Friday 29 Mar 2024
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KUALA LUMPUR (March 11): Malaysia’s financial sector appears resilient with sound profitability and liquidity indicators, as well as low non-performing loans (NPLs), said the International Monetary Fund. 

However, local authorities are encouraged to continue “close monitoring” of risks stemming from large household debt and the real estate market, it said in a statement today. 

This was on the back of the fact that Malaysia’s household debt is high, compared with its peers, having a large share of mortgages, as well as pockets of vulnerability among low-income groups. 

Malaysia’s household debt-to-GDP was recorded at 83.2% as at September 2018, Finance Minister Lim Guan Eng said in November last year. Around 52.8% of the debt was for housing loans. 

IMF executive board expressed these views, following the conclusion of its 2019 bilateral discussion with Malaysia on Feb 15, as required under Article IV of IMF’s Articles of Agreement, the statement said.

The fund also commented on “residency-based differentiation” in the property market, likely referring to changes in the real property gains tax (RPGT) on profits from disposal of property or shares in property companies in the sixth year and beyond, as announced in Budget 2019.  

At that time, the government had announced it will raise RPGT for companies, non-citizens and non-permanent resident holders to 10%, from the previous 5%; while citizens and permanent residents will now have to pay 5% from nil previously. 

“A number of the [IMF] directors agreed that the measures related to residency-based differentiation in the property market should be gradually phased out, as the systemic risks dissipate,” IMF said.

On monetary policy, the IMF supports Malaysia’s “broadly neutral” stance, although its directors were mixed over Bank Negara Malaysia's requirement for businesses to convert 75% of their foreign currency-denominated export proceeds to ringgit. 

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