Fret not, Malaysia still solid and not headed towards bankruptcy

KUALA LUMPUR - Malaysia is still financially solid and is unlikely headed towards bankruptcy.

Economists said the country's gross domestic product (GDP) is still registering growth and it's trade activities are still robust.

Dr Mohd Afzanizam Abdul Rashid said to describe Malaysia as bankrupt is inaccurate because in a literal sense, it is difficult for creditors to claim assets from a sovereign country.

"It is only bad economic management and policies which would lead a country to an economic crisis. And when that happens, typically such countries would seek financial assistance from the International Monetary Fund and the World Bank or a group of creditors to get out of the quagmire.

"The affected country then would seek help from it's creditors and the nation would then need to adhere to the economic policies as prescribed by these institutions in order to qualify for the financial assistance.

"That, to me is the real meaning of a banckrupt nation as the affected country have lost their sovereignty and final say to decide their own fate," the Bank Islam Malaysia chief economist told Sinar Daily.

Afzanizam was commenting on a viral link called "Malaysia Debt Clock" which claimed Malaysia is a bankrupt nation with RM700 trillion in debts and will follow suit Sri Lanka.

Malaysia debt to GDP still manageable

Malaysia's debt to it's gross domestic product is still manageable at between 55-60 per cent.

Associate Professor Dr Ahmed Razman Abdul Latiff said this in stark contrast with the developed countries such as the United States which has a debt to GDP ratio of 134.24 per cent, the United Kingdom (95.3 per cent) and Germany (69 per cent).

"Thus Malaysia is in a more comfortable and the financial stewards are doing a good job in managing our economy," he said.

He added as an example, the US is not a bankrupt and is still the world's strongest economy despite debts of some US$700 trillion while Japan is the world's third largest economy despite a debt to GDP ratio of over 200 per cent.

Meanwhile, an economist said a country's mountain of debts does not indicate that the country is in trouble "As long as you can service your debts and continue making money, it should not be a problem," the economist who declined to be identified told Sinar Daily.

He added a country would face problems if it's cash flow stops trickling.

As long as Malaysia has oil and gas, oil palm and other commodities such as timber and rubber, our exports will sustain the country, God willing.

"However, he warned that the country's natural resources and finances must me managed well.

"The government must nip corruption in the bud because otherwise otherwise, Malaysia could suffer the same fate like other collapsed nations," he added.

Meanwhile, independent financial analyst P. Gunasegaram said even if Malaysia is headed towards bankruptcy, it will take at least ten yaars for that to happen.

"Malaysia can't be bankrupt that soon as are our banks are still strong and exports are resilient with positive trade balance of payment.

"Even if Malaysia were to be bankrupt, it will take at least 10 years... not tomorrow."