KUALA LUMPUR, June 12 – The Malaysian corporate sector holds US$190 billion (US$1=RM4.71) in foreign currency liquid assets located abroad, which is indicative of the country’s robust international investment position, said Bank Negara Malaysia (BNM) Deputy Governor Datuk Marzunisham Omar.
He said the corporate sector is comprised of financial institutions, government-linked investment companies, and government-linked companies that have investments abroad and generate income from their foreign investments.
“We are not asking them to liquidate their assets, but BNM is encouraging them to bring back the realised profits and convert them into ringgit,” he told reporters on the sidelines of the BNM-organised Sasana Symposium 2024 on Wednesday.
Earlier, Marzunisham was one of the panellists at a session themed “Weathering Global Challenges: Buffers Against External Vulnerabilities”.
During the session, he said Malaysia has maintained a current account surplus for the past five years, which includes the holding of foreign assets by corporate and financial institutions.
“They can use this (foreign holding) to meet their financial obligations and this will significantly reduce the need to come to the central bank for foreign currency,” Marzunisham said.
The session was timely with Malaysia’s international reserves adequacy, which has gained increasing attention in the media and among analysts in recent periods, particularly against the backdrop of the strengthening US dollar.
Focusing on the international reserves of BNM, the deputy governor said that the country’s reserves remained resilient due to the level of external debt to the gross domestic product being manageable.
“One-third of the external debt is in the form of ringgit and we are not exposed to foreign currency fluctuation, with less than three per cent of government debt in foreign currencies and almost 96 per cent of government debt is in ringgit,” Marzunisham noted.
Meanwhile, ASEAN+3 Macroeconomic Research Office (AMRO) group head and principal economist Dr Runchana Ponsaparn said ASEAN economies are well prepared financially, particularly in terms of international reserves.
“We have a low public debt and at the same time, our banking system has already built a significant buffer in terms of capital and liquidity.
“Despite being hit by COVID-19 or even the trade tensions between the United States and China, ASEAN remains resilient as we have a buffer, even though it is becoming thinner,” she said during the session.
Sasana Symposium 2024 spans over two days from June 12-13, 2024, with the theme “Structural Reforms: Making it a Reality for Malaysia”.
