MALAYSIA: RM13.1 BLN DEFICIT IN BALANCE OF PAYMENTS FOR 4Q17
Last Updated: 2018-02-14
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KUALA LUMPUR, Malaysia Feb 14 (NNN-Bernama) – The overall balance of payments registered a deficit of RM13.1 billion in the fourth quarter of 2017 (4Q17) compared to a surplus of RM2.9 billion in the third quarter of the year, said Bank Negara Malaysia (BNM).(BNM is Malaysia’s central bank)

In its Quarterly Bulletin released today, BNM said, the current account surplus widened to RM12.9 billion in 4Q17, accounting for 3.7 per cent of gross national income (GNI), compared to RM12.5 billion in 3Q17.

"This was due to a larger goods surplus and lower deficit in the secondary income account which offset the higher deficits in the services and primary income accounts," it said.

For the full year, the current account surplus widened to RM40.3 billion, or 3.1 per cent of GNI, the highest since 2015 compared to 2.4 per cent of GNI in 2016.

Sustained strong export performance during the quarter has contributed to the increase in the goods surplus to RM34.1 billion compared to the preceding quarter, it said.

BNM said the services account, however, registered a larger deficit of RM6.9 billion, attributable mainly to the lower surplus in the travel account (RM7.9 billion) as travel receipts declined due to lower tourist per capita expenditure while the construction services deficit was also higher (RM4.3 billion) driven by higher construction services imports mainly in projects related to the oil & gas, utilities and transportation sectors.

It said the higher deficit in the primary income account (RM9.5 billion) was largely attributable to higher profits accrued to foreign investors in Malaysia, particularly in the mining and wholesale & retail trade services sub-sectors.

While the secondary income account registered a sizeable, albeit smaller deficit of RM4.8 billion with outward remittances amounted to RM8.6 billion driven by foreign worker remittances while inward remittances were sustained at RM3.8 billion, said BNM.

It said for 4Q17, the financial account registered a net inflow of RM5.0 billion compared to net outflow of RM1.2 billion in the preceding quarter.

"This was supported by portfolio investment inflows by both residents and non-residents, foreign direct investments (FDIs) and some liquidation of direct investments abroad (DIA) assets by Malaysian companies.

"These inflows were partially offset by outflows arising from banks’ liquidity and treasury management operations," said BNM.

The central bank said the portfolio investment account registered a net inflow of RM11.7 billion compared to net outflow of RM5.1 billion in 3Q17, attributed mainly to non-resident portfolio investments, which recorded a higher net inflow of RM7.7 billion.

The better-than-expected economic performance, higher corporate earnings and improvement in global oil prices provided support to investor sentiments in the domestic financial markets, it said.

On the other hand, resident portfolio investments also registered a net inflow of RM4 billion as domestic institutional investors liquidated some of their bond holdings abroad, it said.

For the direct investment account, BNM said, it registered a net inflow of RM5.1 billion on account of continued FDI inflows and a reversal of DIA flows during the quarter.

However the FDIs amounted to a smaller net inflow of RM2.8 billion compared to net inflow of RM11.2 billion in 3Q17, due mainly to lower equity capital injections from parent companies and a moderation in retained earnings.

"FDI inflows were channelled mainly into the services sector, particularly the real estate and wholesale and retail trade sub-sectors, followed by the mining and construction sectors,”it said.

DIA by Malaysian companies also recorded a net inflow of RM2.3 billion compared to net outflow of RM5.0 billion, due to a net liquidation of equity capital and a net repayment of intercompany loans from subsidiaries and affiliates abroad.

"The sectors which recorded inflows were the mining and services sectors, particularly the financial services sub-sector," said BNM.

Meanwhile, the other investment account recorded a larger net outflow of RM10.9 billion compared to RM3.3 billion in preceding quarter, due mainly to the placements of currency and deposits abroad by domestic financial institutions, it said.--NNN-BERNAMA