KUALA LUMPUR:The going has been good for the Malaysian economy.
The World Bank and the International Monetary Fund have given us good reviews. International rating agencies are happy with the government’s financial discipline and reforms in its economy.
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Malaysia’s economic growth in recent quarters has surpassed expectations, while the ringgit is improving.
The country’s stronger economic position is evidenced by its ability to withstand structural and policy changes that took place at the global stage in the last two weeks. In the past, when the United States announced major structural changes to its economic and monetary policies, Asian countries, especially Malaysia, would feel the effects.
As the saying goes, when the US sneezes, Asia catches a cold.
The US announced major tax reforms, cutting its corporate tax rate from 35 oer cent to 21 per cent. Another anchor to its tax reforms is incentivising companies such as Apple and Google to repatriate their overseas earnings. US companies hold more than US$1.5 trillion (S$2 trillion) outside the country. Imagine if some or all of that money goes back to the US – the dollar would strengthen and the ringgit would suffer. But nothing happened. Two weeks ago, three major central banks – the Federal Reserve of the United States, European Central Bank and Bank of England – made major policy changes towards increasing interest rates next year.
In the past, the mere mention of the US and other developed countries raising interest rates would have rattled currencies in developing economies.
