Tengku Zafrul says Malaysia’s economy unlikely to follow Sri Lanka’s, but slowdown possible if China-Taiwan tensions worsen

Tengku Zafrul says Malaysia’s economy unlikely to follow Sri Lanka’s, but slowdown possible if China-Taiwan tensions worsen
Tengku Zafrul says Malaysia’s economy unlikely to follow Sri Lanka’s, but slowdown possible if China-Taiwan tensions worsen

Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz delivers a speech at the launch of the KWAP transformation plan in Kuala Lumpur August 3, 2022. — Bernama pic

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By Keertan Ayamany

Friday, 05 Aug 2022 12:10 PM MYT

KUALA LUMPUR, Aug 5 — Malaysia’s economy is more diversified and unlikely to collapse the way Sri Lanka’s did, Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz said in an interview with CNN last night.

He pointed out that Sri Lanka’s economy had been highly focused on tourism, whereas Malaysia’s economy is spread out across several sectors, and that it is also a net exporter of commodities.

“Our reserves are about US$106 billion (RM472 billion) compared to Sri Lanka, which is only US$3 billion. And our debt to GDP… is around 60 per cent, whereas Sri Lanka is above 100 per cent

“And more importantly, if you look at where we are today in terms of our foreign denominated borrowings, it’s only 2.5 per cent of our total debts. So 97.5 per cent of our borrowings are in ringgit.

“And of course Sri Lanka is facing a twin deficit and we are not,” he said in a live interview on the US broadcaster’s First Moves programme with its anchor Julia Chatterley.

Sri Lanka is currently going through an economic meltdown and civil unrest, which saw its former president Gotabaya Rajapaksa fleeing the country to Singapore.

To note, Sri Lanka’s foreign reserves were at US$3.1 billion at the end of 2021, but dropped to US$1.92 billion by May this year.

Tengku Zafrul was also asked to speculate on what a blockade of the Taiwan Strait would mean for Malaysia’s economy following US House Speaker Nancy Pelosi’s recent visit to Taiwan, which escalated tensions with China.

Highlighting that China is Malaysia’s biggest trading partner, Tengku Zafrul said that if should such a blockade happen, “there is risk of a slowdown”.

“We’ve seen that Malaysia’s economic performance is also dependent on how China tackles its own Covid-19 policies. They’ve been very conservative and it has affected our supply chain for example.

“So if anything happens with Taiwan, we will definitely have to monitor this very very closely. As it will have impact… regional stability is crucial for our recovery,” he said.

Since Pelosi’s visit, China’s People’s Liberation Army, has conducted several “drills” surrounding Taiwan, even launching missiles that flew over the island nation earlier today.

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