Malaysia has been rocked by a corruption scandal that has implicated high-ranking officials. But Prime Minister Najib Razak has come up with a new plan to boost confidence in the stock market – and the country.
The Malaysian government announced on Monday it will pump billions into a state investment firm to prop up its stock market.
Prime Minister Najib Razak, who is also Malaysia’s finance minister, said up to 20 billion ringgit ($4.6 billion, 4.1 billion euros) would be used to reactivate ValueCap, an equity investment firm set up in 2002 to invest in undervalued local firms.
“To protect the economy from the risk (of global uncertainty sparked by concerns over China’s economy), the government will implement the various measures to maintain the growth momentum,” Najib told reporters.
Malaysia would not impose capital controls, he said, because the economy was stronger than during the 1997/98 Asian financial crisis.
In addition, the factory sector would be exempted from import duties on 90 tariff lines – including spare parts, consumables and research equipment used in the manufacturing sector – until the economy recovers from the slowdown, he said.
The ringgit’s fall reflects a decline in Malaysia’s trade because of slumping prices for its liquefied natural gas and commodity exports. The country’s economy grew at its slowest pace in nearly two years in the second quarter, amid the plummeting ringgit and political turmoil.
Malaysia’s economic malaise has worsened in recent months after Malaysian investigators had found nearly $700 million in mysterious deposits in Najib’s bank accounts. The embattled prime minister denied any wrongdoing, but his government has since admitted the deposits were made, calling them “political donations” from Middle Eastern sources, but refusing to give further details.
Concerns over alleged mismanagement at state investment fund 1Malaysia Development Berhad (1MDB), which has accumulated 42 billion ringgit in debt since its formation in 2009, has also tarnished the country’s image, adding to its economic blues.
el/uhe (Reuters, AP, AFP, dpa)