Analysts hail Malaysia’s commitment to improve ties with US

(Bernama) – Analysts have commended on Malaysia’s commitment to further improve ties with the US following Prime Minister Datuk Seri Najib Tun Razak’s recent visit to Washington DC.

This is despite the world’s largest economy having placed Malaysia and along with other 15 countries on its trade deficit watchlist earlier this year.

RHB Research Institute Sdn Bhd chief Asean economist Peck Boon Soon said Malaysia was ranked seventh on the merchandise-trade deficit list with a trade surplus of US$25 billion (RM104.7 billion) over the US.

“Although we are not sure about the next steps that they are going to take against the relevant countries, I believe following Najib’s visit, the US will not take any drastic moves to penalise Malaysia,” he told Bernama.

In April, US President Donald Trump was reported to be planning to launch an investigation into the 16 countries, including Malaysia, for allegedly enjoying trade surplus over the US due to alleged unfair trade.

Rebutting the Trump administration’s claim, International Trade and Industry Minister Datuk Seri Mustapa Mohamed had said that Malaysia’s trade surplus with the US was merely US$5 billion, much lower than what was claimed by the world’s biggest economy.

Affin Hwang Investment Bank vice-president and head of retail research Datuk Dr Nazri Khan Adam Khan said the visit could help improve Malaysia’s trade imbalance, with Malaysia buying more US products while they invest more in Malaysia’s equity market.

“There are more investments that the US can make in Malaysia. With the US investing in our market, obviously it will build confidence among other foreign companies to come and invest in our local exchange as well,” he said.

Commenting on plans by the Employees Provident Fund (EPF) and Khazanah Nasional Bhd to expand their investments in the US, Peck said there was nothing to be shocked about the news as it was quite normal for the two entities to invest there.

During his working visit to the US from Sept 11 to13 at Trump’s invitation, Najib announced on the planned investments by EPF and Khazanah, with the EPF alone expected to invest between US$3 billion and US$4 billion.

“The EPF and Khazanah have been investing in good businesses all over the world. Since the visit took place in the US, so the news reports highlighted the investments there.

“In fact, they are investing everywhere but whether the investment will have good returns depends on the company’s judgement,” Peck said.

For Nazri, the EPF’s move was a wise strategy, considering the Malaysian market has saturated and is a bit slow.

“The EPF has bigger total fund now. They cannot depend on the Malaysian market alone and needs to go to big markets like the US.

“But they need to ensure whatever investment they are into is within their circle of competency and they should not venture into an area that they are not comfortable with,” he added.

On the deal signed between Malaysia Airlines Bhd (MAB) and American aircraft maker Boeing to buy 16 aircraft, Nazri said the plan was in line with MAB’s expansion programme.

The deal includes the purchase of eight 787-9 Dreamliners by converting eight of Malaysia Airlines’ existing order of Boeing 737 MAX aircraft and eight additional purchase rights of 737 MAX 8s, as well as Boeing’s Global Fleet Care service to maintain the national carrier’s current and future Boeing aircraft.

“The 787-9 Dreamliners is considered as future expansion. Without the new aircraft, MAB could not add new routes, especially in the European market as the current Boeing 777s are already old and cannot be used anymore,” he said.

Peck described the deal as a normal business exercise for MAB if the airline were to have adequate financial muscle to keep upgrading its airplanes.

“We should not be too negative about it. If they want to upgrade their planes, they could either go for Boeing or France-based Airbus,” he added.