Malaysia: Kuala Lumpur avoids capital flight - Financial Times, September 2
By Jonathan Birchall in Kuala Lumpur
A day billed as Malaysia's moment of reckoning with the
international financial community, the easing of controversial capital
controls imposed a year ago at the height of the country's
economic crisis, passed off without drama yesterday.
"September 1 turned out to be a bit of a yawn," said Tan Min
Lan, a regional economist at Merrill Lynch in Singapore.
Malaysia's state bank, Bank Negara, said that $328m of
portfolio funds were repatriated during the day, an
amount it described as small.
The government had previously estimated that
$1.3bn-$1.8bn might leave the country as a result of the
removal of a 10 per cent exit tax on portfolio investments
made before September 1 last year. A graduated exit tax
of 10-30 per cent, depending on the length of the
investment, is now applied only to repatriated capital
gains.
The Kuala Lumpur stock exchange ended the day down
just 14.15 at 752.91, a 1.8 per cent fall, in quiet trading.
Most analysts had already argued against a heavy
sell-off on the grounds that most investors seeking to
repatriate funds immediately would already have sold in
the run-up to the September 1 deadline.
Foreign interest has been supported by continuing signs
of recovery in the Malaysian economy and last month's
news that the country's stock market would be restored
to the much-tracked Morgan Stanley Capital International
(MSCI) indices next February.
The release yesterday of preliminary trade figures for July
gave further evidence of a recovery in Malaysian exports,
underpinned by the electronics sector. At M$17.1bn
(US$4.5bn) the month's exports were up 17.9 per cent
on July last year, when the country was in recession. |
