Zeti: Malaysia economy is diversified

Malaysia is not affected by the drop in oil prices as much as the market had expected it to be, said Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz.

“The market did not really take into account that we have already restructured our economy, wherein the services sector now constitutes some 55% of our economy while the manufacturing sector is 25%,” Zeti told a press conference here yesterday.

“Therefore, 80% of our economy is not about oil and gas. Granted, we are affected to a certain extent when oil prices come down, but we are not devastated, and as a result, we are able to manage this to grow between 4% and 5%. In fact, in 2015 we had a growth of 5%,” she said.

She stressed that the country’s economy had successfully diversified itself long ago.

“It is the same with government finances. Previously, 40% of government revenue was from oil and energy, but now, the Government has introduced reforms to remove subsidies and this is only now 20% and reduced by half,” Zeti said.

Meanwhile, she expects the ringgit to more accurately reflect the country’s strong fundamentals over the medium term.

“Our fundamentals are now that we have a current account surplus and we have an inflow of foreign direct investments (FDIs) in our current account. Malaysia is a country that has always received FDIs for more than a hundred years,” she said.

“This has continued till now and we are a profit centre for investors. Having these two surpluses has supported our currency, and also our reserve levels are very healthy,” she added.

Zeti also said that Malaysia had a very solid banking sector that intermediates all sorts of financial flows.