1MDB no impact to Malaysia's economy: Report

PETALING JAYA - Investors remain confident of the Malaysian economy despite the political and economic fallout from the 1Malaysia Development Bhd (1MDB) crisis.

A political risk consultancy, Global Risk Insights, said in a report dated Sept 6 that the country's economy had been "remarkably resilient" despite 1MDB dominating recent headlines.

"Investors remain confident in Malaysia's well-developed regulatory framework, and the stock market, despite wavering, is beginning to regain its stability. For now at least, Malaysia has seen the worst of this political and economic storm, and will seek to renew its status as an exciting emerging market," said Alexander Macleod, an analyst with the consultancy.

He pointed out that the 1MDB issue would not force a tectonic shift in the country's economic landscape as it has begun to recover from last year's events, when stock markets plunged, the currency was in freefall, and political tensions were palpable.

While Macleod noted that the crisis "is indicative of the country's failure to effectively tackle corruption in Malaysia's top echelons" and had thrown Prime Minister Datuk Seri Najib Tun Razak into the international limelight, he said Najib had managed to overcome internal divisions within Umno by reinforcing party unity at a time when foreign regulators would be probing closely into its economic and political affairs.

He also said the crisis coincided with a global slump in energy and oil prices, causing a slowdown to Malaysia's economic growth and stock market volatility caused by uncertainty stemming from external headwinds.

"What is certain is that Malaysia's economy is remarkably resilient."