KUALA LUMPUR, April 19 — Deputy Minister Ong Kian Ming today corrected mistakes made by a senior UBS official who said that the Swiss banking giant has not invested in Malaysia for the past five years.
Ong said Kelvin Tay, who is chief investment officer for the Southern Asia and Pacific region at UBS Wealth Management based in Singapore, had made mistakes in his interview with Bloomberg TV that a first-year economics student would not make.
“I'm surprised that an international bank would have someone at such a senior level who can't get his basic economics right.
“It's fair game to criticise the Malaysian government on some of our policies but it's totally unprofessional to get even your basic economic facts wrong,” Ong said on Facebook.
In case you guys missed it, we asked UBS about this the other day. Here's the unadulterated view of the bank on Malaysia pic.twitter.com/2tFD7P6lnZ— David Ingles (@DavidInglesTV) April 17, 2019
Tay told Bloomberg TV that Malaysia would not be able to move forward due to “political paralysis”.
He also said that the Pakatan Harapan (PH) government’s budget was based on an oil price of US$70 per barrel, but noted that because average oil prices were well below that, Malaysia’s “current account deficit” could surpass the government’s projected 3.4 per cent.
Ong, who is the international trade and industry deputy minister, pointed out that Tay should be referring to the fiscal deficit, not current account deficit.
Tay also said that the Malaysian government may need to scale back its expenditure, which means that “the economy is going to shrink even further”.
Ong responded that projections for gross domestic product (GDP) growth were still on track at more than 4 per cent for 2019, “not ‘shrinking’ as he claims”. (Moody’s has estimated Malaysia’s GDP growth to slow to 4.7 per cent this year and 4.5 per cent in 2020 after an average 5 per cent growth from 2015 to 2018).
Tay further said that 30 per cent of Malaysia’s GDP was now reliant on oil because the government zerorised the goods and services tax (GST) at “the start of the year”. (PH actually zerorised GST in June 2018 and replaced the consumption tax with the sales and services tax (SST) in September 2018).
Ong said he believed the banker was actually referring to 30 per cent of government revenue, not the GDP
“Saying that the political paralysis will not lead to anything being done in the country, au contraire, the new government has done quite a fair bit including cleaning up the GLCs (government-linked corporations) and GLICs (government-linked investment corporations) such as FGV and Tabung Haji and renegotiating mega infra projects such as the ECRL (East Coast Rail Link), the MRT2 and LRT3 projects which will contribute to massive government savings in the long run,” Ong added.
HORRIBLE time for investors in Malaysia. What is happening there?!?— David Ingles (@DavidInglesTV) April 17, 2019
The equity market's essentially headed further in the complete opposite direction of everyone else. And now, the currency's on its biggest 2-day drop since 2016.https://t.co/ckeebQkpkW pic.twitter.com/2JIc9Z8pML
Bloomberg was interviewing Tay about how Malaysia’s stock market was down 14 per cent from a record in May 2018 when PH took power and that it was the worst major market globally this year, slipping 3.6 per cent.
The ringgit was also reportedly Asia’s worst performing currency this month. Malaysia may be dropped from FTSE World Government Bond Index, a major bond index, due to concerns about market liquidity, potentially leading to bond outflows of almost US$8 billion, according to Morgan Stanley.
Norway’s sovereign wealth fund will also reportedly cut emerging-market debt, including Malaysian securities, from its index, Bloomberg reported.