PETALING JAYA: Rosy is probably not the word to describe Malaysia’s economic outlook as oil continues to free fall and the ringgit weakens further against the US dollar, but international property and investment company IQI Group Holdings chief economist and investment strategist Shan Saeed is still bullish on the country as he believes that the weakening ringgit would boost the country’s trade competitiveness.

“Countries around the world are debasing their currency and keeping rates down. This is a tactical move to ensure trade competitiveness. Every central bank is focused on stimulating growth,” he told the 17th Malaysia Strategic Outlook Conference 2015 yesterday, implying that Malaysia’s weaker ringgit was a desired condition.

Saeed also dismissed concerns about the views of foreign rating agencies on Malaysia.

“As a foreigner, I am still okay with Malaysia. I don’t follow foreign rating agencies as they have been wrong about Malaysia before,” said Saeed.

However, Affin Hwang Investment Bank head of retail research Datuk Dr Mohd Nazri Khan thinks 2015 will be challenging for the country on the external front, though he maintained that internal local factors would remain solid.

“Our fundamentals remain strong although it has deteriorated. I agree with the prime minister that we are not in crisis and what we are seeing here in the Malaysian economy could be temporary blips in an otherwise bullish run since 2008,” said Mohd Nazri.

Mohd Nazri pointed out that the KLCI index has seen a rise of over 237% over six years and that it would be usual to see some signs of “overheating”. He also forecast that the additional liquidity from the European Central Bank’s quantitative easing would help mitigate the weakening of the ringgit.

Penang Institute chief executive officer Dr Lim Kim Hwa concurred that 2015 will be a challenging year, with two major factors that will impact the economy: crude oil prices and currency. “It is going to be a challenging year, with big themes of oil and currency war,” he said. Lim also believes that the shale oil supply glut will likely continue into 2015 and 2016.

“The International Atomic Energy Agency has predicted that there will be two million barrels of surplus oil by the second half of this year. With this excess supply coming in, the price of oil is unlikely to recover to US$100 [RM361] per barrel anytime soon,” said Lim.

Citing his own study on the issue, Lim said an oil price drop could significantly impact Petroliam Nasional Bhd’s (Petronas) profitability.

“If [the] ringgit depreciates to 3.75 against the [US] dollar and crude oil trades at US$55 per barrel in 2015, Petronas’ profitability [as measured in earnings before interest, taxes, depreciation and amortisation] might fall to RM72 billion; and dividends might fall to RM19 billion [versus RM123 billion and RM27 billion respectively in 2013],” he said.

In 2013, Petronas contributed RM73.4 billion or 30% of government expenditure.

Meanwhile, Inter-Pacific Securities Research Sdn Bhd head of research Pong Teng Siew said maintaining global confidence will play a significant role in Malaysia’s economic outlook for 2015.

“Unfortunately, as a developing economy, Malaysia is viewed through a different lens … It’s very apparent that we are viewed as a commodity-driven economy which is very dependent on crude oil and palm oil,” he said.

Pong added that Malaysia is seen to be undergoing a great deal of stress due to a loss of revenue from the exports of crude oil and commodities.

The conference yesterday was organised by the Asian Strategy and Leadership Institute.

This article first appeared in The Edge Financial Daily, on January 28, 2015.