Mustapa: 1MDB will not have long-term impact on investments in Malaysia

Minister for International Trade and Industry Mustapa Mohamed claimed that the IMDB saga, which has sparked international investigations, will not have a long term impact on investments in Malaysia.

"The 1MDB factor has not had an impact on medium-to-long term investments," he said in an interview with Bloomberg today.

Instead, the minister said good infrastructure, business facilitation and the government’s pro-business policies, were main factors attracting the foreign investments.

Furthermore, he said the country's fundamentals were strong on top of a resilient and diversified economy, as well as a good track record of economic management.

Mustapa also pointed out that foreign direct investment (FDI) had improved despite the 1MDB scandal.

“There has been RM4 billion increase in FDI from the first quarter of 2016 compared to fourth quarter of 2015,” said the minister.

However, he admitted that investors' sentiments had been affected by other factors.

For example, he said a third of FDI went to the oil and gas sector last year but this is unlikely to be maintained due to a slump in global oil prices.

"The oil and gas components, of course you know what’s happening. This year there is going to be some reductions so that component is going to be challenging," he said.

He also acknowledged a slump in commodity prices.

Mustapa said he hoped that the country would be able to maintain the level of FDI from last year.

The 1MDB scandal escalated in April after the Malaysian fund defaulted on two coupon payments on separate bonds totalling US$1.75 billion.

Since then, the ringgit which was a top performing currency in the region in the first quarter of this year, had become the worst performing currency in the last month.

However, Putrajaya has insisted that several other factors were at play, including the interest rates by the US Federal Reserve, commodity prices and crude oil prices.- Mkini