Malaysia’s foreign reserves fall by US$34 billion



Malaysia’s foreign reserves plunge (US$ billion) Source: Bank Negara

Over the last eight months, the country’s foreign reserves have dropped by US$34 billion. They have dipped from a high of US$125.8 billion on 30 June 2008 to US$91.6 billion as at 13 February 2009.

Total gross international reserves:


31 Mar               US$120.3 billion

30 June              US$125.8 billion

30 Sept              US$109.7 billion

31 Dec                US$91.3 billion


13 Feb                US$91.6 billion

Let’s zero in on the third quarter of 2008.  During this period alone, Malaysia’s foreign reserves fell by RM31.5 billion.

On the flip side, the balance of payments posted a deficit during the third quarter of RM31.5 billion. (We had a surplus of RM26.2 billion in the second quarter.) In other words, we had to dip into our piggy bank because our payments were more than our receipts during the third quarter.

The breakdown of this balance of payments deficit is as follows:

Current account (trade in goods and services): RM38.7 billion surplus.

Capital and financial account: RM61.5 billion deficit (an increase of 400 per cent from the second quarter!)

Errors and omissions: RM8.8 billion (negative)

Net: RM31.6 billion deficit

So it is clearly that funds have been flowing out of the country from the third quarter onwards.

Now, let’s look more closely at the capital and financial account deficit of RM61.5 billion.

Capital Account:RM millionQ3/08-119-37
CreditRM millionQ3/0861
DebitRM millionQ3/0812638
Financial AccountRM millionQ3/08-61,360-12,270
Direct Investment AbroadRM millionQ3/08-19,851-14,483
Direct Investment in MalaysiaRM millionQ3/0888117,392
Portfolio & Financial Derivatives – NetRM millionQ3/08-56,179-24,020
Other Investment – NetRM millionQ3/0813,7908,841
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Source: Bank Negara

We can now see that this RM61.5 billion deficit is largely due to the financial account deficit. To be more specific, direct investment abroad has risen. On the other hand, direct investment in Malaysia has sunk 95 per cent from RM17.4 billion in the second quarter of 2008 to just RM0.9 billion in the third quarter.

Meanwhile, portfolio and financial derivative funds have been fleeing the country. The third quarter of 2008 saw RM56 billion leaving the country, 134 per cent more than the second quarter of 2008.

The figures don’t lie.

That said, the foreign reserves of US$91.6 billion (as at 13 February 2009) are sufficient to cover 7.6 months retained imports and 4 times the short-term external debt of the country.

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  1. Despite my utter contempt for BN and its cronies and for the endless harm that they have done and are doing to this Nation, I feel a tinge of sympathy for Najib that he had the urge to take on the job of PM in the worst of times….

    Anyway, that is what politicians are good for and that is the innate quality of men who hanker for high office. They (bring) someone down and in the end get themselves (brought) down.

    Look at TDM. He is a very good example of one who has been cut down without his knowing it. He of course may say otherwise but History may not record it that way.

  2. What is new in this Bolehland ?

    With the “Double Whammy” Financial & Political Tsunami at our doorsteps….with no “Structured Contingency plan nor Quantums” in place….

    Whilst the G20 Presidents/PMs/FMs/Governments are strategising & synergising their positions on the GLOBAL FINANCIAL “Chess Board”….

    In this Bolehland….

    Mahathir wants to retire gracefully but….cannot yet…with Mukhriz’s position still “Hung.”Pak lah also wants to retire gracefully but….cannot yet…with SIL’s position still “Hung.”

    Bank Negara’s Zeti also wants to retire gracefully with a UN position but….cannot yet…as PM & Finance Minister/PM wannabe are still….

    “Quarreling with PR & Anak Bangsa Malaysia with POLITICS JAGUH KAMPONG ala KINDERGARTEN & still playing with Marbles” when all the other nation’s PM & FM are playing “Chess”.

    It is a matter of “What can I do for myself & my family NOW” rather than “Ayooo…will the gomen help me…how ma !”

    SOON….it will be “Every man for himself”….so please consider repositioning yourselves & family financially (mortgages, Loans, educational expenditures, etc); Rentals cheaper than loans >50% repayments; downsize your cars/loans; reposition your profession, career, jobs, etc;

    So please “Fasten your seatbelts tight” to safely ride this “Double Whammy” Financial & Political Tsunami !

  3. Notice that since March 2008 after the Political Tsunami the Malaysia foreign reserves diminishing quickly and very scary. This show that something was very wrong.

    RM 56 Billion fleeing out from the country, what happen? confidence crisis or corrupted money ? If the purging of the reserves won’t stop and prolong until this years what will happen to this country?

  4. Without the US engine, ie a big spender, growth will be very slow from now on. Europe and Japan are also half dead. Brace yourself for a very rough ride ahead.

  5. Pat192,
    You have to be registered first before you’re permitted to comment.
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  6. Malaysians are looking at an impending economical disaster.Thousands of Malaysians are on the way to loosing their jobs. I was told by reliable sources that,a number of multi nationals are in the process of relocating or shutting down operations.Even some banks are (said to be) on the brink of collapse.Well I do not know how far this holds water,but what I know is that,its imperative for the Malaysian govt leaders to rope in the brightest and the best brains in the country to get to the bottom of this serious economical issue immediately.Failing to do so will spell disaster for the ordinary hard working Malaysians.

    The present economic crisis is very different from the one we saw in 1998.If the govt does not take immediate and effective measures,its going to be very hard to recover,and even if we do so it may take a very long period.Lots of people may lose every thing from houses to car and savings.We cannot insulate ourselves from the spill over effect of the USA’s economic crisis which is plaguing that country disastrously right now.I hope the govt leaders will not remain in denial and let the rakyat suffer eventually.The present crisis is going to be something like the 1930s great depression.I sincerely hope the authorities will take immediate and meticulous steps to avert this impending tragedy.

  7. aiyah, the RM fall from RM 3.50/USD to RM 3.80/USD. That’s 10% already. Not all reserves are kept in USD, so already kena from currency speculators

  8. Someone up there mentioned boycotting the USD. LOLLLLL.

    Which country is going to accept your Ringgit when you import? Where do they get Ringgit to pay you when you export? Remember, there is no offshore trading of the Ringgit. Who wants Ringgit anyway except those currency speculators waiting to hammer us?

    So, can you now imagine when you have low or no foreign reserve?

  9. I dunno about you but I’d get me some gold & silver. Fiat money and especially US Fiat is finished. Just a matter of time…

  10. That worked out to roughly: RM 4000/= per living person in Malaysia (based on a population of 26 million). RM 4000.00 vanished in eight months. That’s five hundred ringgits we could use monthly !!!

  11. China has $2 trillion in total Reserves.

    Malaysia has $ 91.6 billion in total Reserves.

    Singapore has $ 167 billion in total Reserves

    The only difference is who’s managing the country right, and which
    bloody idiot is asleep behind the wheel, or getting alot lazier.

    Many used to argue that Singapore has the ability to manage the country well because the population is so small. That is why they are doing well.

    I beg to differ on those idiots…. The figures speaks for themselves. We have alot of catch to do, and cut all the bulls***and monkeying around. This country needs a change of guard and people with REAL BRAINS to lead us through this stormy times.

    Final point. China has 1.4 billion people, Singapore has 4.5 ++ million people. What …. you talking population is the factor that determines success of a country?

  12. All countries use the USD as a reference currency because the USD is the only RESERVED CURRENCY. This may change in the not too distant future. The world may revert to using the IMF SDR (Special Drawing Rights) as a reference currency.

  13. Enforcer,

    I also had difficulties in accessing RPK’s website. Had to try continuously. I believed d establishment is doing its level best to block. Just keep on trying. Best is to revisit the earlier news u had seen or read.

    Can someone tell me how to comment on RPK’s site? I know I have to register and its stated that I have to regicster on the Content page but please advise where on the said Content page can I register! Sorry, buta sikit!

    Try this:

  14. Hai bro Anil,
    Sorry, need to use your column to get some help from any bros out there.
    Can someone please help out. Can’t seem to log on to RPK’s blog…
    Wonder what’s wrong.


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