Published January 1, 2009

M'sia current account surplus up 4.5% in Q3

But services account posts deficit for first time in years

By S JAYASANKARAN
IN KUALA LUMPUR

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MALAYSIA'S current account surplus rose a marginal 4.5 per cent to RM38.7 billion (S$16 billion) in the third quarter (July to September) of the year, according to figures released by the Statistics Department yesterday.

But for the first time in years, the services account posted a small deficit of RM200 million because of greater outflows abroad.

Even so, the current account surplus over the first nine months jumped 34.4 per cent to RM99.5 billion, on the back of a massive surplus on goods (RM131 billion), a small services surplus (RM1.1 billion) and net outflows on income and transfers.

But the figure that is likely to grab analyst attention was the enormous 400 per cent surge in financial outflows to RM61.4 billion. Foreigners sold both bonds (RM42 billion) and equities (RM12 billion). That was made worse by a net outflow on direct investment of RM18.4 billion indicating that more Malaysians were investing abroad than foreigners were investing locally.

The figures illustrate the effects of the global financial crisis on Malaysia as foreign funds exit Malaysian assets to plug financial holes back at home.

The massive deleveraging exercise taking place in the more developed nations also caused the central bank's reserves to fall by over RM31 billion in the quarter under review.

As a result of the massive outflows, Malaysia's overall balance of payments recorded a deficit of RM31 billion from a RM26.2 billion surplus in the previous corresponding quarter.

Still, the overall balance of the first nine months of the year remained in the black to the tune of RM43.6 billion. This net increase went towards total reserves (around RM97 billion) which, however, was lower than the RM45 billion the central bank amassed in the first nine months of 2007.