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Malaysia

Author(s):
International Monetary Fund
Published Date:
September 1999
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Malaysia: Basic Data, 1995-98

Nominal GDP (1998):US$73,348 million
Population (1998):22.2 million
GDP per capita:US$3,300
Quota:SDR 1,487 million
199519961997Prel. 1998
Real sector (percent change)
Real GDP growth9.48.67.7-6.7
Real domestic demand13.55.37.2-25.5
CPI inflation (period average)3.43.52.75.3
Saving and investment (percent of GDP)
Gross domestic investment43.541.642.525.8
Private, including stocks30.930.230.914.5
Public12.611.411.611.4
Gross national saving33.636.737.338.8
Private18.620.819.123.6
Public15.015.918.315.2
Fiscal sector (percent of GDP) 1/
Federal government overall balance1.31.12.6-1.5
Revenue23.423.724.020.4
Expenditure and net lending22.122.621.421.9
Federal government primary balance4.33.84.91.0
Consolidated public sector overall balance3.74.83.5-1.1
Public sector debt 2/52.145.850.254.6
Monetary sector (annual percent change)
M3 growth18.223.720.2-1.6
Domestic credit growth27.727.424.1-2.3
Balance of payments (US$ billion)
Trade balance0.04.04.017.7
Exports, f.o.b.71.776.877.771.9
Imports, f.o.b.71.672.773.754.2
Services account balance-7.7-7.7-7.7-6.0
Current account balance-8.7-4.9-5.09.2
(Percent of GDP)-10.0-4.9-5.112.9
Capital account balance7.07.41.2-4.7
Medium- and long-term6.65.46.83.6
Net foreign direct investment3.33.53.92.2
Short-term1.04.1-4.0-5.5
Portfolio capital 3/-0.7-2.1-1.6-2.8
Overall balance-1.82.5-3.94.5
International trade (annual percent change)
Export value26.77.11.2-7.5
Import value30.51.51.3-26.4
Gross official reserves (US$ billion)25.127.721.726.2
(Months of imports) 4/3.23.42.64.3
Total external debt (US$ billion)33.438.745.642.0
(Percent of GDP)38.339.046.659.2
Short-term external debt (percent of total)19.125.727.817.8
Debt-service ratio (percent) 5/7.38.56.56.6
Sources: Information provided by the Malaysian authorities; and Fund staff estimates.

Figures are presented in the IMF format.

Figures are staff estimates. They exclude domestic debt of the NFPEs.

Including errors and omissions.

Imports of goods and services.

Percent of exports of goods and services. Includes prepayment and refinancing.

Sources: Information provided by the Malaysian authorities; and Fund staff estimates.

Figures are presented in the IMF format.

Figures are staff estimates. They exclude domestic debt of the NFPEs.

Including errors and omissions.

Imports of goods and services.

Percent of exports of goods and services. Includes prepayment and refinancing.

I. Economic Activity and Prices

A. National Accounts

1. Following several years of sustained growth exceeding 7 percent, real GDP contracted sharply by 6.7 percent in 1998, weighed down by a large fall in private domestic demand as a result of a sharp decline in investment and, to a lesser extent, consumption (Appendix Tables 1 and 2 and Chart 1). Factors contributing to the fall in private domestic demand included the adverse wealth effect generated by the collapse in asset prices as well as the effect on consumer and business spending of uncertainty over the direction of the economy. In particular, the fall in private investment demand was very severe (58 percent), as the rapidly deteriorating business environment forced companies to strengthen their cashflow position. The fall in private domestic demand was partially offset by improving net external demand, reflecting largely a sharp compression of imports. Despite stepped-up government spending, mainly in infrastructure projects following the fiscal stimulus packages introduced in March and July 1998 (Section II below), the public sector made a negative contribution to the growth of aggregate demand in 1998.

CHART 1MALAYSIA REAL SECTOR INDICATORS, 1994–98

Source: Data provided by the Malaysian authorities.

1/ In current prices.

B. Sectoral Developments

2. Most major sectors recorded lower output in 1998, with the manufacturing and construction sectors among the hardest hit. Manufacturing output contracted by 10.2 percent in 1998, following strong, robust growth averaging 13.5 percent in 1994–97 (Appendix Table 3). Falling domestic demand and, to a lesser extent, weaker overseas orders—especially from the countries in the region—were the major factors behind the decline. The decline, which gathered momentum over the course of the year, was broad based across industries, and was more pronounced in industries producing construction-related materials and transport equipment (Appendix Table 4).

3. Value-added in the construction sector declined by 24.5 percent in 1998, compared with growth of 9.5 percent in 1997, owing mainly to a sharp drop in construction starts of commercial buildings and upscale residential units. The decline was partly offset by robust demand for medium- and low-cost residential units. The civil engineering subsector, in particular, contracted severely, owing mainly to the deferment of new projects.

4. Production in the agriculture, forestry, and fishery sectors declined by 4 percent in 1998, following a modest rise of 1.3 percent in the previous year, affected mainly by adverse weather conditions, lower yields, and labor shortages stemming from the departure of migrant workers. All major commodities registered lower output in 1998. Output of crude palm oil declined by 8.3 percent and rubber production by 8.8 percent; saw log production fell by 27.2 percent, reflecting weaker demand from countries in the region as well as the slump in the domestic construction sector.

5. Mining output rose slightly by 0.8 percent in 1998, compared with a 1 percent gain in 1997. The performance of the sector reflected primarily higher crude oil and gas production, notwithstanding a sharp contraction (24.5 percent) in the quarrying subsector in response to the decline in construction activity.

6. The services sector grew at a slower—albeit positive—rate in 1998, affected by the decline in overall economic activity. Value-added in the services sector grew by 1.5 percent in 1998, compared with 8 percent in 1997. Growth was stronger in the intermediate services subsector (mainly finance, insurance, real estate, and business services), while the final services subsector (mainly wholesale and retail trade, hotels and restaurants, and government services) expanded at a much slower pace. In particular, growth in government services moderated to 2.4 percent in 1998 from 6.1 percent in the previous year, reflecting the freeze in filling nonessential vacant posts and the reduction in allowances for civil servants.

C. Saving and Investment

7. The excess of saving over investment turned positive in 1998, mirroring a modest rise in gross national saving and the sharp contraction in investment demand. Gross national saving rose by 1.5 percentage points to 38.8 percent of GDP in 1998, as rising private saving offset a marked decline in public saving (Appendix Table 5). Mounting uncertainty over the direction of the economy as well as the negative wealth effect from the sharp fall in asset prices contributed to a decline in consumption and a rise in the saving rate of households. Public saving fell markedly, largely reflecting the automatic impact of the economic cycle on the budget. Gross domestic investment fell sharply from 42.5 percent of GDP in 1997 to 25.8 percent of GDP in 1998, capturing a fall in private investment to less than half the level (as a share of GDP) of the previous year. Contributing factors included the completion of large infrastructure projects and the slowdown in implementation of existing projects (Appendix Tables 6 and 7). The latter factor reflected a reluctance to embark on investment spending amidst mounting uncertainty as well as the need to improve cash-flow positions.

D. The Labor Market

8. Labor market conditions deteriorated in 1998 (Appendix Tables 810). The unemployment rate rose to 3.9 percent in 1998 from 2.6 percent in the previous year (Chart 2). Two main factors accounted for the relatively small rise in the unemployment rate in view of the severity of the output contraction: substantial labor hoarding by firms, and a large decline in the number of foreign workers, who absorbed the brunt of the adjustment in the labor market. Most firms preferred to institute pay cuts rather than shed labor (so as to avoid the costs associated with firing and hiring), in the belief that the contraction would not last long. At the same time, most job cuts affected migrant workers, who represented a high proportion of agricultural workers. Government policy on foreign labor (as stated in the midterm review of the Seventh Malaysia Plan, 1996–2000) became more restrictive in 1998 by giving increased emphasis on measures to reduce reliance on foreign workers.

CHART 2MALAYSIA LABOR AND PROPERTY MARKET DEVELOPMENTS, 1994–98

Source: Data provided by the Malaysian authorities.

9. Total employment declined by 3 percent in 1998, with retrenchment totaling 83,900 workers during the year. Retrenchment trends gradually eased over the course of the year. Many firms relied on temporary layoffs and voluntary retrenchment to reduce the size of their workforce, including by offering attractive voluntary separation packages.

10. The authorities implemented a number of measures to increase flexibility in the labor market and mitigate the impact of the crisis on the unemployed. The Employment Act of 1955 was amended in August 1998 to promote more flexible work practices and encourage employers to provide incentives for productivity. The amended Act provided for a link between duration of employment and compensation for those retrenched. Other measures included efforts to coordinate the job-matching process, job mobility programs to encourage mobility of labor between sectors, and retraining schemes for retrenched workers (targeting mainly the manufacturing sector).

11. Salary increases moderated in 1998. Average salary increases in the private sector slowed to 6.2 percent in 1998, compared to 8.9 percent in 1997. Among the reasons for the relatively high increase—in view of the economic crisis—was the staggered effect of union contract negotiations. In the unionized sections of the labor market, contracts cover wage increases over three years, with the result that only the contracts that came up for negotiation in 1998 reflected the prevailing labor market conditions. Several employers agreed with their workforce to implement pay cuts (labor laws mandate that pay cuts be made in consultation with workers). Pay cuts ranged from 3 percent to as high as 15 percent for those at the upper end of the pay scales.

E. The Property Market

12. Conditions in the property market deteriorated sharply in 1998. The total number of properties transacted fell 32.3 percent to a seven-year low, compared with a modest rise of 1.6 percent in 1997 (see Chart 2). The industrial, development, and commercial sectors were the worst hit. In the residential sector, the decline in transactions was more pronounced in the high-end segment of the market, especially condominiums, which faced particularly acute excess supply conditions.

13. Housing prices faced a downward adjustment in 1998, as falling demand and oversupply conditions forced the first decline in housing prices since 1988. Nonetheless, the residential sector was the least affected by the crisis, with average prices in 1998 lower than in 1997 but still higher than in 1995. The apparent resilience of property prices in the residential sector reflected to a certain extent the impact of measures taken by the authorities during the year to support the sector. Measures included easing the lending norms for the construction or purchase of low- and medium-cost housing, abolishing the margin limit of loan financing for the purchase of nonowner occupied properties, the removal of the levy on foreign purchases of high-end properties, and a reduction in the property gains tax.

F. Prices

14. Inflationary pressures remained relatively subdued in 1998 (Appendix Tables 1113). Consumer price inflation rose to 5.3 percent in December 1999 (12-month rate) from 2.7 percent in the previous year. Contributing factors included rising food prices and the pass-through effect of the depreciation of the ringgit since the beginning of the crisis. Against the background of weak domestic demand, the full impact of the depreciation of the ringgit was not passed through to consumers, as firms felt compelled to absorb part of the rising costs stemming from higher import prices. Excluding the volatile food component, consumer price inflation was more benign in 1998 (at 3.1 percent).

15. Producer prices rose faster than consumer prices in 1998. The producer price index (PPI), which has a higher import component, rose fast during the first half of 1998 but subsequently moderated in response to the slump in demand as well as a decline in prices of mineral fuels, lubricants, and related materials. For 1998 as a whole, the PPI rose by 10.7 percent, compared with a rise of only 2.7 percent in 1997.

II. Fiscal Sector

A. Overview

16. Following a succession of surpluses for the most part of the 1990s, the consolidated public sector registered a deficit in 1998 (Chart 3).1 The outturn mirrored mainly a turnaround in the fiscal position of the federal government from a sizable surplus to a modest deficit, reflecting the cyclical impact of the recent crisis on budget revenue as well as policy measures designed to deal with the crisis (Appendix Tables 1424), Since March 1998, the Malaysian authorities have sought to stem the decline in output by aiming for expansionary fiscal policies. To this end, a number of measures were taken over the course of 1998 aiming to achieve the first federal government deficit since 1991. In the event, the resulting deficit reflected mainly a cyclical reduction in the tax-to-GDP ratio and, to a lesser extent, a modest pickup in development spending (Chart 4).

CHART 3MALAYSIA PUBLIC SECTOR ACCOUNTS, 1994–99 1/

(In percent of GDP)

Sources: Data provided by the Malaysian authorities; and Fund staff estimates.

1/ The consolidated public sector comprises the operations of the federal government, state and local governments, statutory bodies, and nonfinancial public enterprises (NFPEs).

2/ Staff estimates. They exclude domestic debt of the NFPEs.

CHART 4MALAYSIA FEDERAL GOVERNMENT REVENUE AND EXPENDITURE, 1994–99

(In percent of GDP)

Source: Data provided by the Malaysian authorities.

B. Fiscal Performance in 1998

17. The federal government budget for 1998 (announced in October 1997) aimed at a moderate increase of the fiscal surplus to 3 percent of GDP from an anticipated surplus of about 2 percent of GDP in 1997.2 Part of the envisaged increase in the surplus was to be accomplished through cuts in operating expenditures (amounting to 0.5 percent of GDP). The budget aimed to restrain domestic demand—to safeguard Malaysia’s external position in the wake of overheating concerns—and strengthen the banking system amidst the developing financial crisis in the region. In December 1997, when it became clear to the authorities that output growth was going to be lower than earlier forecast, the projected 1998 budget surplus was revised downward to about 1.5 percent of GDP. The revision reflected a substantial downward adjustment of revenue projections, offset by additional cuts in operating as well as development expenditures amounting to 2.5 percent of GDP.3 In addition, several large off-budget infrastructure projects were indefinitely postponed.

18. Against the backdrop of a rapidly deteriorating external environment and the realization that the output effects of the financial crisis were going to be severe, the government gradually shifted to expansionary fiscal policies during 1998. The government announced in March and in July 1998 two policy packages designed to revive economic activity through spending on development projects.4 Including the implications of the spending packages for the federal government, the revised federal government budget for 1998 aimed for a fiscal deficit of 2.6 percent of GDP, compared with an actual surplus of 2.6 percent of GDP in the previous year. In addition to the expenditure measures taken during the year, a large part of the envisaged widening of the deficit was to come through a decline in tax revenues, reflecting the cyclical losses from a weak economy.

19. Despite stepped up development expenditures during 1998, the deficit of the federal government was smaller than planned. The federal government budget recorded a deficit of 1.5 percent of GDP, reflecting higher-than-expected tax revenues and delays in project implementation. Tax revenues exceeded the revised budget target by 0.6 percent of GDP as gains from buoyant direct taxes more than offset a small shortfall in indirect taxes. In particular, direct tax revenues rose by about 5 percent over the previous year and exceeded the revised budget target by over 8 percent in 1998, as the impact of the crisis on individuals’ and corporations’ ability to pay taxes was much less severe than what the authorities had projected.5 Collections of taxes on goods and services were largely on target, but import duties fell short of the budget target, reflecting a marked fall of imports during the year. Despite lower-than-budgeted dividend payments by Petronas (a major NFPE), strong rent and interest receipts helped contain the shortfall in nontax revenues to 0.1 percent of GDP.

20. Federal government expenditures were 0.5 percent of GDP less than the revised target. The expenditure shortfall reflected primarily savings of 0.5 percent of GDP in current expenditures, mainly related to efforts to contain nonessential and unproductive spending to make room for additional spending in priority areas. Reflecting these efforts, development expenditures exceeded the budget target by 0.3 percent of GDP.6 The federal government overfinanced its fiscal deficit in 1998, thus accumulating about RM 8 billion (2.9 percent of GDP) in deposits with the banking system. The excess financing of the deficit reflected efforts to mobilize funding for projects included in the National Economic Recovery Plan covering 1998–2000. Against this background, total federal government debt rose from about 33 percent of GDP in 1997 to 37 percent of GDP in 1998 (Appendix Table 25).

21. The overall financial position of the NFPEs reverted to a deficit of 0.5 percent of GDP in 1998, after recording a small surplus in 1997 (see Appendix Table 23). The operating surplus in 1998 was slightly lower than anticipated, primarily owing to an increase in operating expenditures—including higher debt servicing stemming from the weaker ringgit—of major NFPEs. Revenues of NFPEs performed well in 1998, despite the severity of the crisis. The large NFPEs (such as Petronas) benefited from operations overseas that translated to higher gains in ringgit terms, as they were largely shielded from rising costs stemming from the depreciation of the ringgit Sharp increases in palm oil prices also contributed to the increase in revenues. Development expenditures rose by over 16 percent in 1998, reflecting, among other factors, increased capital spending (in ringgit terms) overseas as well as increased domestic spending on infrastructure and utility projects.

22. Following five consecutive years of surpluses, the fiscal position of the state governments moved to a deficit in 1998 (see Appendix Table 20). State government revenues fell short of budget targets by 0.3 percent of GDP, reflecting the contraction in economic activity and depressed prices of selected commodities (such as saw logs and petroleum products) on which a range of state taxes are based. A tight control over operating expenditures accommodated a small increase in development spending. In the event, state governments recorded a deficit of 0.1 percent of GDP in 1998, compared with a surplus of 0.2 percent in 1997. Against the background of a small deficit (0.1 percent of GDP) in the operations of local governments, and a surplus of 0.5 percent of GDP in the operations of the statutory bodies, the consolidated public sector recorded a deficit of 1.1 percent of GDP, compared with a surplus of 3.5 percent of GDP in 1997.

C. 1999 Federal Government Budget

23. The 1999 federal government budget aims to revive economic activity by providing a fiscal stimulus. The budget provides for a widening of the federal government deficit from 1.5 percent of GDP in 1998 to 5.5 percent of GDP in 1999. The widening of the federal government deficit primarily reflects the operation of automatic stabilizers on the revenue side. Most of the policy initiatives in the budget were on the revenue side (Box 1)7 The main expenditure measures in the budget included increased allocations for infrastructure spending (both off and in the budget) and spending in the social sectors designed to strengthen the social safety net.8 Moreover, the budget included measures dealing with the restructuring of the banking sector.9 Total expenditures are expected to be about 8.5 percent higher than in 1998 in nominal terms. In addition, the fiscal stimulus was designed to be supplemented by significant increases in off-budget spending in 1999.10 Consistent with the widening deficit for the federal government deficit, the consolidated public sector deficit is expected to rise to 4.4 percent of GDP in 1999 from a deficit of 1.1 percent of GDP in 1998.

Box 1.Malaysia: Highlights of the 1999 Federal Government Budget

New tax measures

  • Import and excise duties were increased on cigarettes, tobacco products, and alcohol.
  • The gaming tax and pool-betting duty were increased.
  • A windfall profit levy was imposed on crude palm oil and crude palm kernel oil when their price exceeds RM 2,000 a ton.

Tax exemptions

  • The stamp duty and real property gains tax were waived on mergers among financial institutions concluded between October 24,1998 and June 30, 1999.
  • Fifty percent of the amount in interest-in-suspense accounts is not considered as income for purposes of income tax; however, it will be taxed once it is realized.
  • Seventy percent of income from increased export sales is exempt from tax.
  • Locally manufactured refrigerators, television sets, and air conditioners are exempt from excise duty.
  • Interest income from investment in unit trust funds is exempt from income tax.
  • Loan refinancing instruments are exempt from stamp duty.
  • Losses incurred by companies involved in the production of select food products are allowed to be adjusted against profits of other companies within the same company group.
  • Income on rent, time charter, and voyage charter from Malaysian ships is exempt from income tax.
  • Companies organizing domestic tour packages are exempt from income tax on tours with more than 1,200 local tourists a year.

Tax administration

  • The tax assessment year will be changed from the preceding year to the current year beginning in 2000. Malaysian companies will be allowed to carry forward losses incurred in 1999.
  • The system of official tax assessment will be gradually shifted to a system of self-assessment beginning in 2001 for companies, and in 2004 for individuals.

III. Money, Credit, and Financial Developments11

A. Overview

24. Between 1997 and 1999, monetary policy has swung from being contractionary to being expansionary, as policy priorities have switched from resisting inflationary pressures and supporting the exchange rate to countering a severe economic recession and relieving stress in the financial and corporate sectors.

  • In order to achieve its policy objectives, Bank Negara Malaysia (BNM) has actively employed a variety of instruments, including interest rate and reserve ratio changes, lending directives or guidelines, capital controls, and prudential measures.
  • Monetary and credit growth contracted sharply in 1998, as did private sector funding through capital markets.
  • Since the imposition of capital controls and the pegging of the ringgit, and the move toward expansionary monetary policy, the stock market has recovered part of the ground lost earlier, but credit growth and capital market borrowing by the private sector remains weak.
  • In order to deal with the severe financial difficulties that have resulted from, and contributed to, the severity of the economic contraction, in 1998 the government established an asset management corporation—Danaharta—and a special purpose vehicle—Danamodal—to carry out financial sector restructuring, and a Corporate Debt Restructuring Committee (CDRC) to assist with resolution of financial distress in the corporate sector.

B. Monetary Policy Formulation and Implementation

25. Over the course of 1997–99, the conduct of monetary policy in Malaysia has been severely challenged by the spillover of the regional financial crisis into a sharp decline in the external value of the ringgit, a severe contraction of economic activity, and an associated deterioration in the health of the financial system. The nature of the crisis has generated or accentuated conflicts among key policy objectives including, notably, promoting economic growth, maintaining low inflation, providing a supportive exchange rate environment for the export sector, and preserving the health of the financial system. Policy responses to the crisis have involved a wide array of measures including the introduction of additional policy instruments in order to be able to achieve different objectives simultaneously or, at least, minimize conflicts between them.

26. Through the first half of 1997, monetary policy was primarily oriented toward restraining domestic inflationary pressures, particularly evident in property and equity markets. Double digit rises in share market and property prices in 1996 both reflected the strength of demand in the Malaysian economy and also threatened to boost spending further through their impact on household wealth perceptions and the cost of capital to firms.12 BNM, however, was concerned that interest rate increases to restrain inflation pressures might impinge primarily on “productive investment.” It sought, therefore, to contain pressures more directly in the most affected markets by introducing measures in April 1997 to limit lending for property and share purchases (Box 2). Whether such measures would have been adequate to the task, however, was quickly rendered moot by the spread of the regional financial crisis to the Malaysian economy in July.13

27. In July, interest rates were raised to support the exchange rate as the regional financial crisis spread to Malaysia. The spread of the regional crisis to Malaysia was reflected in an acceleration of capital outflows, a sharp fall in share prices, and downward pressure on the external value of the ringgit. In response to these pressures, BNM intervened heavily in the exchange market (reserves fell $4.7 billion in the month). As liquidity was withdrawn from the market, and exchange rate uncertainty soared, short-term interest rates rose sharply, with the overnight rate briefly rising to as much as 40 percent. Despite these measures, by early August, the ringgit had fallen by over 5 percent from the level in early July.

28. From early August, monetary policy actions were geared toward restoring domestic financial market stability. In the BNM’s judgment, the pressures on the currency were unlikely to dissipate rapidly, so that a prolonged defense of the currency through high interest rates was likely to be unsuccessful and do considerable damage to economic performance. The negative outlook for the ringgit in currency markets, however, worked in the direction of holding Malaysian interest rates well above comparable U.S. interest rates, and thus were in conflict with the BNM’s desire to bring domestic interest rates back toward pre-crisis levels. As domestic interest rates were lowered, therefore, a differential emerged between on-shore and off-shore ringgit interest rates, creating incentives for continued capital outflows and downward pressure on the ringgit. In response, BNM introduced limits on banking system ringgit offer-side swap transactions with foreign customers. Despite this measure and continued intervention in support of the ringgit (reserves fell $3.9 billion in the August-September period), however, the ringgit continued to weaken. By end-September, the ringgit had fallen to 22 percent below the level at the beginning of July.

29. In the period from late September 1997 through early February 1998, the stance of monetary policy firmed gradually as BNM sought to counter the inflationary consequences of the depreciation of the ringgit, and to discourage capital outflows that continued to put downward pressure on the currency. In the September-November period, BNM endorsed a modest firming of the 3-month interbank rate by around 100 basis points. This was complemented, in October, by the establishment of publicly announced targets for reductions in overall credit growth through the end of 1998. In December, BNM also introduced tough restrictions on lending for property development and for car purchases. Continuing pressures on the currency, reflected in the interest differential between on-shore and off-shore ringgit interest rates, also contributed to the firming of domestic interest rates through early 1998, with the 3-month interbank rate rising a further 250 basis points to 11 percent in early February. The pass-through of higher interbank rates to retail lending rates was partially offset by a reduction in the Statutory Reserve Requirement (SRR) in mid-February. Although BNM acted to neutralize the overall effect of the SRR change on system liquidity, the reduction in SRR nonetheless lowered the cost of funds to financial institutions and thus limited the rise in lending rates.

Box 2.Malaysia: Monetary Policy Measures, 1997–99

January-June 1997

  • Restrictions on lending for property share purchases (April). Loans to the property sector (excluding dwellings under RM 150,000, as well as infrastructure and industrial projects) were not to exceed 20 percent of banking institutions’ total loans. In addition, not more than 15 percent of banks’ lending (and not more than 30 percent in the case of merchant banks) was to be available for share purchases.

July-December 1997

  • Limits on ringgit swap transactions (August). Banks were required to limit outstanding noncommerce-related offer-side swap transactions with each foreign customer to $2 million.
  • General and specific credit growth restraints (October-December). These included: (a) establishment of guidelines aimed at reducing annual credit growth to 25 percent by end-1997; to 20 percent by end-March 1998; and to 15 percent by end-1998, with priority for continued lending to be given to the export and manufacturing sectors, SMEs, and medium- and low-cost housing; (b) finance companies were restricted to financing no more than 70 percent of purchases of private cars, and repayment periods limited to five years; (c) banking institutions were prohibited from new lending to property projects not under way and required to reassess projects already under way. Industrial property construction was exempted.

January-June 1998

  • Lending restrictions eased (January 26) for construction of residential properties under RM 150,000.
  • BNM intervention rate raised in three steps from 8.7 percent at end-1997 to 11 percent (February 6).
  • SRR reduced (February 16) from 13.5 percent to 10 percent
  • BNM daily reports on money market operations (May 1). Information includes BNM forecasts of financial system cash flow, BNM liquidity operations, and money market tender results.

July-December 1998

  • BNM intervention rate reduced in six steps from 11 percent at end-July to 7 percent (November 9).
  • Exchange controls introduced (September 1).
  • Exchange rate fixed (September 2) at RM 3.8 per U.S. dollar.
  • SRR reduced in three steps from 10 percent at end-June to 4 percent (September 16).
  • Bank Lending Rate (BLR) formula modified (September 1) to link BLR to the BNM intervention rate directly, and the maximum lending rate spread over BLR was reduced from 4 percent to 2.5 percent.
  • Lending restrictions eased (July-November). These included: (a) lending for residential property purchases below RM 250,000 was exempted from the restrictions introduced in April 1997; (b) the (September 1997) ceiling on bank lending for share purchases was raised from 15 percent to 20 percent of outstanding loans; (c) elimination of the (April 1997) restrictions on financing of car purchases.

January-June 1999

  • BNM intervention rate reduced in two steps from 7 percent at end-December to 6 percent (May).
  • Lending restricted (January 5) for new residential developments above RM 250,000.

30. From February through July 1998, monetary policy remained firm, but did not tighten further. Upward pressure on interest rates was relieved by weakening domestic activity and a sharp fall in lending for property development and share purchases, as well as by the weakening of the U.S. dollar against regional currencies.

31. Subsequently, monetary policy began to ease in response to increasing signs of a sharp contraction of economic activity and the consequent prospect of declining inflation, as well as in response to some easing of exchange market pressures on the ringgit. In July, BNM reduced the SRR further to facilitate a reduction in retail lending rates. The shift toward policy easing was briefly interrupted by the Russian financial crisis in July. As exchange market pressures dissipated, the easing of monetary policy accelerated in August with three cuts in the BNM intervention rate. By the end of August, the 3-month interbank rate had been reduced 150 basis points from the level at the beginning of July.

32. In September, monetary policy was eased sharply following the introduction of exchange controls and the pegging of the exchange rate. Despite the adjustment in the stance of monetary policy over the previous month, the scope for easing had been substantially constrained by concerns for the potential exchange rate consequences. The imposition of exchange controls and the pegging of the ringgit immediately lifted this constraint, permitting a rapid adjustment in the stance of policy. Measures taken included further cuts in SRR, reductions in the BNM intervention rate, and modification of the Base Lending Rate (BLR) formula to make it more responsive to changes in the intervention rate. As a consequence, the 3-month interbank rate and average lending rates of banks fell by about 250 basis points between August and October. In addition, BNM introduced administrative measures to encourage a resumption of lending, including loosening of restrictions on lending for property, car and share purchases, and setting of an 8 percent loan growth for banking institutions on a bank-by-bank basis.14

33. Since late 1998, monetary policy has eased further, but more gradually. The pace of easing has reflected a number of considerations:

  • A substantial easing has already occurred, and BNM has been wary of the dangers of easing too far, particularly as a recovery of activity appears already to be under way in response to past monetary easing, improved external demand, and fiscal stimulus measures.
  • BNM has also been aware that lowering interest rates too far would tend to create incentives for disintermediation and renewed capital outflows despite the existence of controls.
  • A BNM view that, at this stage, the scope for stimulating credit expansion is less limited by the level of interest rates than by a very cautious approach to lending on the part of financial institutions, reflecting both their own impaired financial health and uncertainties regarding the financial health of potential borrowers.
  • A long-standing BNM policy of keeping retail deposit interest rates positive in real terms. Malaysia’s traditionally high saving rate has been regarded as one of the key strengths of the economy and, consequently, BNM has been reluctant to take measures which would discourage saving.
  • BNM’s desire to tailor the speed of adjustment of retail lending rates to changes in banks’ average costs of funds. Because bank lending mostly occurs at floating rates while a significant proportion of funding is from term deposits at fixed rates, rapid reductions in lending rates tend to squeeze banking system cash-flow positions until fixed rate deposits are rolled over at new, lower rates.

34. Taking these considerations into account, BNM has absorbed large amounts of liquidity from the interbank market in order to resist downward pressure on the 3-month rate. As a result, the 3-month interbank rate remained around 6.5 percent from mid-November through mid-March 1999. Subsequently, as inflation prospects were revised downward, BNM permitted a decline in the 3-month rate to the 3 percent to 3.5 percent range by early May 1999, where the rate has remained.

35. Adjustments in the BNM intervention rate, which essentially determines financial institutions’ lending rates, have significantly lagged the decline in interbank rates. This has reflected BNM’s concern to keep reductions in retail lending rates closely linked to reductions in banks’ average funding costs and has led to a pronounced widening of the spread between the BLR and the 3-month interbank rate, especially in the last few months.15

36. The 8 percent loan growth target set for banking institutions in 1998 has been renewed for 1999. In 1998 the target was implemented flexibly, making exceptions for banking institutions facing financial distress or where increased lending would have compromised prudent behavior. As a result, the bank lending target was substantially undershot: total loans (including nonperforming loans (NPLs) sold to Danaharta) increased only 1.3 percent in 1998. Within this total, however, commercial banks achieved loan growth of 7.1 percent, but this was offset by sharp falls in lending by distressed finance companies. For 1999, BNM has again indicated that achievement of the target should not compromise prudent lending practices.

C. Money and Credit Developments

37. The evolution of monetary and credit aggregates since 1997 has reflected three inter-related developments: the slowing and then sharp contraction of domestic economic activity; the collapse of equity and housing market values; and efforts to restore the strength of the financial system. On the demand side, falls in property and equity prices in 1997–98, together with weak export prices and increases in interest rates, all contributed to a sharp contraction of demand for credit. On the supply side, financial institutions became less willing to lend as uncertainties about borrower quality increased and as their own balance sheets were adversely affected by NPLs. The contraction in lending was accentuated, at least until mid-1998, by BNM restrictions on lending. Finally, the measured growth of lending by the banking system has also been affected by operations to relieve the banking system of NPLs.

38. Broad money and credit growth began to moderate in 1997. M3 growth eased slightly, to 20 percent in 1997 from 24 percent in 1996, while Ml growth slowed more sharply, to 10 percent from 24 percent, as depositors shifted funds to take advantage of higher rates. M2 growth, however, remained high (22 percent compared with 23 percent in 1996), as deposits shifted toward commercial banks from finance companies. (See also Appendix Tables 2733)

39. Money and credit growth fell sharply in 1998 in response to the contraction of economic activity, and financial consolidation efforts of banking institutions, but has begun to recover more recently. Between December 1997 and September 1998, annualized growth rates of Ml, M2, and M3 plummeted to -40 percent, -9 percent, and -6 percent, respectively (Appendix Tables 29 and 31). Subsequently, however, growth in the monetary aggregates has begun to pick up in response to stabilization of economic activity, declines in interest rates, and easing of restrictions on lending to the property sector. In the six months to March 1999, annualized growth rates of M1, M2, and M3 picked up to 1.4 percent, 11 percent, and 9 percent, respectively.

40. In 1998 there were also large shifts in the sources of growth in M3. In 1997, the increase in net claims on the private sector had accounted for more than all of the increase in M3, mainly offset by reductions in net external claims (reflecting declines in BNM reserves and increased net liabilities of the banking system in ringgit terms). By contrast, in 1998, net external claims made a large positive contribution to M3 growth, reflecting the accumulation of foreign reserves by BNM and the reduction of short-term foreign debt of the banking system. Offsets were provided by a large negative contribution from net other influences and by a fall in net claims on government. The negative contribution from net other influences partly reflected the effects of capital losses as banks sold NPLs at a loss to Danaharta, as well as the effect of the revaluation of BNM foreign exchange reserves in September.16 The fall in net claims on government primarily resulted from increased government deposits with BNM, including the deposit of a drawdown of a $300 million World Bank loan in June and the proceeds of a (RM 6 billion) bond sale to the Employees Provident Fund in October.

41. Total lending by the banking system (excluding NPLs sold to Danaharta) fell 1.8 percent in 1998 after expanding 26.5 percent in 1997. Although lending growth was weak in virtually all sectors, loans for the purchase of shares, personal consumption (predominantly car loans), and real estate loans were particularly hard hit by the lending restrictions imposed by BNM in 1997. Excluding lending to these sectors, total loans to other sectors increased 2.9 percent in 1998 after increasing 23.3 percent in 1997. In addition, lending growth by different parts of the banking system also varied significantly in 1998. Finance companies, in particular, saw lending fall by 14.4 percent while lending by commercial banks increased by 4.4 percent, as banks gained business being lost by finance companies.

42. Sales of NPLs to Danaharta lowered banking system loan growth in late 1998 and 1999, but have had a more neutral impact on overall M3 growth. Sales of NPLs to Danaharta (amounting to RM 21 billion by end-1998) lowered lending growth in 1998 by a little over 3 percentage points. If such loans are included in total loans, then total lending growth in 1998 was 1.3 percent. The effect of Danaharta operations on overall M3, however, are neutral, since sales of NPLs are offset by increased banking system holdings of Danaharta securities and reductions in banking sector capital liabilities. Injections of capital into the banking system by Danamodal also tend to have offsetting effects on M3, as capital injections have a negative impact on the net other items, while the funding of such operations through sales of bonds to the banking system raise claims on the private sector.17

D. Capital Market Developments

43. Long-term fund-raising in the Malaysian capital market in 1997 and 1998 largely paralleled the slowing and then contraction of borrowing through the banking system, with the notable exception of government financing. Total funds raised in the capital market in 1997 increased by 11.5 percent to RM 38.4 billion, a marked slowing from the 54 percent increase registered in 1996 (Appendix Table 35). In 1998, however, total funds raised fell by 52 percent to RM 18.4 billion. The contraction of private sector funding was even more pronounced, falling nearly 75 percent to RM 8.9 billion. And of this, RM 7.7 billion was accounted for by the issue of Danamodal bonds in October.

44. The public sector significantly increased its funding through the long-term capital market in 1998, in contrast with the decline in net financing of the public sector through the banking system. Funds raised, largely by Khazanah Berhad, the government’s investment agency, amounted to a net RM 9.8 billion versus a net redemption of RM 1.4 billion in 1997. The long-term government bond issues in 1998 also continued the government’s program of providing yield curve benchmarks for the development of the domestic bond market.

45. After several years of spectacular gains, the Kuala Lumpur Composite Index (KLCI) fell sharply in 1997 and 1998. In the first two months of 1997, the KLCI rose about 3 percent and then declined gradually through the beginning of July to about 12.4 percent below the end-1996 level. From the onset of the Asian financial crisis at the beginning of July, the KLCI fell sharply, losing 27 percent of its value by the end of August. Thereafter, stock prices continued to slide, so that by year’s end the KLCI stood nearly 52 percent below its value a year earlier. In 1998, the slide in the stock market continued, so that by the beginning of September, the KLCI was down 79 percent from the end of 1996.

46. In late 1998, the KLCI began to recover along with equity prices elsewhere in the region as economic prospects stabilized. In Malaysia, the easing of monetary policy following the imposition of exchange controls, together with the program for restructuring the financial sector, have also undoubtedly played an important role in boosting share prices. By the end of May 1999, the KLCI had risen by 145 percent from the level at the end of August 1998, though still 40 percent below the end-1996 level.

E. Financial and Corporate Sector Restructuring

47. A full discussion of financial sector restructuring efforts in Malaysia is contained in Chapter III of the Selected Issues paper, while details of corporate sector restructuring efforts are contained in Chapter IV. This section, therefore, provides only a brief overview of developments.

48. The contraction of economic activity in 1998, together with high interest rates, quickly showed up in Malaysia’s banking system in the form of rising NPLs, strained earnings, and declining capital. Malaysia has avoided the effects of full-scale financial sector crisis because of fundamental strengths that were present in advance of the distress, as well as a prompt and concerted effort on the part of the authorities to arrest deterioration once it had begun.

49. The authorities moved in January 1998 to consolidate the finance company sector as it was viewed to be the most vulnerable segment within the banking system. By midyear, this effort was augmented by a comprehensive strategy to restructure and revitalize the banking system, creating Danaharta to acquire NPLs, Danamodal to provide fresh capital, and the CDRC to help negotiate the restructuring of large corporate loans. The authorities (Ministry of Finance and BNM) provided the initial capitalization to Danaharta and Danamodal and stand behind the issuance of approximately RM 30 billion in debt financing. The authorities expect to be repaid when the assets are sold.

50. In 1998, BNM sharpened its supervision over the banking sector by tightening loan classification requirements and, later, requiring that banks reach agreements to sell NPLs to Danaharta in order to improve asset quality. These actions were accompanied by more frequent on-site examinations to scrutinize individual banks and bank managers. To the extent that NPL sales to Danaharta depleted capital, banks were forced to seek new equity either from shareholders, new investors, or through Danamodal.

51. Through March 1999, Danaharta has acquired approximately one-fourth of the banking system’s NPLs, while Danamodal has injected fresh capital into banking institutions that in the aggregate represent approximately one-fifth of system assets. Danaharta’s purchases of NPLs have amounted to RM 23 billion, from 37 financial institutions, while Danamodal’s capital injections into 11 banking institutions have amounted to RM 6.2 billion. NPLs have begun to moderate and are expected to peak in coming quarters.

52. The Malaysian economic crisis has also been reflected in severe financial distress among segments of the corporate sector—primarily companies in the construction and finance sectors as well as diversified holding companies—mainly through the impact on cash flows and debt-servicing capacity arising from the sharp exchange rate depreciation, the significant decline in stock prices, the increase in interest rates, and the sharp decline in demand, both domestically and of Malaysia’s main regional trading partners. The peak increase in interest rates and the peak exchange rate depreciation are estimated to have reduced corporate cash flows by some 10 percent of GDP since the start of the crisis, while the total wealth shock is estimated to have been equivalent to some 170 percent of GDP. The distress in the corporate sector is evidenced by indicators such as the sharp decline in earnings before interest and taxes and by the number of corporations filing for court protection.

53. To facilitate restructuring in the corporate sector, the government established the CDRC, modeled after the London Approach, as a complement to the establishment of Danaharta and Danamodal. In addition, the authorities have implemented several reforms to improve corporate governance and to strengthen regulations over banking and other financial institutions.

IV. External Sector Developments

A. Overview

54. Malaysia’s balance of payments position strengthened significantly in 1998, reflecting mainly a current account surplus generated by a sharp decline in private investment and an improvement in private sector saving in response to the negative wealth shock caused by the stock market collapse in 1997 (Appendix Tables 3642). The large current account surplus—the first since 1989—was in sharp contrast to the current account deficit and substantial loss of reserves observed in 1997. The current account surplus was somewhat offset by short-term capital outflows and a decline in foreign direct investment flows into Malaysia. Nevertheless, for the year as a whole, there was a significant buildup of reserves, especially in the last quarter of the year when exports picked up and capital outflows ceased as a result of the imposition of capital controls in September 1998.

B. Current Account Developments

55. The current account recorded an unprecedented surplus of $9.2 billion during 1998, mainly on account of a sharp positive turnaround in the trade balance. The rise in the trade surplus to $18 billion in 1998 from $4 billion in 1997, resulted entirely from strong import compression, as exports declined notwithstanding the rebound in manufactured exports by 8.8 percent in the fourth quarter of 1998. The service account also improved due, in large part, to a narrowing of the deficit on net payments of freight and insurance, in line with the improvement in the trade balance. Malaysia also recorded a significant net outflow of transfers, mainly one-time lump-sum repatriation of remittances made by a sizable foreign workforce who took their savings with them as they left the country because of the recession.

56. The value of imports fell sharply in 1998, by 26 percent in U.S. dollar terms. The drop in imports was due to a reduction in volumes of all categories of imports. The biggest drop was recorded in the import of capital goods (39 percent), as a result of the contraction in domestic demand, large excess capacity, the exchange rate depreciation, as well as measures introduced earlier in the year to defer noncritical infrastructure projects and rationalize the purchase of imported goods by public agencies. Imports of intermediate goods also declined by 21 percent, in line with a decline in manufacturing production in response to weak domestic and export demand.

57. The dollar value of exports declined by 8 percent in 1998. For the year as a whole, this resulted mainly from a fall in the prices of key export goods (such as semi-conductors and electronics, as well as commodity exports) and, to a lesser extent, from the slowdown in regional export demand. In the final months of 1998, however, exports picked up as the recovery in regional and world demand led to a rise in export volumes, and the declining trend in key export prices moderated. The improved fourth quarter performance was mainly due to the growth in exports of electronic components, transport equipment, nonmetallic mineral products, and rubber products.18 In addition, the downward adjustment in semiconductor prices moderated following the decision of some major world producers to halt or cut production levels to restrain falling prices. For the year as a whole, Malaysia was able to maintain its share of the U.S. and Japanese markets at the 1997 levels, reflecting the competitiveness of the ringgit against other regional currencies (which appreciated against the ringgit in 1998 as the yen rose against the dollar).19

58. Malaysian exports and imports continued to be channeled to and from mainly the ASEAN countries (particularly Singapore), Japan, the United States, and the European Union. However, as their economies contracted, the relative share of ASEAN countries in Malaysian exports declined (by 13 percent), to be replaced by the United States and the European Union, which absorbed larger shares (16 percent and 12 percent more than in 1997, respectively).

C. Exchange Rate Developments and Capital Controls

59. For most of 1998, the ringgit was determined on the basis of a managed float vis-à-vis an undisclosed basket of major trading partners’ currencies. The nominal exchange rate stabilized somewhat after January 1998, following a steep depreciation of the ringgit against the U.S. dollar since the onset of the crisis in July 1997. In June 1998, the currency again came under pressure as the Russian financial crisis unfolded. Through the first eight months of 1998, the real effective exchange rate recovered some ground and, by September 1998, stabilized at about 23 percent below its June 1997 level.

60. At the beginning of September 1998, the Malaysian authorities introduced a wide range of capital controls and pegged the exchange rate at RM 3.8 per U.S. dollar. These measures were aimed at stemming speculation against the ringgit and regaining monetary policy independence.20 The controls effectively eliminated the offshore ringgit market, by removing all legal channels for the transfer of ringgit abroad and requiring transfer of offshore ringgit to Malaysia, and prohibited nonresidents from repatriating portfolio capital held in Malaysia for a period of 12 months. Payments and transfers related to current international transactions and foreign direct investment were exempt from the controls.

61. In February 1999, the 12-month rule was replaced with a declining scale of exit levies that apply to the principal or the profits from investments in Malaysian securities, depending on whether the funds were brought into Malaysia before or after February 15, 1999, respectively, with the size of the levy decreasing with the length of the investment. Some exemptions from the exit levy have also been granted for property investments and transactions related to the new over-the-counter stock exchange and financial futures exchanges. In introducing the exchange and capital controls in September 1998, the authorities stated that these would be temporary, and that Malaysia would in time modify the capital controls and return to more flexible management of the exchange rate. Official statements (as recently as mid-May) indicated that capital controls would remain in place until stricter curbs were imposed on currency trading in international markets.

D. Capital Account Developments

62. The capital account swung from a small surplus in 1997 to a deficit of $5 billion in 1998. The deterioration in the capital account can be attributed to an increase in short-term private sector capital outflows (by 32 percent), as well as a slowdown in portfolio capital inflows due to investors’ risk aversion to emerging markets. This was exacerbated by a drop in foreign direct investment inflows (by almost half the amount that came in during 1997), as well as smaller net inflows of official medium- and long-term capital (Appendix Table 43).

63. Foreign direct investment flows moderated because of the tightening of lending conditions in international markets, domestic financial problems in the major investing countries (such as Japan), global excess capacity, and continued regional uncertainties. Reinvestment by foreign investors in Malaysia also declined as a result of higher repatriation of profits and dividends, mainly by Japanese firms, to meet liquidity needs in their parent companies. In addition, the imposition of selective capital controls in September 1998 and the confusion surrounding the initial phase of implementation appears to have been detrimental to foreign direct investment, even though such transactions fell outside the purview of the controls. Matters improved somewhat in the last quarter of 1998 following the liberalization of foreign equity participation in the telecommunications and manufacturing sectors, when funds were brought in by foreign investors for the acquisition of stakes in Malaysian companies. In addition, the number of applications for new investment projects increased significantly during this period, once the operation and scope of the capital controls became increasingly clear to long-term foreign investors.

64. The net outflow of short-term capital increased further in 1998 from the historically high level already witnessed in 1997. This was due to a decline in the external liabilities of the commercial banks and the liquidation of portfolio investments by foreign investors. The former reflected a decline in the short-term external debt of commercial banks in response to the stagnation of domestic demand and reduction in external trade. Heightened uncertainty, including increased concerns about the risks in the financial system and the economic outlook, led to a large portfolio capital outflow, especially in the second and third quarters of 1998. However, such capital outflows stabilized in the last quarter after the imposition of the 12-month withholding period for portfolio capital under the selective capital controls imposed in September 1998.

E. International Reserves, External Debt, and Debt Service

65. BNM’s external reserves rose by $4.5 billion to $26.2 billion at end-1998, equivalent to approximately four months of retained imports of goods and services (Appendix Table 44). This reflects the strong balance of payments position generated by a large current account surplus. This was bolstered in the last quarter of the year by the effectiveness of the capital controls in preventing large private capital outflows. As a result, reserve accumulation accelerated in the final quarter of the year (reserves rose by $6 billion in this period), allowing the reserve loss during the early part of the year to be recouped. In 1999, reserves have continued to build up, reaching $29.8 billion by the end of May.

66. Malaysia’s total external debt stood at $42 billion in 1998, equivalent to 59 percent of GDP, up from 45 percent of GDP in 1997 (Appendix Tables 4549). Within this total, there has been a noticeable shift in the maturity profile, toward medium- and long-term debt away from short-term debt. The latter has declined significantly as a proportion to total external debt from 25 percent to 18 percent during this period. Medium- and long-term debt rose slightly in 1998 on account of increased borrowing by the federal government from official creditors, while the nonfinancial public and private sectors maintained virtually the same levels of external indebtedness as in the previous year. At the same time, short-term debt declined, owing to a reduction in external liabilities of commercial banks, which in turn reflects lower short-term borrowing by banks as a result of lower trade financing needs following the stagnation in domestic demand and external trade. The currency composition continued to be dominated by U.S. dollar-denominated debt (74 percent of total debt outstanding at the end of 1998), while yen-denominated debt registered a small increase (to 17 percent of total outstanding debt in 1998).

67. Malaysia’s debt-service payments have remained low, at about $6 billion in 1998. However, its debt-service ratio, while still modest, has increased somewhat to 7 percent of exports of goods and services, reflecting the fall in the value of exports.

F. Trade Policy

68. Malaysia’s trade regime is characterized by a relatively moderate average tariff rate of 9.3 percent. All nontariff barriers on agricultural goods (including licensing requirements and quotas) have been converted to tariffs, and several other items such as diamonds, polyethylene, polypropylene, etc., have been removed from import licensing in recent years. However, despite continued progress toward the reduction of tariff and nontariff barriers, Malaysia’s trade system remains somewhat more restrictive than some other countries in the region because of the continued existence of nontariff barriers. These take the form of discretionary import licensing requirements for the import of automobiles, iron and steel products, and other industrial goods, aimed at protecting domestic infant industries, as well as promoting forward and backward industrial linkages.

69. During 1998, Malaysia made further progress toward meeting its commitments to the WTO, mainly through continued tariff reduction, enhanced GATS commitments in the financial services sector, further relaxation in foreign equity participation in the telecommunications sector, and amendment to Malaysian anti-dumping legislation and regulations. During 1998, duties on 65 tariff lines were reduced and those on 12 items, abolished (increasing the number of tariff lines with zero duty to 57 percent from 13 percent in 1993). Some import duties were raised in the 1998 and 1999 budgets, but these increases were consistent with Malaysia’s tariff bindings under WTO.21

70. The December 1998 ASEAN Summit agreed to advance the time frame of the ASEAN Free Trade Area (AFTA) by one year from 2003 to 2002. Under this agreement, Malaysia agreed to accelerate the implementation of AFTA to ensure that 85, 90, and 100 percent of the total tariff lines in the Inclusion List would have tariffs of 0–5 percent by January 1, 2000, 2001, and 2002, respectively; to deepen tariff reduction to zero percent as soon as possible; and to accelerate the transfer of products from the General Exception List to the Inclusion List. Moreover, in March 1999 it was agreed that as an initial step, at least 60 percent of total tariff lines of each member country would be at zero percent by 2003. Thus far, Malaysia has been in compliance with the Summit mandate, and is in the process of identifying products for which tariff reduction could be accelerated.

STATISTICAL APPENDIX
Table 1.Malaysia: Expenditure on Gross Domestic Product in 1978 Prices, 1994-98
1994199519961997Prel.

1998
(In millions of ringgit)
Domestic demand114,689130,215137,161147,039109,479
Consumption67,88873,85677,48681,25372,871
Private51,51656,28859,66862,49054,757
Public16,37217,56817,81818,76318,114
Investment46,80156,35959,67565,78636,608
Private31,45939,41144,67548,44620,440
Public15,00416,30416,48517,90816,121
Change in stocks338644-1,485-56847
Net exports-4,713-9,943-6,540-6,35521,779
Exports109,566128,827138,043152,942151,890
Imports114,279138,770144,583159,297130,111
Gross domestic product109,976120,272130,621140,684131,258
Net factor payments from abroad-5,970-6,568-7,455-7,873-6,782
Gross national product104,006113,704123,166132,811124,476
(Annual percentage change)
Domestic demand13.913.55.37.2-25.5
Consumption9.98.84.94.9-10.3
Private9.99.36.04.7-12.4
Public9.97.31.45.3-3.5
Investment20.320.45.910.2-44.4
Private27.925.313.48.4-57.8
Public-0.68.71.18.6-10.0
Change in stocks 1/1.10.3-1.80.70.4
Net exports 1/-4.6-4.82.8-2.8442.7
Exports22.517.67.210.8-0.7
Imports27.721.44.210.2-18.3
Gross domestic product9.39.48.67.7-6.7
Net factor payments from abroad12.110.013.55.6-13.9
Gross national product9.19.38.37.8-6.3
Source: Data provided by the Malaysian authorities.

Annual change as a percent of GDP.

Source: Data provided by the Malaysian authorities.

Annual change as a percent of GDP.

Table 2.Malaysia: Expenditure on Gross Domestic Product in Current Prices, 1994–98
1994199519961997Prel.

1998
(In millions of ringgit)
Domestic demand193,407227,425246,948271,547216,553
Consumption116,504132,331143,179154,589144,546
Private92,568104,695114,594123,910114,338
Public23,93627,63628,58530,67930,208
Investment76,90395,094103,769116,95872,007
Private51,70066,57777,06486,09340,209
Public24,65727,54328,43731,82331,712
Change in stocks546974-1,732-95886
Net exports-3,133-8,7542,5553,82062,171
Exports173,771208,699229,841261,227324,677
Imports176,904217,453227,286257,407262,506
Gross domestic product190,274218,671249,503275,367278,724
Net factor payments from abroad-9,412-10,377-11,816-14,273-16,230
Gross national product180,862208,294237,687261,094262,494
(Annual percentage change)
Domestic demand16.917.68.610.0-20.3
Consumption13.213.68.28.0-6.5
Private13.813.19.58.1-7.7
Public10.815.53.47.3-1.5
Investment23.123.79.112.7-38.4
Private31.728.815.811.7-53.3
Public2.311.73.211.9-0.3
Change in stocks 1/0.90.2-1.20.30.4
Net exports 1/-1.8-3.05.20.521.2
Exports28.220.110.113.724.3
Imports30.422.94.513.32.0
Gross domestic product15.214.914.110.41.2
Net factor payments from abroad13.910.313.920.813.7
Gross national product15.215.214.19.80.5
Source: Data provided by the Malaysian authorities.

Annual change as a percent of GDP.

Source: Data provided by the Malaysian authorities.

Annual change as a percent of GDP.

Table 3.Malaysia: Gross Domestic Product by Sector of Origin in 1978 Prices, 1994–98
1994199519961997Prel.

1998
(In millions of ringgit)
Primary sector24,28925,21025,96526,28025,686
Agriculture, forestry, and fishing16,04716,23116,58416,80516,133
Mining and quarrying8,2428,9799,3819,4759,553
Secondary sector39,43145,17550,83457,00250,241
Manufacturing34,84239,79044,68450,27045,155
Construction4,5895,3856,1506,7325,086
Tertiary sector46,25649,88753,82257,40255,331
Electricity, gas, and water2,4742,7973,1343,5433,672
Transport storage, and communications7,7768,8529,71110,53010,652
Wholesale and retail trade13,42814,78016,16317,28916,936
Business services 1/11,71212,93914,82616,23916,945
Government services11,02111,45411,93112,65412,953
Other services 2/-155-935-1,943-2,853-5,827
Gross domestic product109,976120,272130,621140,684131,258
(Annual percentage change)
Primary sector0.23.83.01.2-2.3
Agriculture, forestry, and fishing-1.01.12.21.3-4.0
Mining and quarrying2.58.94.51.00.8
Secondary sector14.814.612.512.1-11.9
Manufacturing14.914.212.312.5-10.2
Construction14.117.314.29.5-24.5
Tertiary sector10.17.87.96.7-3.6
Electricity, gas, and water13.713.112.013.13.6
Transport, storage, and communications12.413.89.78.41.2
Wholesale and retail trade8.010.19.47.0-2.0
Business services 1/10.010.514.69.54.3
Government services9.43.94.26.12.4
Other services 2/-30.2503.2107.846.8104.2
Gross domestic product9.39.48.67.7-6.7
(Percent of GDP)
Primary sector22.121.019.918.719.6
Agriculture, forestry, and fishing14.613.512.711.912.3
Mining and quarrying7.57.57.26.77.3
Secondary sector35.937.638.940.538.3
Manufacturing31.733.134.235.734.4
Construction4.24.54.74.83.9
Tertiary sector42.141.541.240.842.2
Electricity, gas, and water2.22.32.42.52.8
Transport, storage, and communications7.17.47.47.58.1
Wholesale and retail trade12.212.312.412.312.9
Business services 1/10.610.811.411.512.9
Government services10.09.59.19.09.9
Other services 2/-0.1-0.8-1.5-2.0-4.4
Source: Data provided by the Malaysian authorities.

Finance, insurance, real estate, and business services.

Community, social and personal services, private nonprofit services to households and domestic services of households, less imputed bank service changes and plus import duties.

Source: Data provided by the Malaysian authorities.

Finance, insurance, real estate, and business services.

Community, social and personal services, private nonprofit services to households and domestic services of households, less imputed bank service changes and plus import duties.

Table 4.Industrial Production Index, 1994–98
19941995199619971998
(Index numbers: 1993 = 100)
Total112.4127.1141.1156.1144.9
Mining103.6112.8119.4122.3123.6
Electricity113.8129.9146.5167.3173.0
Manufacturing114.9131.2147.3165.6148.6
Food106.1113.8118.8123.3120.7
Beverages115.4127.6147.5147.2129.9
Tobacco98.8100.8108.3129.8118.0
Textiles119.4130.7133.2142.6130.0
Wearing apparel96.495.692.794.795.7
Crude oil refineries116.4137.4149.3164.0146.2
Industrial chemicals110.2123.9154.3180.0175.2
Other chemical115.1115.0131.0140.4122.1
Wood products104.2110.5123.1121.1107.4
Rubber products115.4130.5145.0149.9161.7
Nonmetallic minerals113.1125.5156.2172.0126.4
Iron and steel114.8129.5153.6165.6106.7
Nonferrous metal114.5129.3144.0193.6177.5
Fabricated metal117.0127.6157.1175.8145.6
Electrical machinery and electronics121.7146.9159.9181.6167.6
Transport equipment119.8163.1199.5228.0109.1
(Annual percentage change)
Total12.413.111.010.6-7.2
Mining3.68.95.92.41.1
Electricity13.814.112.814.23.4
Manufacturing14.914.212.312.4-10.3
Food6.17.34.43.8-2.1
Beverages15.410.615.6-0.2-11.8
Tobacco-1.22.07.419.9-9.1
Textiles19.49.51.97.1-8.8
Wearing apparel-3.6-0.8-3.02.21.1
Crude oil refineries16.418.08.79.8-10.9
Industrial chemicals10.212.424.516.7-2.7
Other chemical15.1-0.113.97.2-13.0
Wood products4.26.011.4-1.6-11.3
Rubber products15.413.111.13.47.9
Nonmetallic minerals13.111.024.510.1-26.5
Iron and steel14.812.818.67.8-35.6
Nonferrous metal14.512.911.434.4-8.3
Fabricated metal17.09.123.111.9-17.2
Electrical machinery and electronics21.720.78.813.6-7.7
Transport equipment19.836.122.314.3-52.1
Source: Data provided by the Malaysian authorities.
Source: Data provided by the Malaysian authorities.
Table 5.Malaysia: Composition of Investment and Saving in Current Prices, 1994–98
1994199519961997Prel.

1998
(In millions of ringgit)
Gross domestic investment76,90395,094103,769116,95872,007
Private gross fixed capital formation51,70066,57777,06486,09340,209
Oil and gas3,4122,6161,4511,7772,252
Other48,28863,96175,61384,31637,957
Public gross fixed capital formation24,65727,54328,43731,82331,712
Federal government5,4796,6046,3868,1768,983
Statutory bodies1,6202,2192,0302,2791,609
State governments3,0863,5024,0983,9903,923
Local governments8067608637631,835
Public enterprises13,66614,45815,06016,61515,362
Change in stocks546974-1,732-95886
Gross national saving62,13373,44891,572102,807108,075
Private sector28,79040,68551,84352,49365,745
Public sector33,34332,76339,72950,31442,330
(Percent of GDP)
Gross domestic investment40.443.541.642.525.8
Private gross fixed capital formation27.230.430.931.314.4
Oil and gas1.81.20.60.60.8
Other25.429.230.330.613.6
Public gross fixed capital formation13.012.611.411.611.4
Federal government2.93.02.63.03.2
Statutory bodies0.91.00.80.80.6
State governments1.61.61.61.41.4
Local governments0.40.30.30.30.7
Public enterprises7.26.66.06.05.5
Change in stocks0.30.4-0.7-0.30.0
Gross national saving32.733.636.737.338.8
Private sector15.118.620.819.123.6
Public sector17.515.015.918.315.2
Source: Data provided by the Malaysian authorities.
Table 6.Malaysia: Total Proposed Capital Investment in Approved Manufacturing Projects, 1994–98 1/(In millions of ringgit)
19941995199619971998
Total22,95120,86934,25825,82126,406
By ownership
Foreign ownership8,3506,40012,9564,2267,411
Joint ownership10,1178,60015,12217,47613,233
Malaysian majority7,5166,2407,61610,3517,491
Foreign majority2,5062,2247,4077,0325,590
Equal ownership951369993152
Malaysian ownership4,4845,8696,1804,1195,762
By industry
Electrical and electronic products6,3393,15213,0626,2232,410
Textiles and textile products1,316635480277700
Wood, furniture and fixture2,5242,1129787441,282
Rubber and rubber products152171241285208
Food, beverages and tobacco9235064057601,097
Petroleum products2,6861,8103,8836,5526,435
Natural gas002,1370110
Chemicals and chemical products1,3221,7981,0351,3235,913
Non-metallic mineral products2,4734,0453,3381,6291,073
Basic and fabricated metal products2,8393,9982,1664,7623,674
Transport equipment8771,4151,1831,0271,674
Miscellaneous1,5001,2275,3502,2391,830
Source: Data provided by the Malaysian authorities.

Includes equity and loans.

Source: Data provided by the Malaysian authorities.

Includes equity and loans.

Table 7.Malaysia: Ongoing and Planned Investment in Infrastructure-Main Projects, 1998–2002
Main ProjectsExpected Construction PeriodEstimated Cost (RM million)Estimate Annual Cost
19981999200020012002 and beyond
Government (Federal and State)
Roads-Ongoing projects
Middle Ring Road II (Phase 2)1997-2000250241408600
Access Road to Bakun Hydroelectric Dam1995-199939099125000
Simpang Pulai-Lojing-Gua Musang-Kuala Berang Road1990-20051,100812002275000
Kuala Kangsar-Grik Road1997-200020011607400
Batang Rejang Bridge1998-20001241487500
Upgrading Betong-Kayu Malam Road1998-20001654808100
Access Road to Tanjung Pelepas Port, Johor1998-200020010790300
Kuala Perlis - Changlun Road1997-2000295928012300
South Klang Valley Expressway - Seksyen 1A1999-20013500120190400
Kota Kinabalu - Sulaiman Coastal Road, Sabah1997-200131511510585100
Ports
Lahad Datu Port1995-1998108513000
Labuan Integrated Port (Phase I)1997-2000701472200
Water supply
Rehabilitation and Upgrading of Water Supply System1994-2000950192160000
Interstate Water Transfer (Phase I)1999-20042,5110425668781,025
Private sector 1/
Roads-Ongoing projects
New North Klang Straits Bypass1996-200047270802000
Butterworth Outer Ring Road1999-20013500502001000
Rail
Light Rail Transit, System I, Phase II1996-19982,2008600000
Light Rail Transit, System 21995-19994,3501,7401,305000
Express Rail Link KL-KLIA1996-19992,400331,0908234540
KL Monorail1997-20011,5001504004002000
Rail Link to North Butterworth Container Terminal1997-1999250100150000
Rawang-Ipoh Double Track Project1999-20052,50001003008001,300
Rail Link to Tanjong Pelepas Port1999-200160001002003000
Electrified Double Track Project Sentul-Batu Caves1999-2001165020100450
Ports
West Port of Port Klang1992-20012,200893011000
Tanjung Pelepas Port (Phase I)1995-20012,800754883604344215
Phase IIA NBCT, Penang Port1997-200012063385100
Kuching Port Terminal1993-1998250498000
Bintulu International Container Terminal1995-199824310934800
Basin Dredging of Kuantan Port1999-200115303884310
Airports
Kuala Lumpur International Airport1993-19989,0001,8830000
Total38,1166,6325,9074,3323,7022,540
Source: Data provided by the Malaysian authorities.

According to the authorities’ classification. Many private sector infrastructure projects are undertaken at the behest of the government and are financed by government-guaranteed loans.

Source: Data provided by the Malaysian authorities.

According to the authorities’ classification. Many private sector infrastructure projects are undertaken at the behest of the government and are financed by government-guaranteed loans.

Table 8.Malaysia: Labor Market Developments, 1994–98
19941995199619971998
(In thousands)
Population19,65020,68921,16921,66622,180
Total labor force7,8468,2578,6419,0388,881
Labor force participation rate (in percent)64.964.565.867.064.3
Unemployment rate (in percent)2.92.82.62.63.9
Total employment7,6188,0248,4178,8058,538
Primary sector1,5561,5621,5441,5341,473
Agriculture, forestry, and fishery1,5181,5241,5051,4951,434
Mining and quarrying3838393939
Secondary sector2,4712,7723,0233,2643,032
Manufacturing1,8772,0612,2212,3902,305
Construction594711802874727
Tertiary sector3,5913,6903,8504,0074,033
Transport, etc.362399419436438
Wholesale and retail services, hotels, and restaurants1,3181,3141,3821,4471,439
Business services 1/346374391406416
Government services868870871873875
Electricity, gas, and water6166707677
Other services636667717769788
(Annual percentage change)
Total labor force2.95.24.74.6-1.7
Total employment3.05.34.94.6-3.0
Primary sector-3.60.4-1.2-0.6-4.0
Agriculture, forestry, and fishery-3.70.4-1.2-0.7-4.1
Mining and quarrying1.30.02.60.00.0
Secondary sector8.112.29.18.0-7.1
Manufacturing7.79.87.87.6-3.6
Construction9.219.712.89.0-16.8
Tertiary sector2.72.84.34.10.6
Transport, etc.5.210.25.04.10.5
Wholesale and retail services, hotels, and restaurants3.4-0.35.24.7-0.6
Business services 1/4.38.14.53.82.5
Government services0.50.20.10.20.2
Electricity, gas, and water1.28.26.18.61.3
Other services2.34.97.57.32.5
(Percentage share of total employment)
Total employment100.0100.0100.0100.0100.0
Primary sector20.419.518.317.417.3
Agriculture, forestry, and fishery19.919.017.917.016.8
Mining and quarrying0.50.50.50.40.5
Secondary sector32.434.535.937.135.5
Manufacturing24.625.726.427.127.0
Construction7.88.99.59.98.5
Tertiary sector47.146.045.745.547.2
Transport, etc.4.85.05.05.05.1
Wholesale and retail services, hotels, and restaurants17.316.416.416.416.9
Business services 1/4.54.74.64.64.9
Government services11.410.810.39.910.2
Electricity, gas, and water0.80.80.80.90.9
Other services8.38.38.58.79.2
Source: Data provided by the Malaysian authorities.

Finance, insurance, real estate, and business services.

Source: Data provided by the Malaysian authorities.

Finance, insurance, real estate, and business services.

Table 9.Malaysia: Registered Unemployed by Occupation, 1994–98
19941995199619971998
(Number of registered unemployed persons)
Total26,44525,54621,66823,76233,345
Industrial9,1988,2107,0818,1569,845
Agricultural13298766795
Services584674472437823
Clerical13,58913,18111,06111,06614,712
Professional and technical2,1492,6292,2632,7975,281
Others7937547151,2392,589
(Percentage share of total registered unemployed)
Total100.0100.0100.0100.0100.0
Industrial34.832.132.734.329.5
Agricultural0.50.40.40.30.3
Services2.22.62.21.82.5
Clerical51.451.651.046.644.1
Professional and technical8.110.310.411.815.8
Others3.03.03.35.27.8
Source: Data provided by the Malaysian authorities.
Source: Data provided by the Malaysian authorities.
Table 10.Malaysia: Changes in Average Wage Rates, 1994–98 1/(Percentage change)
19941995199619971998
Manufacturing8.310.212.110.05.8
Food manufacturing, beverages, tobacco industries14.010.99.011.43.4
Textile, weaving, etc., industries15.29.710.86.15.0
Wood and wood products7.82.39.28.36.0
Petroleum refineries10.614.311.5-2.1-1.6
Nonmetallic, mineral industries8.815.18.65.67.9
Basic metal, metal products9.313.32.810.23.6
Electrical and electronics products8.813.512.710.510.7
Chemicals, chemical and plastic products7.54.717.19.7-0.3
Transport equipment9.76.98.921.0-1.9
Source: Data provided by the Malaysian authorities.

For supervised personnel.

Source: Data provided by the Malaysian authorities.

For supervised personnel.

Table 11.Malaysia: Average Domestic Prices and Taxes on Energy-Related Products, 1994–98(Cents per liter; unless otherwise indicated)
19941995199619971998
Crude oil
Excise duty0.000.000.000.000.00
Import duty0.000.000.000.000.00
Gasoline regular
Price106.00106.00106.00106.00106.00
Excise duty58.6258.6258.6258.6258.62
Import duty58.6258.6258.6258.6258.62
Gasoline premium
Price113.00110.00110.00110.00110.00
Excise duty58.6258.6258.6258.6258.62
Import duty58.6258.6258.6258.6258.62
Kerosene 1/
Price66.1066.1066.1066.1066.10
Excise duty17.060.000.000.000.00
Import duty17.060.000.000.000.00
Diesel oil
Price65.1065.1065.1065.1065.10
Excise duty17.3219.6419.6419.6419.64
Import duty17.3219.6419.6419.6419.64
Fuel oil 1/, 2/
Excise duty (in tons)16.730.000.000.000.00
Import duty (in tons)16.730.000.000.000.00
Natural gas 2/
Excise duty (cents/kg.)1.01.01.01.00.0
Import duty (cents/kg.)1.01.01.01.00.0
Source: Data provided by the Malaysian authorities.

Duties on kerosene and fuel oil were abolished on October 10,1994.

Prices of fuel oil and natural gas (liquefied) are not available.

Source: Data provided by the Malaysian authorities.

Duties on kerosene and fuel oil were abolished on October 10,1994.

Prices of fuel oil and natural gas (liquefied) are not available.

Table 12.Malaysia: Consumer Price Index, 1994–98
Weights1994199519961997199819971998
Q1Q2Q3Q4Q1Q2Q3Q4
(Index numbers; 1994 = 100)
Food34.9100.0104.9111.0115.5125.8115.2114.5114.9117.2122.9126.2126.2127.7
Beverages and tobacco3.6100.0102.4104.6106.0110.6105.2105.3106.4107.0107.4108.3110.0116.5
Clothing and footwear3.6100.0100.099.398.899.399.198.898.998.299.599.899.598.3
Gross rent, fuel, and power21.2100.0103.4106.7110.2114.9108.3109.7110.8111.8113.3114.7115.6116.0
Furniture and household equipment5.6100.0102.8103.9104.0108.0104.0103.9103.7104.5106.1108.0108.8109.2
Medical care and health expenses1.9100.0103.1106.9110.7117.6109.5110.2111.1112.1115.0117.3118.6119.5
Transport and communications17.9100.0101.8103.2103.8103.7103.8103.8103.8103.8103.9103.8103.6103.6
Recreation, education, cultural services5.8100.0102.5105.9106.4109.8106.1106.2106.3106.8108.2109.2110.6111.1
Miscellaneous5.6100.0104.2106.9111.7119.5109.2111.3112.3114.0117.5119.2120.5120.9
Total100100.0103.4107.1109.9115.7109.2109.4109.9111.0113.9115.7116.1117.0
(Annual percentage change)(4-quarter percentage change)
Food5.34.85.84.18.95.93.92.93.66.710.29.89.0
Beverages and tobacco4.92.42.21.34.31.90.80.91.62.12.83.48.9
Clothing and footwear-0.80.0-0.7-0.50.5-0.4-0.7-0.4-0.50.41.00.60.1
Gross rent, fuel, and power2.43.33.23.34.32.83.23.43.84.64.64.33.8
Furniture and household equipment1.62.81.10.13.80.10.1-0.30.62.03.94.94.5
Medical care and health expenses3.43.03.73.66.23.73.63.53.75.06.46.86.6
Transport and communications4.61.81.30.6-0.10.70.31.00.50.10.0-0.2-0.2
Recreation, education, cultural services0.62.63.30.43.20.60.10.20.92.02.84.04.0
Miscellaneous2.44.22.54.57.02.94.24.96.17.67.17.36.1
Total3.73.53.52.75.33.12.42.32.74.35.85.65.4
Source: Data provided by the Malaysian authorities.
Source: Data provided by the Malaysian authorities.
Table 13.Malaysia; Producer Price Index, 1994–98
Weights1994199519961997199819971998
Q1Q2Q3Q4Q1Q2Q3Q4
(Index numbers; 1989 = 100)
Food and live animals14.9111.0113.6119.9122.8133.1121.1121.0123.1125.8131.6134.1133.2133.6
Beverages and tobacco2.1133.7136.7137.4137.5139.6137.3137.4137.6137.7137.5137.5137.6145.7
Crude materials18.0113.4121.3119.5113.6117.0116.4114.2110.0113.6118.2118.6115.9115.1
Mineral fuels18.8100.099.7112.2120.0116.9120.7112.3115.3131.5122.4115.8117.3112.2
Animal and vegetable oils8.5121.5153.0144.2162.8266.7155.5151.0149.0195.7259.9267.2275.9263.6
Chemicals4.4107.0109.3110.5111.8117.0110.2111.0111.6114.3117.3116.9117.0116.8
Manufactured goods, n.e.i10.8112.4112.3113.2113.3121.0112.5112.3112.5115.9121.2121.3121.3120.0
Machinery and transport equipment18.4102.9101.0101.6104.9111.1102.4102.8105.8108.5111.2110.7111.7110.7
Miscellaneous goods3.6114.1116.7120.7119.2125.6119.1118.6118.6120.3123.7125.0126.3127.4
Communication and transport0.6113.1112.7113.0112.4114.7112.5112.2112.3112.7114.8114.6114.8114.7
Total100109.3113.6116.2119.3132.2118.5116.1116.7125.8132.5132.3133.0130.8
Domestic production79.3110.7115.9119.2122.2135.9121.7118.8119.0129.4136.3136.1136.8134.3
Imports20.7103.9104.6104.7107.6117.5105.7105.5107.5111.6117.7117.5117.8116.9
(Annual percentage change)(4-quarter percentage change)
Food and live animals5.72.45.52.48.53.61.00.64.48.710.88.26.2
Beverages and tobacco2.02.30.50.11.5-0.10.00.10.30.10.10.05.8
Crude materials10.07.0-1.5-4.93.0-4.5-7.2-6.4-1.51.53.95.41.3
Mineral fuels-4.5-0.312.56.9-2.512.92.14.28.51.43.11.7-14.7
Animal and vegetable oils19.126.0-5.812.963.86.92.56.536.067.177.085.234.7
Chemicals0.42.21.11.24.7-0.20.10.84.06.45.34.82.2
Manufactured goods, n.e.i.3.2-0.10.80.16.8-0.7-1.0-0.42.67.78.07.83.5
Machinery and transport equipment0.4-1.80.53.35.91.11.64.36.18.67.75.62.0
Miscellaneous goods5.42.33.44.35.4-1.2-1.9-1.90.03.95.46.55.9
Communication and transport1.7-0.40.3-0.52.0-0.4-0.7-0.6-0.32.02.12.21.8
Total4.03.92.32.710.72.8-0.51.07.211.814.014.04.0
Domestic production5.04.72.82.611.23.0-0.90.67.512.014.615.03.8
Imports0.20.70.12.89.21.41.02.86.011.411.49.64.7
Source: Data provided by the Malaysian authorities.
Source: Data provided by the Malaysian authorities.
Table 14.Malaysia: Federal Government Revenue and Grants, 1995-99
Budget 1/Prel.Budget
19951996199719981999
(In millions of ringgit)
Tax revenue43,30649,16855,66445,5014738739,657
Taxes on net income and profits20,13622,66127,12126,2362836918,657
Oil production companies2,1372,2033,8614,0284,0462,689
Petronas1,6721,7623,8614,0284,0462,689
Other oil companies465441000
Other companies11,70714,16616,68815,99717,29410,936
Individuals6,2036,1726,4296,0826,9004,950
Other 2/8912014312912982
Taxes on property281437542424430402
Taxes on goods and services14,02915,96617,60712,54712,71614,146
Sales tax4,8685,4736,1673,7893,8444332
Imported goods1,6641,7682,0071,2581,267I397
Domestic goods3,2043,7054,1602,5312,5772,935
Selective excises on goods5,2805,7906,0533,1433,5864,084
Tobacco and alcoholic beverages1,0551,0661,1461,0811,1211316
Petroleum products1,8991,9081,70513041,5261,623
Motor vehicle tax2,2802,7563,1367078971,094
Other466066514251
Selective excises on services3,8814,7035,3875,6155,2865,730
Motor vehicle tax1,4961,6991,9731,8221,7711,884
Taxes on international trade6,4747,1737,5774,6964,4914,691
Import duties5,6216,1326,5244,0413,8684361
Tobacco and alcoholic beverages366419425374365409
Petroleum products1,5461,6851,74913331,4621,556
Other import duties3,7094,028435023342,0412396
Export duties8531,0411,053655623430
Petroleum7519961,024607563386
Palm oil74249192020
Other282120294024
Other tax revenue 3/2,3862,9312,8171,59813811,761
Nontax revenue7,7659,89010,3969,9039,43610,980
Property income5,5535,6345,7866,4935,9857,473
Public financial institutions2197741,004
Rent and interest1,7411,6671,6881,4081,7791346
Dividends paid by Petronas3,1003,1003,1004,1003,1004,100
Petroleum royalties7108489919781,1021,023
Administrative fees and charges on sale of goods, fines, and forfeit1,6923,4814,6003,0353,0633,113
Other nontax revenue52077510375388394
Capital revenue868853455152
Total revenue51,15759,14666,11355,44956,87450,689
Foreign grants000000
Total revenue and grants51,15759,14666,11355,44956,87450,689
(In percent of GDP)
Tax revenue19.819.720.216.316.914.0
Nontax revenue3.64.03.83.53.43.9
Total revenue23.423.724.019.820.317.9
Source: Data provided by the Malaysian authorities.

Refers to revised budget plans presented in July 1998.

Consists of income taxes on cooperatives and other direct taxes.

Includes stamp duties. Excludes expenditure refunds and net lending.

Source: Data provided by the Malaysian authorities.

Refers to revised budget plans presented in July 1998.

Consists of income taxes on cooperatives and other direct taxes.

Includes stamp duties. Excludes expenditure refunds and net lending.

Table 15.Malaysia: Economic Classification of Federal Government Expenditure and Net Lending, 1995-99
Budget 1/Prel.Budget
19951996199719981999
(In millions of ringgit)
Current expenditure 2/37,74744,92945,47346,53944,86849,726
On personnel, goods, and services18,82221,63920,46820,86619,77922,686
Wages and salaries11,43314,32413,19514,27613,98413,971
Other goods and services 3/7,3897,3157,2736,5905,7958,715
Interest payments 4/6,5216,7956,4256,5316,9289,033
Subsidies and other current transfers12,40416,49518,58019,14218,16118,007
Transfers to state governments1,4101,4511,5411,5921,7151,396
Pensions2,7553,5093,6383,6213,6583,873
Other current transfers 5/8,23911,53513,40113,92912,78812,738
Development expenditure11,21211,79613,87816,62517,03817,089
Direct development expenditure11,01710,78312,76114,51615,20416,591
Net lending 6/1951,0131,1172,1091,834498
Adjustment for accounts payable-649-255-349-400-870-500
Total expenditure and net lending48,31056,47059,00262,76461,03666,315
(In percent of total expenditure)
Current expenditure 2178.179.677.174.173.575.0
Expenditure on goods and services39.038.334.733.232.434.2
Wages and salaries23.725.422.422.722.921.1
Other goods and services 3/15.313.012.310.59.513.1
Interest payments 4/13.512.010.910.411.413.6
Subsidies and other current transfers25.729.231.530.529.827.2
Transfers to state governments2.92.62.62.52.82.1
Pensions5.76.26.25.86.05.8
Other current transfers 5/17.120.422.722.221.019.2
Development expenditure23.220.923.526.527.925.8
Direct development expenditure22.819.121.623.124.925.0
Net lending 6/0.41.81.93.43.00.8
Adjustment for accounts payable-1.3-0.5-0.6-0.6-1.4-0.8
(In percent of GDP)
Current expenditure17.318.016.516.616.117.6
Expenditure on goods and services3.42.92.62.42.13.1
Wages and salaries5.25.74.85.15.04.9
Direct development expenditure5.04.34.65.25.55.9
Source: Data provided by the Malaysian authorities.

Refers to revised budget plans presented in July 1998.

Includes expenditure refunds.

Includes defense expenditures shown in the development budget and some net lending shown in the current budget.

Excludes contributions to the sinking funds.

Consists of subsidies, indemnities, refunds and write-offs, transfers to statutory bodies, and other transfers.

Includes repayments of loans from revenue and loan funds, and revenue from sales of shares.

Source: Data provided by the Malaysian authorities.

Refers to revised budget plans presented in July 1998.

Includes expenditure refunds.

Includes defense expenditures shown in the development budget and some net lending shown in the current budget.

Excludes contributions to the sinking funds.

Consists of subsidies, indemnities, refunds and write-offs, transfers to statutory bodies, and other transfers.

Includes repayments of loans from revenue and loan funds, and revenue from sales of shares.

Table 16.Malaysia; Functional Classification of Federal Government Expenditure and Net Lending, 1995-99(In millions of ringgit)
Budget 1/Prel.Budget
19951996199719981999
General services33,60437,68839,90839,65339,89841,582
General public services9,1978,6699,9861131910,0478,784
General administration6,4265,7006,9428,7147,3156,158
Internal security2,7712,9693,0442,5052,7322,626
Defense6,1216,0915,8785,3464,5456,511
Education10,60312,48912,88112,12513,44314,179
Health2,7723,4743,7273,6724,0474,435
Social security 2/2,7553,5093,6383,6213,6583,873
Housing and community developments2,1563,4563,7983,6704,1583,800
Of which: Community and social securities1,4252,1432,4042,4042,4042,404
Economic services9,30911,97811,62614,03413,32914,766
Agriculture, forestry, and rural development2,4952,6182,4052,3172,0813,418
Transport and communication4,1915,6554,99253664,1435,596
Other economic services 3/2,6233,7054,2296,4517,1055,752
Unallocable6,0467,0597,8179,4778,67910,467
Interest payments6,5216,7956,4256,5316,9289,033
Transfers to state governments1,4101,4511,5411,5921,7151,396
Others 4/-1,885-1,187-1491,3543638
Adjustment for accounts payable-649-255-349-400-870-500
Total expenditure and net lending48,31056,47059,00262,76461,03666,315
Memorandum item:
Interest payments (in percent of GDP)3.02.72.32.32.53.2
Source: Data provided by the Malaysian authorities.

Refers to revised budget plans presented in July 1998.

Includes government pensions.

Includes general administration, regulations and research, mining, manufacturing and construction, and utilities.

Includes expenditure refunds and net lending items.

Source: Data provided by the Malaysian authorities.

Refers to revised budget plans presented in July 1998.

Includes government pensions.

Includes general administration, regulations and research, mining, manufacturing and construction, and utilities.

Includes expenditure refunds and net lending items.

Table 17.Malaysia: Federal Budgetary Developments, 1995-99
Budget 1/Prel.Budget
19951996199719981999
(In millions of ringgtt)
Total revenue and grants51,15759,14666,11355,44956,87450,689
Tax revenue43,30649,16855,66445,50147,38739,657
Nonpetroleum tax revenue36,97342,37647,32538,22939,79033,403
Taxes on net income and profits 2/18,28020,89523,80222,63224,75316,370
Sales tax and excises 3/14,51616,98918,71912,84112,57114,284
Taxes on international trade4,1774,4924,8042,7562,4662,749
Petroleum tax revenue6,3336,7928,3397,2727,5976,254
Oil production companies2,1372,2033,8614,0284,0462,689
Excises and duties4,1964,5894,4783,2443,5513,565
Nontax revenue7,8519,97810,4499,9489,48711,032
Petroleum3,8103,9484,0915,0784,2025,123
Other 4/4,0416,0306,3584,8705,2855,909
Total expenditure and net lending48,31056,47059,00262,76461,03666,315
Current expenditure37,74744,92945,47346,53944,86849,726
Wages and salaries11,43314,32413,19514,27613,98413,971
Other expenditure on goods and services7,3897,3157,2736,5905,7958,715
Interest payments6,5216,7956,4256,5316,9289,033
Subsidies and transfers12,40416,49518,58019,14218,16118,007
Development expenditure10,56311,54113,52916,22516,16816,589
Direct expenditure11,01710,78312,76114,51615,20416,591
Net lending 5/-4547587681,709964-2
Overall balance2,8472,6767,111-7,315-4,162-15,626
Memorandum items:
Current balance13,32414,12920,5878,86511,955911
Primary balance 6/9,3689,47113,536-7842,766-6,593
(In percent of GDP)
Total revenues23.423.724.019.820.417.9
Total expenditures22.122.621.422.421.923.4
Overall balance1.31.12.6-2.6-1.5-5.5
Current balance6.15.77.53.24.30.3
Primary balance4.33.84.9-0.31.0-2.3
Source: Data provided by the Malaysian authorities.

Refers to revised budget plans announced in July 1998.

Includes taxes on property.

Includes “other tax revenue.”

Includes capital revenue and foreign grants.

Includes adjustment for accounts payable.

Overall balance plus interest payments.

Source: Data provided by the Malaysian authorities.

Refers to revised budget plans announced in July 1998.

Includes taxes on property.

Includes “other tax revenue.”

Includes capital revenue and foreign grants.

Includes adjustment for accounts payable.

Overall balance plus interest payments.

Table 18.Malaysia: Federal Government Operations, 1995-99(In millions of ringgit)
Budget 1/Prel.Budget
19951996199719981999
Total revenue and grants51,15759,14666,11355,44956,87450,689
Total expenditure and net lending48,31056,47059,00262,76461,03666,315
Current expenditure 2/37,74744,92945,47346,53944,86849,726
Transfers to:4,4514,1424,6804,7804,9035,144
Statutory bodies2,9532,5863,0573,0973,0973,665
State governments1,4101,4511,5411,5921,7151,396
Statutory grants914907907938938938
Other grants496544634654777458
Local governments8810582919183
NFPEs000000
Direct development expenditure11,01710,78312,76114,51615,20416,591
Transfers to:2,0682,7402,7041,9423,3031,093
Statutory bodies1,5872,1712,1031,3941,394796
State governments 3/536938563856
Local governments8166437474141
NFPEs3474345204181,797100
Net lending1951,0131,1172,1091,834498
Net loans to:7652,1236756401,7082,098
Statutory bodies434343555350
State governments247261638273242203
Local governments-12-8-8-11-17-15
NFPEs4871,82723231,4301,860
Adjustments for accounts payable-649-255-349-400-870-500
Overall balance2,8472,6767,111-7,315-4,162-15,626
Financing (net)-2,847-2,676-7,1117,3154,16215,626
External (net)-1,851-1,986-1,5132,0962,096
Project loans-534-1,503-984708708
Market loans-746231-4792,2672,267
Other-571-714-50-879-879
Domestic (net)-996-690-5,5985,2192,06615,626
Banking system 4/-2,440-2,0552,6888,378-11,024
Central bank-435-1,006-907-12,206-13,982
Claims on federal government1,1441,024-1,3381,070-706
Deposits by federal government-1,579-2,030431-13,276-13,276
Commercial banks-2,005-1,0493,59520,5842,958
Claims on federal government-1,0471,3433,43122,9315,305
Deposits by federal government-958-2,392164-2,347-2,347
Nonbanks1,4441,365-8,286-3,15913,09015,626
Employees Provident Fund-1,123-396-8977,2947,294
Petronas1,1201,452-2,262-57-57
Insurance companies 5/-44-70-412113113
Other1,491379-4,715-10,5095,74015,626
Memorandum items:
Current balance13,32414,12920,5878,86511,955911
Overall balance (in percent of GDP)1.31.12.6-2.6-1.5-5.5
Source: Data provided by the Malaysian authorities.

Refers to revised budget plans presented in July 1998.

Excludes net lending shown in the current budget.

Includes reimbursements to state governments.

Net of claims and deposits from Pension Trust Fund (which are included in monetary survey figures).

Insurance companies are currently required to hold 25 percent of assets in government securities.

Source: Data provided by the Malaysian authorities.

Refers to revised budget plans presented in July 1998.

Excludes net lending shown in the current budget.

Includes reimbursements to state governments.

Net of claims and deposits from Pension Trust Fund (which are included in monetary survey figures).

Insurance companies are currently required to hold 25 percent of assets in government securities.

Table 19.Malaysia: Operations of Statutory Bodies, 1995-99(In millions of ringgit)
BudgetPrel.Budget
19951996199719981999
Total revenue6,7657,1227,6517,7267,7268,434
Own revenue2,2252,3652,4913,2353,2353,973
Transfers from the federal government4,5404,7575,1604,4914,4914,461
Total expenditure5,5386,14363786,38363836,275
Operating expenditure3,3194,1134,0994,7744,7744,762
Development expenditure2,2192,0302,2791,6091,6091,513
Overall balance1,2279791,2731,3431,3432,159
Financing (net)-1,227-979-1,273-1,343-1,343-2,159
External-167-174-177-246-246-237
Domestic-365366-9-386-388-324
Net borrowing from federal government434343555350
Other-408323-52-441-441-374
Change in assets (increase -)-695-1,171-1,087-711-709-1,598
Memorandum items:
Current balance3,4463,0093,5522,9522,9523,672
Overall balance (in percent of GDP)0.60.40.50.50.50.8
Source: Data provided by the Malaysian authorities.
Source: Data provided by the Malaysian authorities.
Table 20.Malaysia: Operations of State Governments, 1995–99(In millions of ringgit)
BudgetPrel.Budget
19951996199719981999
Revenue and grants8,2619,4949,6039,3568,4217,725
Own revenue6,7987,9748,0247,7086,6686,273
Transfers from:1,4631,5201,5791,6481,7531,452
Federal government1,4631,5201,5791,6481,7531,452
Statutory bodies000000
Local governments000000
NFPEs000000
Expenditure7,6408,5609,0959,0498,5907,932
Operating expenditure4,1674,9564,9884,6064,1234,665
Transfers to:324478496859859774
Federal government000000
Statutory bodies000000
Local governments324478496859859774
NFPEs000000
Development expenditure and net lending3,4733,6044,1074,4434,4673,267
Direct development expenditure3,7933,5793,9844,2864,1462,911
Transfers to:859580929193
Federal government000000
Statutory bodies000000
Local governments859580919193
NFPEs000100
Net lending-32025123157321356
Local governments13-71111517
Other-33332122146306339
Overall balance621934508307-169-207
Financing (net)-621-934-508-307169207
External000100
Domestic-621-934-508-307169207
Borrowing from federal government247261638273242203
Other borrowing including change in assets-868-1,195-1,146-580-734
Memorandum items:
Current balance4,0944,5384,6154,7504,2983,060
Overall balance (in percent of GDP)0.30.40.20.1-0.1-0.1
Source: Data provided by the Malaysian authorities.
Source: Data provided by the Malaysian authorities.
Table 21.Malaysia: Operations of Local Governments, 1995–99(In millions of ringgit)
BudgetPrel.Budget
19951996199719981999
Total revenue2,8723,1083,2105,1445,1445,198
Own revenue2,2942,3642,5094,0294,0294,107
Transfers from:5787447011,1151,1151,091
Federal government169171125165165224
Statutory bodies000000
State governments409573576950950867
NFPEs000000
Total expenditure2,8653,0033,2655,5155,5155,472
Current expenditure2,1052,1402,4473,6803,6803,673
Transfers to:000000
Federal government000000
Statutory bodies000000
State governments000000
NFPEs000000
Development expenditure7608638181,8351,8351,799
Overall balance7105-55-371-371-274
Financing (net)-7-10555371371274
External000000
Domestic-7-10555371371274
Borrowing from federal government-12-8-8-11-17-15
Borrowing from state governments13-71111517
Other borrowing including change in assets-8-9062371373272
Memorandum items:
Current balance7679687631,4641,4641,525
Overall balance (in percent of GDP)0.00.00.0-0.1-0.1-0.1
Source: Data provided by the Malaysian authorities.
Source: Data provided by the Malaysian authorities.
Table 22.Malaysia: General Government Operations, 1995–99 1/(In millions of ringgit)
Budget 2/Prel.Budget
19951996199719981999
Total revenue and grants62,47471,84979,13770,42170,80665,042
Federal government51,15759,14666,11355,44956,87450,689
Statutory bodies2,2252,3652,4913,2353,2353,973
State governments6,7987,9748,0247,7086,6686,273
Local governments2,2942,3642,5094,0294,0294,107
Total expenditure and net lending57,48166,86669,62676,12973,87278,735
Total current expenditure42,56351,51851,83153,96051,68356,908
Federal government33,29640,78740,79341,75939,96544,582
Statutory bodies3,3194,1134,0994,7744,7744,762
State governments3,8434,4784,4923,7473,2643,891
Local governments2,1052,1402,4473,6803,6803,673
Total direct development expenditure 3/15,98314,85417,57820,63121,19721,728
Federal government9,2968,47710,57712,99213,69815,598
Statutory bodies2,2192,0302,2791,6091,6091,513
State governments3,7083,4843,9044,1954,0552,818
Local governments7608638181,83518351799
Net lending-4167495661,9381,862599
Adjustments for accounts payable-649-255-349-400-870-500
Overall balance4,9934,9839,511-5,708-3,066-13,693
Financing-4,993-4,983-9,5115,7083,06613,693
External-2,018-2,160-1,6901,8511,850-237
Domestic (including change in assets)-2,975-2,823-7,8213,8571,21613,930
Memorandum items:
Current balance19,8254,89527,25316,41619,0788,089
Overall balance (in percent of GDP)2.32.03.5-2.0-1.1-4.8
Net lending-903-1,0785641,615432-1,261
Federal government (other)-570-1,1104421,469126-1,600
State governments (other)-33332122146306339
Source: Data provided by the Malaysian authorities.

Includes federal, state, and local governments, and the statutory bodies.

Figures for the federal government refer to revised budget plans presented in July 1998.

Net of transfers.

Source: Data provided by the Malaysian authorities.

Includes federal, state, and local governments, and the statutory bodies.

Figures for the federal government refer to revised budget plans presented in July 1998.

Net of transfers.

Table 23.Malaysia: Operations of Nonfinancial Public Enterprises (NFPEs), 1995–99 1/(In millions of ringgit)
BudgetPrel.Budget
19951996199719981999
Operating surplus16,33920,7622236726,5942434924,052
Transfers from;3474345204181,797100
Federal government3474345204181797100
Development expenditure13,63015,51222,18122,45625,77724,791
Overall balance2,7095,250864,138-1,528-739
Financing-2,709-5350-86-4,1381,528739
External6,6962,8447,0452,1003,5003,500
Domestic-9,405-8,094-7,131-6,238-1,972-2,761
Borrowing from federal government4871,8272-6,238-1,972-2,761
Borrowing from state governments000100
Other (including changes in assets)-9,892-9,921-7,133-100
Memorandum items:
Operating surplus net of transfers15,99220,32821,74726,17622,45223,952
Current balance16,33920,7622236726,5942434924,052
Current balance (in percent of GDP)7.58.38.19.58.78.5
Development expenditure (in percent of GDP)6.26.28.18.09.28.8
Overall balance (in percent of GDP)1.22.10.01.5-0.5-0.3
Source: Data provided by the Malaysian authorities.

As a result of privatization, the number of enterprises declined from 32 in 1995, to 31 in 1996, and to 28 in 1997.

Source: Data provided by the Malaysian authorities.

As a result of privatization, the number of enterprises declined from 32 in 1995, to 31 in 1996, and to 28 in 1997.

Table 24.Malaysia: Consolidated Public Sector, 1995–99 1/(In millions of ringgit)
Budget 2/Prel.Budget
19951996199719981999
Total revenue and grants 3/78,46692,177100,88496,59793,25888,994
Federal government51,15759,14666,11355,44956,87450,689
Statutory bodies2,2252,3652,4913,2353,2353,973
State governments6,7987,9748,0247,7086,6686,273
Local governments2,2942,3642,5094,0294,0294,107
NFPE operating surplus15,99220,32821,74726,17622,45223,952
Total expenditure and net lending70,27780,11791,28597,84396,422101,566
Total current expenditure 3/42,56351,51851,83153,96051,68356,908
Federal government33,29640,78740,79341,75939,96544,582
Statutory bodies3,3194,1134,0994,7744,7744,762
State governments3,8434,4784,4923,7473,2643,891
Local governments2,1052,1402,4473,6803,6803,673
Total direct development expenditure 3/29,26629,93239,23942,66845,17746,419
Federal government8,9498,04310,05712,57411,90115,498
Statutory bodies2,2192,0302,2791,6091,6091,513
State governments3,7083,4843,9044,1944,0552,818
Local governments760863818183518351799
NFPEs13,63015,51222,18122,45625,77724,791
Net lending-903-1,0785641,615432-1,261
Adjustment for accounts payable-649-255-349-400-870-500
Overall public sector balance8,18912,0609,599-1,246-3,164-12,572
Financing-8,189-12,060-9,5991,2463,16412,572
External4,6786845,3553,9515,3503,263
Domestic (including changes in assets)-12,867-12,744-14,954-2,705-2,1869,309
Memorandum items:
Current balance 4/35,81740,57149,00042,59241,52432,041
Current balance (percent of GDP)16.416.317.815.214.911.3
Overall balance (percent of GDP)3.74.83.5-0.4-1.1-4.4
Source: Data provided by the Malaysian authorities.

Consists of the federal, state, and local governments, statutory bodies, and NFPEs.

Figures for the federal government refer to revised budget plans presented in July 1998.

Net of transfers.

Excludes capital revenue and foreign grants.

Source: Data provided by the Malaysian authorities.

Consists of the federal, state, and local governments, statutory bodies, and NFPEs.

Figures for the federal government refer to revised budget plans presented in July 1998.

Net of transfers.

Excludes capital revenue and foreign grants.

Table 25.Malaysia: Outstanding Federal Government Debt, 1994–98
Est.Prel.
19941995199619971998
(In millions of ringgit)
Domestic debt78,26078,03879,21176,96888,197
Government securities69,76969,76971,06069,01277,012
Treasury bills4,3204,3204,3204,3204,320
Other4,1713,9493,8313,6366,865
Foreign debt14,81913,33110,47012,95114,924
International institutions and foreign governments 1/7,4687,1005,3116,4797,232
Market loans7,3516,2315,1596,4727,692
Total debt93,07991,36989,68189,919103,121
(In percent of GDP)
Domestic debt41.135.731.728.031.6
Government securities36.731.928.525.127.6
Treasury bills2.32.01.71.61.5
Other2.21.81.51.32.5
Foreign debt7.86.14.24.75.4
International institutions and foreign governments 1/3.93.22.12.42.6
Market loans3.92.82.12.42.8
Total debt48.941.835.932.737.0
Source: Data provided by the Malaysian authorities.

Consists of project loans and suppliers’ credit.

Source: Data provided by the Malaysian authorities.

Consists of project loans and suppliers’ credit.

Table 26.Malaysia: Operations of the Employees’ Provident Fund, 1994–98(In millions of ringgit)
Prel.
19941995199619971998
Receipts14,90016,98521,13122,99424,879
Contributions8,79210,32412,89914,61416,499
Investment income5,6896,5998,1378,2788,380
Other41962951020
Expenditure2,7343,3313,9805,9168,969
Withdrawals2,5923,1603,7685,6798,708
Operating expenditure142171212237261
Balance12,16613,65417,15117,07815,910
In percent of GDP6.46.26.96.25.7
Holding of government securities40,72139,15038,75438,06845,670
Registered employees (in thousands)7,3007,7608,0508,2758,512
Registered employers (in thousands)236256276296297
Source: Data provided by the Malaysian authorities.
Source: Data provided by the Malaysian authorities.
Table 27.Malaysia: Monetary Authorities’ Account, 1994–99 1/
Old Format
199419951996199719981996199719981999
Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1
(In millions of ringgit; end of period)
Net foreign assets 2/68,17363,77070,00560,04699,42170,00572,04270,62562,31260,04657,99359,30981,48499,421105,285
Net domestic assets-27,691-15,80059129,880-44,2295914,50412,84319,12829,8809,3273,423-32,299-44,229-33,776
Net claims on federal government-5,488-6,223-10,078-5,712-30,435-10,078-3,866-3,210-8,274-5,712-4,265-9,208-16,024-30,435-24,022
Net claims on banks and NFIs 3/3,4433,2503,67627,4512,5123,6762,59810,12623,36727,45111,73312,1634,7322,5122,287
Claims on private sector3,3194,0728,90410,17518,1338,9048,9658,8398,93110,1759,6559,07911,38118,13319,957
Other Hems net 4/-28,964-16,899-1,911-2,033-34,439-1,911-3,192-2,911-4,896-2,033-7,796-8,612-32,388-34,439-31,998
Reserve money98,281116,25070,59689,92655,19270,59676,54683,46881,44089,92667,32062,73249,18555,19271,509
Amounts due to banks and NFIs17,17018,9136,1377,03019,0146,1377,65810,9194,9247,0302,7481,09412,24619,01435,602
Monetary base40,55548,66864,45982,89636,17864,45968,88872,54976,51582,89664,57261,63836,93936,17835,908
Currency in circulation17,17018,91321,06624,53220,54121,06621,56721,88123,32324,53222,97421,99920,75120,54120,927
Statutory and excess reserves23,38529,75543,39358,36415,63643,39347,32150,66853,19358,36441,59839,63916,18815,63614,980
(12-month percentage change)
Net foreign assets 2/, 5/-11.5-4.510.2-14.143.8-14.1-18.4-13.623.543.870.2
Net domestic assets 5/28.612.123.941.5-82.441.56.3-11.3-63.1-82.4-64.0
Net claims on federal government 5/-4.2-0.73.66.2-27.56.2-0.5-7.2-9.5-27.5-293
Net claims on banks 5/58.8-0.2-3.133.7-27.733.711.92.4-22.9-27.7-14.0
Claims on private sector38.322.711.414.30.014.37.72.727.478.2106.7
Other items net 4/, 5/-27.312.322.6-0.2-36.0-0.2-6.0-6.8-33.8-36.0-36.0
Reserve money 6/36.918.315.027.4-38.627.4-1Z1-24.8-39.6-38.66.2
Amounts due to banks and NFIs17.210.2-70.814.5170.514.5-64.1-90.0148.7170.51195.4
Monetary base42.020.037.328.6-56.428.6-6.3-15.0-51.7-56.4-44.4
Currency in circulation17.210.211.416.5-16.316.56.50.5-11.0-16.3-8.9
Statutory and excess reserves68.127.253.734.5-73.234.5-12.1-21.8-69.6-73.2-64.0
Source: Data provided by the Malaysian authorities.

Bank Negara Malaysia accounts plus Treasury IMF operations. Data are reported according to the Fund’s monetary statistics framework.

1997 figures exclude valuation gains on foreign currency reserves.

Nonmonetary financial institutions (finance companies, merchant banks, and discount houses).

Includes BNM deposits at banks and NFIs.

Contribution to reserve money growth.

The Fund’s definition of reserve money includes monetary base (which corresponds conceptually to the BNM definition of reserve money) plus amounts due to banking and nonfinancial institutions.

Source: Data provided by the Malaysian authorities.

Bank Negara Malaysia accounts plus Treasury IMF operations. Data are reported according to the Fund’s monetary statistics framework.

1997 figures exclude valuation gains on foreign currency reserves.

Nonmonetary financial institutions (finance companies, merchant banks, and discount houses).

Includes BNM deposits at banks and NFIs.

Contribution to reserve money growth.

The Fund’s definition of reserve money includes monetary base (which corresponds conceptually to the BNM definition of reserve money) plus amounts due to banking and nonfinancial institutions.

Table 28.Malaysia: Deposit Money Banks-Consolidated Statement of Assets and Liabilities of Commercial Banks and Bank Islam, 1994–99 1/
Old Format
199419951996199719981996199719981999
Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1
(In millions of ringgit; end of period)
Assets236,035287,836332,638443,260428,412332,638359,440396,636416,482443,260426,077418,639416,831428,412432,280
Foreign assets 2/10,54210,32011,04323,37820,96711,04314,22014,30918,30323,37825,60526,38123,64120,96719,015
Reserves15,81020,45930,72942,26613,67930,72933,49436,73238,06342,26630,79229,34114,38813,67913,489
Claims on general government11,12710,18211,69017,35722,85711,69011,78712,78613,97317,35718,51819,55718,82122,85722,924
Claims on private sector141,965185,472224,084276\381284,692224,084238,252253,272264,396276,381275,137277,407281,975284,692280,142
Claims on NFIs 3/14,46318,6318,92116,05123,6728,92112,80813,59015,28716,05120,85622,20523,46323,67223,131
Other assets42,12942,77246,17267,82762,54546,17248,87965,94766,46167,82755,16843,74854,54362,54573,579
Liabilities236,035287,836332,638443,260428,412332,638359,440396,636416,482443,260426,077418,639416,831428,412432,280
Foreign liabilities 2/17,00015,87328,42848,02434,81028,42835,74939,51642,83748,02440,54836,60830,81534,81034,418
Liabilities to general government2,8584,14924,32726,90629,38024,32727,80027,63428,23526,90628,61829,23629,64129,38032,129
Demand deposits 4/31,72336,19137,75238,49533,47037,75239,30739,41339,72338,49531,85530,26631,26833,47032,056
Time and savings deposits 4/99,749124,935149,814193,656208,513149,814158,026165,090172,597193,656197,041198,619200,740208,513214,692
Repurchase agreements9,2029,61211,09012,41414,15811,09011,29213,39013,81312,41411,64910,52811,49014,15814,513
Bonds and money market instruments26,52938,65520,86923,31519,65520,86921,48925,84123,93023,31523,50223,35019,56419,65516,791
Credit from central bank-18,079-10,1901,71018,055121,71095,64617,94618,0559,7796,2611,587126
Credit from NFIs 3/2,1162,8136,72315,1488,4746,7236,1008,7398,26415,14812,1449,00811,4328,4747,054
Capital and reserves23,81329,47829,90140,68240,68229,90135,25444,26538,25040,68240,85838,50038,05940,68240,683
Other liabilities41,12436,32022,02426,56639,25722,02424,41427,10130,88726,56630,08136,26342,23639,25739,938
(12-month percentage change)
Assets8.521.97.333.3-3.333.318.55.50.1-3.31.5
Foreign assets0.6-2.17.0111.7-10.3111.780.184.429.2-103-25.7
Claims on private sector16.030.6-93.723.33.023.315.59.56.63.01.8
Liabilities8.521.97.333.3-3.333.318.55.50.1-3.31.5
Foreign liabilities-46.0-6.637.568.9-27.568.913.4-7.4-28.1-27.5-15.1
Demand deposits8.914.123.32.0-13.12.0-19.0-23.2-21.3-13.10.6
Time and savings deposits10.625.226.429.37.729.324.720316.37.79.0
Source: Data provided by the Malaysian authorities.

Data are reported according to the Fund’s monetary statistics framework.

Valued at current exchange rates.

Nonmonetary financial institutions (finance companies, merchant banks, and discount houses).

Includes deposits of nonresidents, state and local governments, statutory bodies, and the Employees Provident Fund.

Source: Data provided by the Malaysian authorities.

Data are reported according to the Fund’s monetary statistics framework.

Valued at current exchange rates.

Nonmonetary financial institutions (finance companies, merchant banks, and discount houses).

Includes deposits of nonresidents, state and local governments, statutory bodies, and the Employees Provident Fund.

Table 29.Malaysia: Monetary Survey, 1994–99 1/
Old Format
199419951996199719981996199719981999
Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1
(In millions of ringgit; end of period)
Net foreign assets 2/61,71458,21652,62035,40185,57852,62050,51345,41837,77835,40143,05049,08274,31085,57889,882
Net domestic assets116,528157,013201,050274,946214,190201,050217,300236,155252,964274,946256,055245,091215,544214,190214,928
Domestic credit148,065189,355232,447288,079287,006232,447249,061264,976272,776288,079285,152283,636285,725287,006285,143
Net claims on general government2,781-189932,031-13,705932,4953,352-782,0311,819-1,403-5,530-13,705-12,850
Claims on private sector145,284189,544232,353286,049300,711232,353246,566261,625272,854286,049283,333285,040291,255300,711297,993
Other items net-31,537-32,342-31,396-13,133-72,816-31,396-31,761-28,821-19,812-13,133-29,097-38,545-70,181-72,816-70,216
Broad money (M2)175,994198,964253,671310,347299,768253,671267,812281,573290,742310,347299,105294,174289,853299,768304,809
Narrow money (Ml)53,92847,33077,52385,05960,04877,52382,62784,87485,55985,05970,61366,94858,32560,04858,731
Reserve money64,04661,28770,59689,92655,19270,59676,54683,46881,44089,92667,32062,73249,18555,19271,509
Less: Banknotes and coins1,2861,4802,0873,1732,3802,0872,1502,7993,2403,1732,4862,3142,7292,3802,632
Less: Bank deposits at Bank Negara40,55548,66849,53065,39434,65149,53054,97961,58758,11765,39444,34740,73328,43434,65150,582
Plus: Bank demand deposits 3/31,72336,19158,54463,69941,88658,54463,21165,79265,47663,69950,12547,26440,30341,88640,435
Quasi-money 3/, 4/120,726134,551162,753198,875214,436162,753167,282176,608183,577198,875202,681202,977209,721214,436222,890
Other financial liabilities 5/13,10017,08313,39526,41225,28413,39517,90320,09221,60626,41225,81124,24821,80725,28423,189
(12-month percentage change)
Net foreign assets 2/, 6/3.6-2.00.5-6.816.2-6.8-2.81.312.616.215.7
Net domestic assets 6711.223.0-89.829.1-19.629.114.53.2-12.9-19.6-13.8
Domestic credit13.027.9-95.423.9-0.423.914.57.04.7-0.40.0
Net claims on federal government 6/-2.0-1.7-3.70.8-5.10.8-0.3-1.7-1.9-5.1-4.9
Claims on private sector16.530.5-91.423.15.123.114.98.96.75.15.2
Other items net 671.5-0.50.97.2-19.27.21.0-3.5-17.3-19.2-13.7
M20.513.116.422.3-3.422.311.74.5-0.3-3.41.9
M1-23.9-1X2-2.79.7-29.49.7-14.5-21.1-31.8-29.4-16.8
Source: Data provided by the Malaysian authorities.

Consolidation of the accounts of the monetary authorities, commercial banks, and Bank Islam. Data are reported according to the Fund’s monetary statistics framework. See footnote 1 to Table 31.

1997 figures exclude valuation gains on official foreign currency reserves; financial institutions’ net foreign assets valued at current exchange rates.

Includes deposits of nonresidents, state and local governments, statutory bodies, and the Employees Provident Fund.

Quasi-money is equal to Bank Negara time deposits plus bank time, and savings deposits plus bank repos.

Includes bank negotiable instruments of deposit

Contribution to M2 growth.

Source: Data provided by the Malaysian authorities.

Consolidation of the accounts of the monetary authorities, commercial banks, and Bank Islam. Data are reported according to the Fund’s monetary statistics framework. See footnote 1 to Table 31.

1997 figures exclude valuation gains on official foreign currency reserves; financial institutions’ net foreign assets valued at current exchange rates.

Includes deposits of nonresidents, state and local governments, statutory bodies, and the Employees Provident Fund.

Quasi-money is equal to Bank Negara time deposits plus bank time, and savings deposits plus bank repos.

Includes bank negotiable instruments of deposit

Contribution to M2 growth.

Table 30.Malaysia: Nonmonetary Financial Institutions - Consolidated Statement of Assets and Liabilities of Finance Companies, Merchant Banks, and Discount Houses, 1994–99 1/
Old Format
199419951996199719981996199719981999
Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1
(In millions of ringgit; end of period)
Assets105310130,100162,381208,568176,064162,381174376186,920202,156208,568196,145185,178178,196176\064175,559
Foreign assets 2/1672093721,0691,0143723706529361,0691,0631,0981,0421,0141,149
Reserves1039412,28014,86519,7114,51614,86516,17117,15218,60419,71113,57012,9344,8544,5164,444
Claims on general government3,0732,99543543,6526,61643544,4714,1293,7573,6524,3134,7055,7636,6166,947
Finance companies1,9362,031-6662,4633,9826667202,9382,6372,4633,0273,2923,9093,9824,374
Merchant banks5464313,0538781,6703,0533,0126746978789631,0441,3361,6701,632
Discount houses591533635311964635740517423311323369519964940
Claims on private sector71,02491,554117,192144,463132,249117,192126,524135,238145,788144,463143,597138,738133,401132,249126,178
Finance companies51,68165,64189,948110,34995,22689,94896,220104344110,448110349107,792104,04497,69995,22690,466
Merchant banks13,07415,90721,47126,89528,01521,47123,88625,18527,50926,89527,63127,49227,52428,01526,819
Discount houses6,26910,00614,17816,78416,40714,17813,76714,86917,53216,78415,62415,03414,90516,40714,381
Claims on commercial banks9,1359,1482,1994,1073,5622,1992,9163,4013,0184,1074,8563,6444,8723,5623,930
Finance companies6,6427,3951,2771,7422,18613771,4281,4741,0491,7422,2301,7233,0662,1862,613
Merchant banks2,2611,4687382,2181,0247381,1761,7461,85523181,5101,11613531,0241,177
Discount houses233285168140322168159178841401,11370244132295
Other assets11,51713,91423,40035,56628,10623,40023,82526,34830,05235,56628,74724,05928,26328,10632,911
Liabilities105310130,100162381208,568176,064162381174,276186,920202,156208,568196,145185,178178,196176,064175,559
Foreign liabilities 2/30628751,73513258751,86013392,0991,7351,8801,6731,4511,3251,583
Liabilities to federal government7071,21311,63612,45912,22911,63613,94015,18814,54612,45913,33512,60011,95512,22913,474
Time and savings deposits 3/61,07368,69282,0149033594,88182,0148638192,86992,3509033596,74896,53394,79594,88197,055
Finance companies4739654,2126133669,79373,68061,53667,13271,51572,03969,79376,41777,09574,53073,68073,769
Merchant banks8,9648,88012,93714,15414,38312,93712,16714,61614,39614,1541437114,23013,8911438316,230
Discount houses4,7135,6006,6845,4115,9776,6846,2285,7994,9565,4115,07643985,6675,9776,045
Repurchase agreements33275,0794,6766,69953164,67643204,0324,9996,6995,5715,8874,5155,5163,613
Bonds and money market instruments7,55611,0978001,6351,1688009031,4391,6821,6351,3841,3041,2661,1681,162
Credit from commercial banks13,26719,09431,98143,72022,47031,98133,55034,74047,27243,72036,20325,08024,07122,47019,487
Finance companies5,5621037016,41824,6818,01416,41817,2691837925,40924,68118,47512,839113158,0147,128
Merchant banks4,9694,9799,028103306,8779,02810,164931611,962103308,6016,2496,3086,8776,137
Discount houses2,7363,74563358,8087,5796,5356,1177,0459,9018,8089,1265,9916,24873796,222
Capital and reserves8,58810,77214,72120,74121,00614,72115,47617,38418,05920,74120,95720,05719,90321,00621332
Other liabilities10,76214,09115,67831,24617,46915,67817,94619,72921,1493134620,06822,04320,24017,46917,952
(12-month percentage change)
Assets19.523.530.128.4-15.628.412.5-0.9-11.9-15.6-10.5
Foreign assets2L625.173.2187.5-5.1187.5187.368.511.3-5.18.1
Claims on private sector19.028.932.323.3-8.523.313.52.6-8.5-8.5-12.1
Liabilities19.523.530.128.4-15.628.412.5-0.9-11.9-15.6-10.5
Foreign liabilities-32.9103.9-30.698.3-23.698.31.18.7-30.8-23.6-15.8
Time and savings deposits8.412.526.110.15.010.112.03.92.65.00.3
Source: Data provided by the Malaysian authorities.

Data are reported according to the Fund’s monetary statistics framework.

Valued at current exchange rates.

Includes deposits of nonresidents, state and local governments, statutory bodies, and the Employees Provident Fund

Source: Data provided by the Malaysian authorities.

Data are reported according to the Fund’s monetary statistics framework.

Valued at current exchange rates.

Includes deposits of nonresidents, state and local governments, statutory bodies, and the Employees Provident Fund

Table 31.Malaysia: Banking Survey, 1994–99 1/
Old Format
199419951996199719981996199719981999
Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1
(In millions of ringgit; end of period)
Net foreign assets 2/61,85158,36352,11734,73585,26752,11749,02344,53136,61534,73542,23348,50773,90085,26789,448
Net domestic assets181,462229,300290,932377,708320,509290,932311,675336,063355,939377,708365,160353,912320,372320,509322,691
Domestic credit221,455282,690338,537420,037410,539338,537359,274386,000403,741420,037415,695410,980409,780410,539402,100
Net claims on general government5,1471,592-7,189-6,776-19,318-7,189-6,974-7,707-10,867-6,776-7,204-9,299-11,722-19,318-19,377
Claims on private sector216,308281,098345,725426,813429,857345,725366,248393,708414,608426,813422,899420,278421,501429,857421,476
Other items net-39,993-53,390-47,605-42,328-90,030-47,605-47,598-49,937-47,802-42,328-50,536-57,068-89,408-90,030-79,409
Total liquidity (M3)241,067271,399343,049412,443405,776343,049360,698380,593392,554412,443407,392402,419394,271405,776412,139
Monetary liabilities46,01337,54361,92464,39754,85161,92465,69166,76666,07264,39756,30953,39352,85754,85153,731
Narrow money (Ml) 3/53,92847,33077,52385,05960,04877,52382,62784,87485,55985,05970,61366,94858,32560,04858,731
Less: Intersystem demand deposits5616019031,1528699039421,1581,2141,152930799804869745
Less: NFI deposits at BNM 4/7,3549,18614,69619,5104,32814,69615,99516,94918,27319,51013,37312,7574,6654,3284,255
Broad quasi-money173,027207,873240,982282,373305,860240,982250,081263,978273,275282,373293,071296,110299,195305,860315,546
Quasi-money and bank repos 3/108,966134,551162,753198,875214,436162,753167,282176,608183,577198,875202,681202,977209,721214,436222,890
NFI time and savings deposits 3/, 4/61,07368,69276,93584,31789,76276,93581,36886,64587,42884,31789,60090,94789,84589,76292,374
NFI repos 4/3,3275,0794,6766,6995,5164,6764,2204,0324,9996,6995,5715,8874,5155,5163,613
Less: Intersystem fixed deposits3394493,3827,5183,8543,3822,7893,3062,7297,5184,7813,7024,8863,8543,331
Other financial liabilities 5/22,02725,98340,14365,67345,06540,14344,92649,84953,20765,67358,01352,91642,21945,06542,861
Memorandum items:
Broad money (M2)175,994198,964253,671310,347299,768253,671267,812281,573290,742310,347299,105294,174289,853299,768304,809
Narrow money (Ml)53,92847,33077,52385,05960,04877,52382,62784,87485,55985,05970,61366,94858,32560,04858,731
(12-month percentage change)
Net foreign assets 2/, 6/2.7-1.40.4-5.112.3-5.1-1.91.09.512.311.6
Net domestic assets 6/11.619.8-58.925.3-13.925.314.84.7-9.1-13.9-10.4
Domestic credit14.327.7-53.124.1-2.324.115.76.51.5-2.3-3.3
Net claims on federal government 6/-1.8-1.5-2.30.1-3.00.1-0.1-0.4-0.2-3.0-3.0
Claims on private sector17.330.0-51.123.50.723.515.56.71.70.7-0.3
Other items net 6/-0.3-5.6-3.61.5-11.61.5-0.8-1.9-10.6-11.6-7.1
M33.512.619.120.2-1.620.212.95.70.4-1.61.2
M20.513.116.4223-3.422.311.74.5-0.3-3.41.9
M1-23.9-12.2-2.79.7-29.49.7-14.5-21.1-31.8-29.4-16.8
Source: Data provided by the Malaysian authorities.

Consolidation of the accounts of the monetary authorities, commercial banks, and Bank Islam, and NFIs (nonmonetary financial institutions, comprising finance companies, merchant banks, and discount houses). Note that data are reported according to the Fund’s monetary statistics framework, although this framework is currently being revised for Malaysia in light of the new report forms submitted by financial institutions to Bank Negara.

1997 figures exclude valuation gains on official foreign currency reserves; financial institutions’ net foreign assets valued at current exchange rates.

Includes deposits of nonresidents, state and local governments, statutory bodies, and the Employees Provident Fund.

Nonmonetary financial institutions (finance companies, merchant banks, and discount houses).

Includes bank and NFI negotiable instruments of deposit

Contribution to M3 growth.

Source: Data provided by the Malaysian authorities.

Consolidation of the accounts of the monetary authorities, commercial banks, and Bank Islam, and NFIs (nonmonetary financial institutions, comprising finance companies, merchant banks, and discount houses). Note that data are reported according to the Fund’s monetary statistics framework, although this framework is currently being revised for Malaysia in light of the new report forms submitted by financial institutions to Bank Negara.

1997 figures exclude valuation gains on official foreign currency reserves; financial institutions’ net foreign assets valued at current exchange rates.

Includes deposits of nonresidents, state and local governments, statutory bodies, and the Employees Provident Fund.

Nonmonetary financial institutions (finance companies, merchant banks, and discount houses).

Includes bank and NFI negotiable instruments of deposit

Contribution to M3 growth.

Table 32.Malaysia: Money and Banking Indicators, 1994–99
19941995199619971998199719981999
Q1Q2Q3Q4Q1Q2Q3Q4Q1
(In millions of ringgit)
Interbank transactions volume818.9857.2888.3527.7369.2223.1276.8412.3527.7606.7425.0422.8369.2606.7
(In percent; end of period)
Interest rates
Interbank rate (overnight)4,906.507.158.305.416.437.185.718.309.6210.196,645.415.23
Interbank rate (3-month)5.486.657.348.606.487.367.717.658.6010.9111.077,756.486.19
Treasury bill rate (3-month)4,505.806.486.765.386,316.486.006.766.089.986.265.385.40
Deposit rate (12-month) 2/6.156.897.269.335.747.257.387.799.339.910.246.135.745.4
Average base lending rate 1/6.838.039.1810.338.049.249.509.6110.3311.9612.278.898.048.04
Average lending rate 1/8.249.2810.1211,519.7210.1410.6810.6811.5113.3313.5111.099.729.56
Loan/deposit ratio 2/
Commercial banks83.788.989.391.992.992.192.694.091.994.297.296.992.990.1
Finance companies87.489.790.896288.689.292.097.496.291.089.690.888.686.1
Merchant banks87.980.387.484.385.688.687.787.489.193.888.884.375.7
Share of loam to broad property sector 2/
Commercial banks26.326.530.431.833.329.730.631.731.832.332.733.033.334.2
Finance companies26.324.024.024.728.424.324.122.824.725.626.927.828.428.3
Merchant banks21.622.225.832.732.128.630.731.932.730.332.633.332.131.4
Risk-weighted capital ratio (RWCR) 3/
Commercial banks11.311.110.810.311.711.012.211.010.311.011.010.411.712.1
Finance companies10.19.79.810.311.19.910.810.610.310.710.910.611.112.0
Merchant banks8.211.911.713.315.211.913.412.913.311.811.611.715.214.5
(Number)
Institutions not meeting the minimum RWCR 3/
Commercial banks100110001I311
Finance companies3101500012475
(Percent of total loans)
Nonperforming loans 4/
Commercial banks6.94.93.64.915.03.23.53.34.97.610.915.515.016.4
Finance companies9.96.64.79.228.14.24.35.19.213.617.323.628.127.1
Merchant banks9.57.81.74.832.41.72.02.04.88.013.323.132.436.5
Banking system7.85.53.76.018.93.33.63.76.09.112.617.818.919.8
Banking system incl. NPLs sold to Danaharta 5/(17.75)(21.34)(24.13)
General provisions 6/
Commercial banks1.71.71.92.22.32.02.02.12.22.42.32.12.32.4
Finance companies1.51.61.61.72.11.61.61.61.71.81.81.82.11.6
Merchant banks1.81.71.81.92.21.71.81.81.92.02.12.12.22.1
Banking system1.71.71.82.02.31.91.91.92.02.22.22.02.32.2
(Percent of no performing loans)
Total outstanding bad-debt provision 7/
Commercial banks78.685.098.379.753.7107.096.3104.279.756.156.248.753.750.0
Finance companies75.284.087.946.932.083.278.266.146.937.634.231.632.031.2
Merchant banks102.890.2155.668.034.5149.7127.3124.568.061.950.038.934.536.1
Total79.285.196.466.244.7100.691.890.966.249.548.642.844.743.1
Memorandum Hems:
Number of institutions
Commercial banks3838383535373635353535353532
Finance companies4040403933404039393939373331
Source: Data provided by the Malaysian authorities.

Commercial banks.

Deposits include repurchase agreements and negotiable instruments of deposit; loans exclude housing loans sold to Cagamas Berhad, the national mortage corporation.

The minimum RWCR is currently 8 percent for all institutions; before 1994, it was 8 percent for finance companies and domestic banks, and 10 percent for foreign banks. Compliance was mandatory by end-December 1992.

NPLs (including those sold to Danaharta, the national asset management corporation) as a percent of total loans including housing loans sold to Cagamas and NPLs sold to Danaharta. Figures reported through 1997 4Q were under the old system of classification, which counted loans as nonperforming if payments were overdue for six months or more. Beginning 1998 Q1, figures are reported using a 3-month criterion. Using this criterion, the 1997 Q4 figures would be 5.3 percent and 9.9 percent for commercial banks and finance companies, respectively.

Loans were first sold to Danaharta beginning 1998 Q3.

In percent of total loans including housing loans sold to Cagamas Berhad, minus interest-in-suspense and specific provisions; minimum requirement is 1.5 percent (1 percent prior to January 1, 1998).

Aggregate of provisions for general, specific, and interest-in-suspense.

Source: Data provided by the Malaysian authorities.

Commercial banks.

Deposits include repurchase agreements and negotiable instruments of deposit; loans exclude housing loans sold to Cagamas Berhad, the national mortage corporation.

The minimum RWCR is currently 8 percent for all institutions; before 1994, it was 8 percent for finance companies and domestic banks, and 10 percent for foreign banks. Compliance was mandatory by end-December 1992.

NPLs (including those sold to Danaharta, the national asset management corporation) as a percent of total loans including housing loans sold to Cagamas and NPLs sold to Danaharta. Figures reported through 1997 4Q were under the old system of classification, which counted loans as nonperforming if payments were overdue for six months or more. Beginning 1998 Q1, figures are reported using a 3-month criterion. Using this criterion, the 1997 Q4 figures would be 5.3 percent and 9.9 percent for commercial banks and finance companies, respectively.

Loans were first sold to Danaharta beginning 1998 Q3.

In percent of total loans including housing loans sold to Cagamas Berhad, minus interest-in-suspense and specific provisions; minimum requirement is 1.5 percent (1 percent prior to January 1, 1998).

Aggregate of provisions for general, specific, and interest-in-suspense.

Table 33.Malaysia: Direction of Financial Institution Lending, 1996–98
199619971998199619971998199619971998
(In millions of ringgit; end of period)(Percentage change)(Share of total loans, in percent)
Primary industries 1/6,8608,9869,3916.531.04.52.12.12.3
Commercial banks5,0346,7047,3795.833.210.11.51.61.8
FCs and MBs 2/1,8262,2822,0138.524.9-11.80.50.50.5
Manufacturing53,44763,31163,2009.518.5-0.216.115.015.3
Commercial banks47,09954,95256,53211.116.72.914.113.013.7
FCs and MBs6,3488,3596,669-0.931.7-20.21.92.01.6
Electricity, gas, and water4,5194,4615,87920.5-1.331.81.41.11.4
Commercial banks4,1463,9445,08315.8-4.928.91.20.91.2
FCs and MBs373517797120.638.554.00.10.10.2
Commerce, restaurants, and hotels27,46334,94135,11128.127.20.58.28.38.5
Commercial banks23,97129,47830,26325.723.02.77.27.07.3
FCs and MBs3,4925,4634,84948.256.4-11.2