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==
Malaysia
SEB MERCHANT BANKING – COUNTRY RISK ANALYSIS June 19, 2008
 
important
 
your attention is drawn to the statement on the back cover of this report which affects your rights.
Analyst: Camilla Löwenhielm. Tel 
 
: +46 8 
 
763 98 11. E-mail 
 
: camilla.lowenhielm@seb.seAfter decades of mostly stable rule Malaysia has entered a period of political uncertainty, asreflected in market spreads. The political patronage structure – including preferential treatment of ethnic Malays – may be coming to an end judged by recent election results and frustration over growing corruption and inequalities.
Country Risk Analysis
=
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få=ä~ëí=j~êÅÜI=íÜÉ=êìäáåÖ=Åç~äáíáçåI=_~êáë~å=k~ëáçå~ä=E_kFI=ïçå=ÖÉåÉê~ä=ÉäÉÅíáçåë=Äìí=åÉîÉêíÜÉäÉëë=ëìÑÑÉêÉÇ=~=ëÉíÄ~Åâ=äççëáåÖ=íÜÉ=íïçJíÜáêÇë=ã~àçêáíó=áí=Ü~Ç=ÉåàçóÉÇ=Ñçê=ÇÉÅ~ÇÉë=~åÇ=~äëç=ÑáîÉ=çÑ=NP=ëí~íÉ=ÖçîÉêåãÉåíëK=qÜáë=Ü~ë=äÉÑí=íÜÉ=Åç~äáíáçåI=áåÅäìÇáåÖ=áíë=ã~áå=é~êíóI=rãåçI=áå=~=Åêáëáë=ãçÇÉK=píçÅâ=ã~êâÉíë=ÑÉää=NMB=ïÜÉå=êÉëìäíë=ïÉêÉ=~ååçìåÅÉÇ=~ë=áåîÉëíçêë= ÄÉÅ~ãÉ=åÉêîçìë=~Äçìí=éçäáíáÅ~ä=ìåÅÉêí~áåíóK=^=ã~áå=êÉ~ëçå=ÄÉÜáåÇ=íÜÉ=ÉäÉÅíáçå=ëÉíÄ~Åâ=ï~ë=íÜÉ=äçëë=çÑ=ëìééçêí=Ñêçã=ÉíÜåáÅ=`ÜáåÉëÉ=~åÇ=fåÇá~å=ãáåçêáíáÉëK=i~ëí=óÉ~ê=eáåÇá=Öêçìéë=ëí~ÖÉÇ=ã~ëë=ÇÉãçåëíê~íáçåë=~Ö~áåëí=~ääÉÖÉÇ=ÇáëÅêáãáå~íáçåK=qÜáë=Åçëí=íÜÉ=j~ä~óëá~å=fåÇá~å=`çåÖêÉëë=EçåÉ=çÑ=íÜÉ=ÑçêãÉê=ÖçîÉêåáåÖ=Åç~äáíáçå=é~êíáÉëF=áíë=êÉJÉäÉÅíáçåK===mêáãÉ=jáåáëíÉêI=^ÄÇìää~Ü=_~Ç~ïáI=Ü~ë=êÉëéçåÇÉÇ=íç=íÜÉ=áåíÉêå~ä=ÅêáíáÅáëã=Äó=íÜêçïáåÖ=çìí=ëçãÉ=çÑ=íÜÉ=çäÇ=Öì~êÇ=Ñêçã=íÜÉ=åÉï=ÖçîÉêåãÉåí=~åÇ=ÄÉÖáååáåÖ=íç=~ÇÇêÉëë=áëëìÉë=ïÜÉêÉ=ÜÉ=Ü~Ç=éêçãáëÉÇ=êÉÑçêã=ïÜÉå=Ñáêëí=ÉäÉÅíÉÇI=ëìÅÜ=~ë=Éê~ÇáÅ~íáåÖ=Åçêêìéíáçå=áå=íÜÉ=àìÇáÅá~êó=~åÇ=íÜÉ=éçäáÅÉ=ÑçêÅÉK=jê=^åï~êI=ïÜç=äÉ~Çë=íÜÉ=çééçëáíáçåI=Ü~ë=íÜêÉ~íÉåÉÇ=íç=íçééäÉ=íÜÉ=ÖçîÉêåãÉåí=Äó=ãáÇJpÉéíÉãÄÉê= Äó=Å~ääáåÖ=~=åçJÅçåÑáÇÉåÅÉ=îçíÉK=qç=ëìÅÅÉÉÇI=ÜÉ=åÉÉÇë=PM=ÖçîÉêåãÉåí=ãÉãÄÉêë=çÑ=é~êäá~ãÉåí=íç=ÇÉÑÉÅí=Ñêçã=íÜÉ=Åç~äáíáçå=~åÇ=àçáå=Üáë=Å~ãé=Äìí=Åä~áãë=íç=Ü~îÉ=ÉåçìÖÜ=ëìééçêí=~äêÉ~ÇóK=qÜÉ=çééçëáíáçå=áë=ã~ÇÉ=ìé=çÑ=íÜêÉÉ=îÉêó=ÇáÑÑÉêÉåí=é~êíáÉë=EáåÅäìÇáåÖ=~å=fëä~ãáÅ=é~êíóFI=ïÜç=ã~å~ÖÉÇ=íç=ìåáíÉ=îçíÉêë=Ñêçã=ÇáÑÑÉêÉåí=ÉíÜåáÅ=Öêçìéë=áå=~=ÑáÖÜí=~Ö~áåëí=Åä~ëë=áåÉèì~äáíó=~åÇ=ÅçêêìéíáçåK=fí=áëI=ÜçïÉîÉêI=ìåÅäÉ~ê=Üçï=ìåáíÉÇ=íÜÉó=ïçìäÇ=êÉã~áå=~ë=~=ÖçîÉêåãÉåí=Åç~äáíáçåK=
GDP growth and current accountbalances
0%2%4%6%8%10%12%14%16%18%200220032004200520062007GDPCA
=qÜÉ=éçäáÅó=çÑ=éêÉÑÉêÉåíá~ä=íêÉ~íãÉåíë=çÑ=j~ä~óë=Ü~ë=ÄÉÉå=~=ÅçêåÉêëíçåÉ=çÑ=j~ä~óëá~å=éçäáíáÅë=Ñçê=ÇÉÅ~ÇÉëK=fí=áåáíá~ääó=êÉÇìÅÉÇ=ä~êÖÉ=áåÅçãÉ=Ö~éë=áå=íÜÉ=éçéìä~íáçåK=eçïÉîÉêI=áåÅêÉ~ëáåÖ=Åçêêìéíáçå=~åÇ=ÄêçíÜÉêJáåJä~ï=éçäáíáÅë=Ü~îÉ=Å~ìëÉÇ=éççêÉê=j~ä~óë=~ë=ïÉää=~ë=çíÜÉê=ÉíÜåáÅ=ãáåçêáíáÉë=íç=äççëÉ=Ñ~áíÜ=áå=íÜÉëÉ=éçäáÅáÉë=~ë=áåÉèì~äáíó=ÄÉíïÉÉå=êáÅÜ=~åÇ=éççê=Ü~ë=ïáÇÉåÉÇ=~Ö~áåK==
 
SEB Merchant Banking Country Risk Analysis June 19, 2008
 
2
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The fiscal position is relatively weak with an increasing dependence on oilrevenues.
Malaysia recorded a fiscal deficit of 3.2% of GDP in 2007. As theextensive fuel subsidy system was becoming increasingly costly - subsidieswould have amounted to almost 7% of GDP this year - the governmentrecently announced bold plans to restructure the system, implementing adoubling of fuel prices. It recently raised fuel prices by 40% and said it plansto bring them up to market rates by August. This is a highly unpopular moveat a sensitive time for the government. Mr Anwar has promised to lower fuelprices if he comes to power. Inflation has remained relatively benign inMalaysia helped by extensive price controls and subsidies. The hike in fuelprices is estimated to increase inflation from 3% to 4-5% on a full-year basis,probably peaking at 6-7% in the near future.
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SEB Merchant Banking Country Risk Analysis June 19, 2008
 
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Spot Rates
EUR/MYR USD/MYR
Source: Reuters EcoWin 
02030405060708
3.003.253.503.754.004.254.504.755.005.25
 
KL Stock Exchange Index
Source: Reuters EcoWin 
02030405060708
   I  n   d  e  x
6007008009001000110012001300140015001600
 
Consumer Price Inflation [ar 12 months]Policy Rates
Source: Reuters EcoWin 
JanAprJulOctJanAprJulOctJanApr060708
   P  e  r  c  e  n   t
1.01.52.02.53.03.54.04.55.0
 
Exports
Exports, Electronics and electricals [maTotal exports [ma 12]
Source: Reuters EcoWin 
0001020304050607
   M   Y   R   (   b   i   l   l   i  o  n  s   )
152025303540455055
Repo rate and CPI
of 00

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