KUALA LUMPUR: Prime Minister Datuk Seri Najib Razak said yesterday Malaysia’s economy is now in a far stronger position to weather any incoming storms, compared to the Asian financial crisis of 1997-98.

“In the last 15 years, we undertook important structural reforms in the financial and banking system.

“The bond market helped reduce the country's reliance on short-term foreign currency-dominated borrowings, as was the case during the Asian crisis,” he said in his keynote address at the World Capital Markets Symposium 2015, organised by the Securities Commission Malaysia (SC) yesterday. Malaysia's bond market is the third largest in Asia at RM1.1 billion.

“The differences between 1998 and 2015 do not end there. Today, the equity market is worth RM1.5 trillion, compared with RM175 billion then, with much stronger corporate balance sheets and better-governed listed companies,” Najib added.

He added that the structural reforms implemented have collectively strengthened the ability of the Malaysian financial system to weather intense bouts of volatility and to affect adjustments in an orderly manner.

“Given our extensive cross-border interlinkages, both in the real and financial sectors, it is little surprise that a relatively small open economy, such as Malaysia, would be exposed to some degree of this volatility,” he pointed out.

He said in response to the current various market trends and developments, he recently established a Special Economic Committee, which is headed by Minister in the Prime Minister's Department Datuk Seri Abdul Wahid Omar, along with nine other committee members, including CIMB Group Holdings Bhd chairman Datuk Seri Nazir Razak.

Yesterday, the ringgit fell 0.8% to 4.2455 against the US dollar. The currency hitting a 17-year low has drawn comparisons to the 1997 crisis. Against the Singapore dollar, the ringgit touched at 2.9999 yesterday.

“I am confident the collective wisdom and experience of the committee members will provide sound and pragmatic recommendations to ensure our economy remains on course,” said Najib.

Meanwhile, SC chairman Datuk Ranjit Singh said Malaysian shares will “pick up”, despite the recent selldown of ringgit-denominated assets on concerns about political uncertainty and a depreciating currency.

Ranjit said fund managers have indicated that the country has strong financial and capital markets. 

“Most fund managers we spoke to this morning (yesterday) acknowledged that Malaysia has built a very strong financial and capital market system,” he told reporters on the sidelines of the symposium.

This article first appeared in digitaledge Daily, on September 4, 2015.