When investors want to invest into any country, they needed to know if their investments are safe. Thus, they would refer to a few international rating agencies for their comprehensive assessment and rating. The three most major ones are Moody’s, Fitch Ratings and Standard & Poor’s. While there are slightly differences in their ratings but generally it’s similar. As per the latest ratings thus far, Malaysia’s sovereign rating has remained under the ‘Investment Grade’ by all three rating agencies. Is there going to be a change since we now have a new government? Well, if we go by the latest announcements from Moody’s Investor Service, it’s the same.
Article in thestar.com.my here. Moody’s Investor Service says that Malaysia’s credit profile (issuer rating A3) is supported by the sovereign’s “Very High (-)” economic strength, which reflects a large and diverse economy that is growing at a relatively strong pace and boasts high levels of competitiveness. (Briefly, the whole sentence says that we are at where we should be, economically.) The rating agency also said that Malaysia’s “High (+)” institutional strength reflected a credible monetary policy framework, “but pervasive corruption and some constraints to government effectiveness”. (Briefly, it’s still looking great but if corruption could be eradicated, it will be much better)
The next assessment is not excellent but still under ‘Moderate.’ It says that Malaysia’s fiscal strength is only at ‘Moderate’ because of high debt burden, weak debt affordability and a narrow revenue base that is reliant on oil and non-tax revenues. (Briefly, I think GST would have been better when compared to SST as long as it (GST) was implemented efficiently) Moody’s conducts these periodic reviews through portfolio reviews in which Moody’s reassesses the appropriateness of each outstanding rating in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. Article in thestar.com.my here.
Bottom line is this, we (Malaysia) are still under Investment Grade rating. Here are all those countries as per Moody’s rating. Click here to read. Look at those with green colour yeah. Of course, I would hope that Malaysia’s sovereign rating continue to rise because we are at the LOWEST point for Investment Grade. Oops… As for now, please tell all your business friends overseas to invest here yeah. We are worth their time, money and attention. Happy understanding.
written on 17 March 2019
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