign
performance was largely weighed down exchange administration rules has
by the decline in commodity prices and resulted in a greater decentralisation
the sluggish demand for commodities of international reserves, which has
and commodity-related manufactured enabled the economy to reduce its
products. In the second half of the reliance on the Bank’s international
year, external trade improved due to reserves. This is evident from the
a rebound in export growth arising increasing acquisition of assets abroad
from higher demand for manufactured by Malaysian entities. The availability
products and commodities, and the of these external assets enables these
positive valuation effects from the entities to meet their external debt
ringgit depreciation. For the whole year, obligations without creating a claim on
the trade surplus was higher, supported the international reserves. The greater
by both manufactured and commodity exchange rate flexibility also reduces
products. reliance on international reserves in
managing external pressures.
Against the backdrop of continued
uncertainties in global financial Malaysia’s external debt remained
markets, the external sector manageable throughout 2015. The
experienced significant two-way external debt stood at RM833.7 billion,
cross-border capital flows for most of equivalent to USD192.2 billion or 72.1%
2015. The financial account recorded of GDP as at end-2015 (end-2014:
a net outflow of RM53.3 billion (2014: RM747.5 billion, equivalent to USD211.8
net outflow of RM81.6 billion). During billion or 67.5% of GDP). The rise in
the year, considerable volatility was the external debt was mainly due to
observed in foreign portfolio funds, valuation effects from the depreciation
in part due to the building up and of the ringgit against most currencies
unwinding of speculative positions in during the year. Excluding the foreign
the domestic and offshore markets. exchange revaluation changes,
Net portfolio outflows of non-resident offshore borrowing increased at a
funds amounted to RM19.0 billion more moderate pace of 4.0% in 2015,
(2014: net outflows of RM10.4 billion). contributing two percentage points
Notwithstanding the developments to the overall increase in the external
in short-term portfolio flows, it is debt. These borrowings were mainly
noteworthy that Malaysia remained a a reflection of the net drawdown
competitive destination for long-term of intercompany borrowings by
capital, as evidenced by the steady several private corporations in the oil
inflow of foreign direct investments and gas sector, and new issuances
(FDI). The bulk of the FDI flows went into of international debt securities.
the manufacturing sector, primarily in Nevertheless, the profile of Malaysia’s
the electronics and electrical (E&E) and external debt remained healthy with
petrochemical-related industries. more than half being of medium to
long-term tenures. Risks from foreign
The international reserves of Bank exchange fluctuations were largely
Negara Malaysia amounted to RM409.1 contained as about 36% of the
billion (equivalent to USD95.3 billion) as external debt is ringgit-denominated,
at 31 December 2015. As at 29 February while most of the foreign currency-
2016, the reserves were at RM410.5 denominated debt was hedged, either
billion (equivalent to USD95.6 billion). The naturally through foreign currency
international reserves remained ample earnings or through the use of financial
to facilitate international transactions instruments. Being a highly open
and 0.4%, respectively (2014: 6.3% and and were sufficient to finance 8.3
5.3%). There were two divergent trends months of retained imports and is 1.2
in external trade during the year. In the times of the short-term external debt.
first half of the year, the external trade The progressive liberalisation of foreign
performance was largely weighed down exchange administration rules has
by the decline in commodity prices and resulted in a greater decentralisation
the sluggish demand for commodities of international reserves, which has
and commodity-related manufactured enabled the economy to reduce its
products. In the second half of the reliance on the Bank’s international
year, external trade improved due to reserves. This is evident from the
a rebound in export growth arising increasing acquisition of assets abroad
from higher demand for manufactured by Malaysian entities. The availability
products and commodities, and the of these external assets enables these
positive valuation effects from the entities to meet their external debt
ringgit depreciation. For the whole year, obligations without creating a claim on
the trade surplus was higher, supported the international reserves. The greater
by both manufactured and commodity exchange rate flexibility also reduces
products. reliance on international reserves in
managing external pressures.
Against the backdrop of continued
uncertainties in global financial Malaysia’s external debt remained
markets, the external sector manageable throughout 2015. The
experienced significant two-way external debt stood at RM833.7 billion,
cross-border capital flows for most of equivalent to USD192.2 billion or 72.1%
2015. The financial account recorded of GDP as at end-2015 (end-2014:
a net outflow of RM53.3 billion (2014: RM747.5 billion, equivalent to USD211.8
net outflow of RM81.6 billion). During billion or 67.5% of GDP). The rise in
the year, considerable volatility was the external debt was mainly due to
observed in foreign portfolio funds, valuation effects from the depreciation
in part due to the building up and of the ringgit against most currencies
unwinding of speculative positions in during the year. Excluding the foreign
the domestic and offshore markets. exchange revaluation changes,
Net portfolio outflows of non-resident offshore borrowing increased at a
funds amounted to RM19.0 billion more moderate pace of 4.0% in 2015,
(2014: net outflows of RM10.4 billion). contributing two percentage points
Notwithstanding the developments to the overall increase in the external
in short-term portfolio flows, it is debt. These borrowings were mainly
noteworthy that Malaysia remained a a reflection of the net drawdown
competitive destination for long-term of intercompany borrowings by
capital, as evidenced by the steady several private corporations in the oil
inflow of foreign direct investments and gas sector, and new issuances
(FDI). The bulk of the FDI flows went into of international debt securities.
the manufacturing sector, primarily in Nevertheless, the profile of Malaysia’s
the electronics and electrical (E&E) and external debt remained healthy with
petrochemical-related industries. more than half being of medium to
long-term tenures. Risks from foreign
The international reserves of Bank exchange fluctuations were largely
Negara Malaysia amounted to RM409.1 contained as about 36% of the
billion (equivalent to USD95.3 billion) as external debt is ringgit-denominated,
at 31 December 2015. As at 29 February while most of the foreign currency-
2016, the reserves were at RM410.5 denominated debt was hedged, either
billion (equivalent to USD95.6 billion). The naturally through foreign currency
international reserves remained ample earnings or through the use of financial
to facilitate international transactions instruments. Being a highly open
