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8/8/2019 CRA Malaysia

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EPGDIB - GLOBAL BUSINESS ENVIRONMENT

COUNTRY RISK ANALYSISMALAYSIA

GROUP 17

ASHISH GOSWAMI ROLL NO. 16

SARABJIT SINGH ROLL NO. 83


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MALAYSIA

Malaysia is a country in south-east asia, which in late 20th

century has experienced an economic boom and underwent

rapid development.

It borders the Strait of Malacca, an importantinternational shipping crossroad, and international

trade is integral to its economy.

Manufacturing makes up a major sector of the country's

economy.

COUNTRY RISK ANALYSISMALAYSI


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COUNTRY RISK ANALYSIS is a collection of risks

associated with investing in a foreign country.

These risks includepolitical risk

exchange rate risk

economic risk

sovereign risk

transfer risk

We will summarize our country risk analysis for

Malaysia based on above factors.

In upcoming slides we have a look on performance data

of Malaysian economy in recent past.

COUNTRY RISK ANALYSISOVERVIEW


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COUNTRY RISK ANALYSISPERFORMANCE DAT

GROSS DOMESTIC PRODUCT


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EXPORTS/IMPORTS/BALANCE OF TRADE


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INDEX of INDUSTRIAL PRODUCTION


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INFLATION

UNEMPLOYMENT RATE


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FOREIGN DIRECT INVESTMENT

FOREIGN DIRECT INVESTMENT BREAKUP YEAR 2009


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COUNTRY RISK ANALYSISRISK-POLITICA

POLITICAL RISK

Malaysia enjoys a high degree of political stability, with little

risk of political turbulence in the short to medium term.According to the World Bank, Malaysia ranks in the second top

quartile of countries for political stability, but in the second

bottom quartile for accountability.

The ruling Barisan Nasional (BN) coalition lost its long-standing

two-thirds majority, and opposition parties won elections in

five states. The new Prime Minister Najib Razak, who took

over in April 2009, has announced plans to provide stimulus

package to aid coming out of recent recession .

He will, however, face challenges both from within his party

and from an opposition alliance.


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COUNTRY RISK ANALYSISRISK-ECONOMI

ECONOMIC RISK

The Malaysian economy has an impressive economic

development record, with manufacturing, services andtourism industries successfully expanding since the 1960s to

complement the countrys competitive natural resource

industries. Malaysia is now a hub for multinational companies

and high-tech exports, as well as a major exporter of LNG and

palm oil. Growth has averaged 5.6% a year over the last 15

years, which has doubled per capita income to US$8,140 .

Meanwhile, poverty has fallen from 60% of the public in 1970

to 5% in 2002. The government has a 2020 Vision for

Malaysia to reach developed country status. For long-term

foreign currency bond risk, both Standard & Poors and Fitch

rate it A-; Moodys, A3. The economy is very open to foreign

trade and investment. At its last trade policy review in

2006, the WTO noted that Malaysia had continued efforts toliberalise its trade and investment policies.


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COUNTRY RISK ANALYSISRISK-SECURIT

SECURITY RISK

Though there are sporadic anti-government

demonstrations, these have not been directed at foreign

investors or resulted in substantial property damage.

Islamic extremism does not have a strong foothold in

Malaysian society, because of unsympathetic public attitudes

towards it and effective counterterrorism. Even so, plots

against foreigners and Chinese Malaysians have been

uncovered, and future security incidents can't be ruled out.Foreign tourists have been kidnapped in the recent past from

Malaysian resorts by the Philippines-based, al Qaida-linked

Abu Sayyaf group.

Thanks to improved security cooperation between

Malaysia, Indonesia and Singapore, pirate attacks on shippingthrough the busy Straits of Malacca have declined markedly in

recent years.

.


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COUNTRY RISK ANALYSISSUMMAR

STRENGTHS

Diversified exportsDynamic services sector

Effective education system, good infrastructure, high R&D

Support for investment via development of the financial marke

and broader access to FDI

WEAKNESSESEconomic dependence on foreign demand

Fiscal revenues heavily dependent on the performance of the

gas and oil sector

Very high stock of bank credit to the private sector

Erosion of the economys price competitiveness associated with

high labour costs. Persistent regional disparities

Key indicators 2009 2010 2011 2012 2013 2014

Real GDP

growth (%) -1.7 5.4 4.0 4.5 4.9 5.3

Consumer price

inflation (av; %) 0.6 1.7 2.4 2.6 2.5 2.7

Budget balance

(% of GDP) -7.0 -5.6 -5.2 -4.4 -4.2 -3.6

Current-

account

balance (% of

GDP) 16.2 12.7 14.1 13.5 13.1 11.9

Commercial

banks' prime

rate (av; %) 4.8 5.1 5.6 6.0 6.1 6.4

Exchange rate

M$:US$ (av) 3.52 3.37 3.31 3.27 3.19 3.13

Exchange rate

M$:100 (av) 3.76 3.70 3.67 3.73 3.70 3.68


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COUNTRY RISK ANALYSISSUMMAR

Organizations involved in manufacturing of electronic

goods are the most attractive bet to set up

business/investment in Malaysia.

Malaysia is a strong trade member country in ASEAN

region. Hence, investing here might open routes to otherASEAN partner countries.

Preferential treatment given to local Malay population

might suggest to go into tie-up with local organizations to

set-up new shop.

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