Malaysians are investing more abroad than what foreigners are investing in Malaysia, the country’s balance of payments figures indicate.
| Financial Account | RM million | Q3/09 | -11,078 | -24,198 | |
| Direct Investment Abroad | RM million | Q3/09 | -13,283 | -8,964 | |
| Direct Investment in Malaysia | RM million | Q3/09 | 3,565 | 863 | |
| Portfolio & Financial Derivatives – Net | RM million | Q3/09 | 18,580 | -9,933 | |
| Other Investment – Net | RM million | Q3/09 | -19,939 | -6,163 |
The “Financial Account” (IMF format) of Malaysia’s Balance of Payments - Source: Bank Negara. Figures in the middle are for the third quarter of 2009, compared to the second quarter (far right column). All figures in RM million.
Malaysians invested RM13.3 billion in stakes in companies abroad while foreigners invested RM3.6 billion in Malaysian firms during the third quarter of 2009.
Portfolio funds appear to have returned in a big way in the third quarter. Has the impact been felt in the country? Or does this represent just a return of portfolio funds seeking higher returns in emerging markets as a result of the low-interest rate regimes in developed nations that have introduced stimulus packages?
The ‘Other Investments – Net’ figure shows an outflow of RM19.9 billion, which warrants a closer look:
“The other investment item is a residual category that includes all financial transactions not covered under direct investment, portfolio investment, financial derivatives or reserve assets … Other investment can be further subdivided into (i) trade credits, (ii) loans/currency and deposits and (iii) other assets/other liabilities.” (European Central Bank)
The negative figure (in ‘Other Investments – Net’) may be due to bank loan repayments by Malaysian residents to foreign banks or it could be due to Malaysian banks giving out loans to foreigners.
Petronas transactions could also affect the financial account.
Another possibility: the Malaysian Insider reports interest among Malaysians in foreign property has picked up:
Interest in foreign properties has surged among Malaysians thanks to favourable investment conditions at the destination countries, coupled with uncertainties on the domestic front.
… the Australian Trade Commission says Malaysians invested about A$4.9 billion (RM15.3 billion) in Australian property in 2008.
The amount invested in overseas property also suggests a continuing trend of brain and money drain from the country, as those who can afford to purchase property in Australia and UK tend to be educated and skilled and many do so with an eye on migration, either for themselves or for their children. It also contributes to the outflow of capital from Malaysia, which has exceeded inflows for the past decade.
Now, where would purchases of property abroad show up in the Balance of Payments? Under ‘Other Investments – Net’?
Says blog reader Ganesh:
This is where the bulk of the money is moving. Mind you these are merely official figures. We all know that people just fly direct to Australia and UK and buy (property) direct there.It runs into billions, thus an opportunity cost to Bursa….
Could this partly explain why the younger crowd are shunning the Bursa?
The larger question is, why aren’t more Malaysians investing locally in small- and medium-sized businesses to create a more sustainable, self-sufficient local economy which is less influenced by global market volatility?
Dear Anil
I wonder in which column would the outflow that were sent through money changers. Remember the 10M RM sent out by a MB through his money changer.
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Good question. One possibility is that these sorts of transactions end up being reported under ‘Net Errors and Omissions’, which amounted to RM2.7 billion in the third quarter of 2009.
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Anil: The official estimate for number of M’sians studying abroad was 50,000. Assuming an average spend of RM100K per student per year, that would be RM5bil of exchange outflow per year. Also the reported migration between Mar till Aug 09 was 304,000. I am not sure how much was brought out when these people migrate but that would be tens of billions too. Wouldn’t both these fall under “others” too?
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Yes, that’s a lot of money flowing out of the country as well. Not quite sure where that will fall under…
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If I am a legitimate citizen of this country and dutifully pay all my taxes and I see my contribution abused by some politicians in govt I would be very reluctant to invest locally if I could help it. Worse of all we are being discriminated inspite of 90% of all taxes are paid by the minorities. We are used, abused and called names like pendatangs and told to get out if we don’t like it here. One must be freaking mad to pay more taxes and contribute to their corruption.
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Agree with you John, I share the same opinion of yours, as I had also been paying my taxes, and that too, in no small amount, and I detest to be considered and called a “pendatang”, I hate the discrimination against the minority. I hate the rule of the corrupt and not the rule of law. I hate that constitutional laws are abused at their whims and fancies, as it is, Constitutional laws govern the governing but it is the other way round. I hated when someone branding a keris shouted to thousands of worked up Malays…. I hated it when again the keris was used by the cousin in a threatening manner to intimidate us.
I hate when we talk of meritocracy and we reasoned with them with our paper qualifications to gain entry into local U, they tell you no matter how smart you are, “Kami Tak Nak”. They made it very clear, very very brazenly! Do we have no pride? Have we got to succumb to their wishes and demands everytime? Are we parasites and have no backbones to stand up and say enough is enough? … I hate to be bullied for five decades. With the rising discontent against the discrimination and misrule, will the rakyat rise up and say,”Kami Tak Nak” to them? If we lose, then we very well will be on our way to the next destination which will welcome us. Things does not look good, until and unless, the Rakyat take the steps necessary to protect the interests of ourselves and country. The most shameful thing is that we still have people who are willing to continue to be bullied and continuing being slaves to these corrupt leaders for a fistful of ringgit! These parasites stink and I have my every right in the name of democracy to avoid them at all cost. Are there no better way to earn an honest living then depending on the handouts from corrupt monies?
With the latest warning by the United States against the missing jet engines and the church issues, a very stern warning that they will consider economic sanctions against us, if the matters pertaining to the above are not properly attended to, are we not moving along the path to be just an international (outcast)? Like Iran, North Korea and for the nearer distance for those who cannot see too far, Myanmar? Should we continue to be slaves and continue to support these people who lead us down the way to international shame?
The serious capital outflow above is a serious concern for all Malaysians, the outflow almost bankrupted our reserves, and is considered highly abnormal by financial analyst. I will be on my way if we lose the next round, but, I choose to stay to fight one more round with Malaysians. If we lose, then I will still come back to vote come the next election, if there is one after GE13. Folks, together we can make a huge difference and let us all make it count this time around! Cheers.
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You want to talk about outflow? Last year 304K Malaysian migrated abroad. Each of those Malaysian, have at the minium a lifetime present value of income of over RM1million each.
In other words, in value terms, some RM304billion left the country in terms of present value of human earnings..
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Thanks. So it seemed that our politician fat cats’ funny monies going out would amount to 2-3 Billions a quarter. A billion here and billion there and very soon we are talking real money.
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Well, there could be other items in there, not necessarily all of which is hanky panky. It’s just a balancing figure, which would include all the unrecorded and uncounted stuff.
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The politicians & the cronies have started syphoning the money out since last election. They have already prepared the exile home overseas. Money is moved out for the comfortable exile.
Then the smart (non Malay) tycoons have already moved their investments abroad (perhaps part of the official figures above). They too know that to put all the eggs in one basket is too risky.
This official figure does not take into account the unofficial routes of syphoning money out. Easiest way is just fly out with cash. Being VIP, do you really think they go through the normal customs & immigration procedure? Flying in & out via private jet (could) already allow them to bypass the strict protocols of customs & immigration. Imagine how many cases of cash a Learjet can carry. Hey, Marcos moved cash out by Boeing jet during the last days of his rule.
The massive outflow perhaps explains why the economy is so sluggish also. There is just a trickle of money flowing from the top to the bottom. Our local SMI & retail depends on the flow of money to survive. If it stops at one end, then the whole cycle is disrupted, causing a domino effect. This is what we are seeing now (the disruption & domino effect).
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The politicians & the cronies have started syphoning the money out since last election.
You must be kidding, right?
They have been siphoning the money OUT of the countries since the 1970′s !
By the late 1990′s, the money out there has accumulated so much, even after their buying binge of castles, ranches, villas and so on, they (could) have around 45 to 75 Billion USD in various bank accounts, from which they (allegedly) channeled part of that amount back to Malaysia and disguised it as “FDI”.
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I agree with BigJoe. Those who migrate need lots of money as a startup in the foreign country.
Last year, 300,000 people migrated.
Minimum they need to bring is RM100,000 each, as startup money and yes, some, even in the millions.
I estimate it runs in the berpuluh billions or even hundreds of billions.
Besides cash, don’t forget, the gold and diamonds they bring along. We all know that Indians, for instance, got loads of gold.
As for houses, ask anyone and they will tell you they at least know someone with a luxury apartment in UK. Countless of people own luxury apartments in the UK, and each, nothing less than 500,000 pounds (RM3 mil).
And yes, there are also government servants also owning such apartments. How?
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http://www.asiasentinel.com/index.php?option=com_content&task=view&id=2234&Itemid=229
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Anil , based on the figure above it , does it have any impact on the currency ..?
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I think the reported figure of 304,000 citizens emigrated from Mar to Aug 2008 was erroneous. That figure probably reflected the average total number of Malaysians residing overseas during that period, including students.
To get a net outflow of 304,000 Malaysians within a period of 6 months, it would mean Malaysians are abandoning the country at a rate of about 51,000 persons a month.
MAS and AirAsia would be flying out full and returning empty.
However, that did not seem to be the case.
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There are only two airlines flying ?
How about Cathay Pacific? Singapore Airlines? Quantas? Thai Airways? Air Emirate?
Spend an evening in KLIA and see for yourself how many different airlines there are.
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Does Wira think that the only airlines that fly from Malaysia is MAS and AirAsia?
There are countless of others.
Also, thousands fly from Singapore as the flight tickets are far cheaper.
Are you also saying the Ministry made an error?
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Malaysia (UMNO) Inc. is just another bank Bumiputra waiting to collapse from bloated payroll, sllowances, perks, and what have you. And that does not include fraud and corruption.
It is same pervasive mindset that has seen other big GLC on the verge of bankruptcy were it not for more taxpayers’ monies pumped into it; And without the taxpayers’ consent!
Now that the game is up the “Management” ie UMNO, is l(grabbing) as much as they can before the Malaysia (UMNO) Inc. falls. They will clear out from power and wait for well meaning suckers to clean up the mess while they wait on the sidelines like vultures. And by the time, Malaysia is clean and ready to trod the path of normality again, these vultures will swoop in and hijack the country.
I say, set up an international crime tribunal to hear the crimes committed by these crooks against the people. Crime should not pay and should not be seen to pay….
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Thanks. And just read TDM rationale for another round of price increase, shortly! Sickening and just does not make sense! Just wait for the New Economic Model, Malaysians. Cannot imagine how our Malays brothers and sisters are going to cope as they are the biggest losers. With bigger than normal Malaysian families to feed, after they followed the call of TDM to increase the population to 70 million, today they are struggling to take care of a growing family. With inflation and stagnation of salary, and with opportunities becoming scarce, they are the biggest losers. And rampant corruption is going to robbed them of what actually belongs to them, the Rakyat!
The setting up of the International Crime Tribunal is the best, but looking at what happened to many countries that failed like Zimbabwe, and also the fact that Malaysia is just too small for the International community to care about, the chances of international intervention is remote. Our only hope is that the US apply further pressure on the missing jet engines and the church issue, and together with France on the Scorpene issue. This will make the present corrupt leaders sit up and be more responsible. Cheers.
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Nobody cares about Zimbabwe because it is located at a place no one cares about.
But if something drastic happens in Malaysia, surely a lot of people would care.
See no further than the Straits of Malacca.
The International Community have vested interest in that Straits. If ever anyone threatens it, surely someone will intervene, and that “someone” may turn out to be more than one country, and they may even work as a team, against whoever endanger that crucial waterway.
So have no fear. Our location isn’t somewhere like Mugabe’s remote homeland.
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There is a fact that many don’t know.
A sizable portion of “FDI” that came into Malaysia is (allegedly) owned by (a certain political party).
It’s a “re-cycling” exercise.
They suck up our money, (allegedly) put into their bank accounts abroad, and then return back to Malaysia as “FDI”.
Most of those money are (allegedly) used to prop up the share market.
In other words, looking at raw FDI figures doesn’t cut it anymore, because there is no longer any clear cut evidence if the FDI is genuine (from the pockets of Foreigners) or merely a result of “re-cyling” exercise.
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Dear Ganesh,
If I assume non-Malay/non-native population in this country at 8 million citizens, 304,000 would be about 1:26.
Consider your closest 26 friends and associates who are non-Malays.
Has anyone of them emigrated from Malaysia to other countries during the period March~August 2008?
OK, extend that to 100 friends and associates.
Can you still find anyone of them leaving the country for greener pastures elsewhere during that same period?
Go ask others with the same questions.
We can get a more accurate estimation with a larger database.
So can you understand now how ridiculous was that figure given by our YB minister?
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Wira, firstly, why are you assuming its non malays who have migrated? Are you a racist or are you just shallow?
Countless of Malays have migrated also, for a number of reasons.
The figures given by the Ministry comprise of all Malaysians of different races who have migrated.
I just considered my closest 26 friends. 3 of them have migrated. So how now? Must do your 100 test kah?
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Let me see …
My sample grouping is from the fellas who graduated the same year as yours truly, from the same school.
From the group 523, about 20 of them already passed away. The rest of us, around 500, today less than 100 still staying in Malaysia.
Out of that 100 still staying here, around 70 of them didn’t study in university. Out of the 30 who did, 12 of them have either permanent residentships or citizenship of other countries.
The 18 remaining that never took up any permanent residentship / citizenship of other countries and are staying in Malaysia, 5 have plans to move out, waiting for their kids to graduate from high schools.
Even those 70 who didn’t enter universities, 25 to 30 of them have permanent residentship / citizenship of other countries.
But my sample could be biased, since we are all having the common ethnicity: Chinese.
Hopefully that answers some of your questions, on how critical the brain-drain problem has become.
And oh, btw, most of those who are living abroad are professionals – Surgeons, Engineers, Professors, Entrepreneurs, CEOs – people with the knowledge and skill that may help Malaysia, if Malaysia isn’t practicing institutionalized racism.
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Malaysia will only be suitable for “Fly by night” companies…making some quick bucks with a little bit of “kopi money” as incentive….grabbing what are available to the maximum in the minimum time.
As a long term investors, do you think this is an attractive way to do business?
If I were to invest, I will be thinking of the 3 economic giants in Asia…China, Vietnam and India.
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WIRA;
I emigrated more than 25 years ago!…I am laughing my guts out that I have left all the “….” behind.
You remained a UMNO … in the well….see as far as your nose!!!
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The failure of our GLCS is a known fact. TNB. for instance, is a failure. They are losing money forever. The subsidiaries are facing deficit after deficit and yet they they are kept to run their unprofitable business. This is the way our GLCs function. Ashamed. Many don’t understand why TNB has to run a university which is not making any money,in fact losing millions, when other private universities can make it. Why should the government allow this to happen? Isn’t education part of governmnent’s responsibility and not the GLCs?
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Dear Anil,
Sorry I don’t know where to put the following. If it’s possible please move this to the appropriate thread. Thank you.
CPI-Asia (Center for Policy Initiatives – Asia) is looking for perspective on the religious hatred in Malaysia.
Your comments are welcome at the following link – http://english.cpiasia.net/index.php?option=com_content&view=article&id=1841:perspectives-on-the-anatomy-of-religious-hate-in-msia&catid=228:commentary
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Dear Ganesh,
It is common knowledge that among those who emigrated, the non-Malays overwhelmingly form the largest group.
So if you include the Malays, then there may be an aberration to the data collected. Why are you so jumpy to conclude that I must be a racist?
If I consider 26 of my closest friends and associates since my school days, yes, certainly more than 3 had emigrated, but not within that given period last year.
Going abroad for studies does not qualify one for emigration, not according to the yardstick of the minister.
I’ve been asking around, and I don’t get 1 out of 26.
Not even 1 out of 50.
Same with my friends.
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Dear WandererAUS,
You have emigrated 25 years ago.
So you are not one of those who left last year.
Bless you.
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Wira, from your tone, you are still in your little world of Malays vs non-Malays kah?
We are all Malaysians.
Btw, I was talking about in the last year alone 3 of my friends migrated. Who is talking about since school days?
Also, maybe you are not exposed. There is a large proportion of Malays who have migrated to Australia and UK. Nobody is talking about studies and those who study overseas.
These Malays don’t bother registering with the respective embassies. I know countless of Malays in London and Australia, living there as residents.
You need to travel and expose yourself a bit more.
Before you travel and exposing yourself more, remember, this is not malays vs non malays. We are all Malaysians.
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Dear Ganesh,
I don’t subscribe to Malay vs non-Malay.
I only subscribe to a corrupt UMNO vs the rest of us.
I am well traveled and well exposed.
Thank you.
What I was commenting was that the deputy minister’s figure on emigration could be wrong during that short period and you were swiftly jumping into conclusions about my character.
Don’t you read and consider well before you respond?
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simply said… the value of our money and inflation says it all… if our country has such rich resources, both physical and non-physical, why is that Ringgit Malaysia is 2.4 against Singapore Dollar, a country that was once part of Malaysia and with resources not more than 10% of ours… and don’t “let’s compare to Indonesia and Thailand” boo-haa… humans always look towards the best… and i have an arguement, Singapore was once under the flag of Malaysia and why can it achieve more higher than Malaysia can in 50 years after independence huhh ???
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The money that is leaving malaysia we malay economist call it ‘duit takut’. that means many Malaysians are investing overseas because:
1. Our Malaysian politics is not stable. Our politicians are not considered reliable enough.
2. There is a perception that doing business in malaysia is not so profitable anymore, because not enough big players anymore. All the money makers also moving offshore.
3. We have a big problem with this whole NEP thing. As i have said before you cannot bring in social engineering changes into a market economy. It simply backfires.
4. There is a lot of (resentment) especially with the Indians and Chinese for they believe that they have always been second class citizens in Malaysia.
5. Lastly but most damaging is the non-stop corruption in Government and private sector circles. Where there is corruption there can be no proper functioning of the market economy.
So the writing is on the wall. Common sense lah. Would you invest in a country where you are feeling insecure? of course not. Even we malays investing overseas lah.
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You are right, that why me and most of my business associates have put our money in Fd in Singapore which we feel is more safer. Investing abroad is better than in Malaysia and many are now hoping to Vietnam and China. Well you can`t blame us as what matter is profit count. These idiot politician keep saying, hey you must have social responsibilities which is a farce because if we lose money who is going to care about us when we suffer….. Many donate not out of their social responsibilities but to get their dato and tan si and to protect their business interest. We have our social responsibilities only if we think it is right and within our budget…
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When more and more ” duit berani ” becomes “duit takut” … LOL … gone liao, Malaysia, gone liao !
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All my friends who own apartments in London are all kakitangan kerajaan.
Some are just low level kerajaan employees but each apartment cost Ringgit Malaysia bejuta juta.
Even CEO’s of private sector companies cannot afford apartments in London but kakitangan kerajaan can afford.
Affording the apartment is one thing but with currency controls in Malaysia, how did they transfer millions into United Kingdom?
Surely Bank Negara approval is needed. If Bank Negara approval is needed, why Bank Negara never questions the person seeking approval for the transfer of the money
Why Bank Negara never ask why a low level kakitangan kerajaan can afford luxury apartments in London?
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