KUALA LUMPUR (Jan 27): 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.

For Saeed 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 today, implying that Malaysia’s weaker ringgit was a desired condition.

Saeed also dismissed concerns about foreign rating agencies views 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 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 Khan.

Khan pointed out that the KLCI index has seen a rise of over 237% over 6 years and that it would be common to see some signs of “overheating.”

Khan foresaw that the additional liquidity from the European Central Bank’s quantitative easing would help mitigate the weakening of the ringgit.

Penang Institute CEO Dr Lim Kim Hwa concurred that 2015 would be a challenging year, with two major factors that will be impacting 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 foresaw that the shale oil supply glut will likely continue into 2015 and 2016.

“The International Energy Agency (IEA) 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 per barrel anytime soon,” said Lim.

Citing his own study on the issue, Lim said the oil price slump could significantly impact Petronas’ profitability.

“If ringgit depreciates to 3.75 against the dollar and crude oil trades at US$55 per barrel in 2015, PETRONAS’ profitability (as measured EBITDA) might fall to RM72 billion; and dividends might fall to RM19 billion (vs RM123 billion and RM27 billion respectively in 2013),” he said.

In 2013, Petronas contributed RM73.4 billion or 30% of the Malaysian government’s expenditure.

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