MALAYSIA'S A3 SOVEREIGN CREDIT RATING STRONGER THROUGH GLOBAL CRISIS

KUALA LUMPUR, June 17 (Bernama) -- Malaysia's A3 sovereign credit rating has
been underpinned through the global crisis by its strong external position, deep
and liquid domestic capital markets as well as a well managed financial system,
says Moody's Investors Services in its annual sovereign report.

In a statement here Thursday, Moody's said the sovereign credit outlook is
stable and is adequately supported by favourable expectations for economic
performance and policy management.

This also includes the government's efforts to liberalise investment laws
and foster competition so as to improve the country's growth model.

"Malaysia's strong liquidity and deep capital markets have ensured the
"finance-ability" of large fiscal deficits and affordability of higher level of
government debt that was ratcheted up by policy responses to the external shocks
of 2008-09," Moody's Vice President and author of the report, Aninda Mitra,
said.

While Malaysia boasts a well-diversified and reasonable competitive and
externally oriented economy, stabilisation of government's debt level in the
medium term requires stronger economic and fiscal reforms than seen in the
recent past.

Consequently, the government's recent articulation of medium-term policy
goals of enabling greater domestic competition, fostering a knowledge-driven
economy and achieving a higher income status - as contained in its New Economic
Model - represent its strong intent to re-invigorate and re-balance the drivers
of economic growth.

However, a demonstrable commitment to specific medium-term strategies that
may better underpin its relative sovereign credit fundamentals remains pending,
Moody's said.

In particular, the rationalisation and better targeting of fuel subsidies
and the implementation of goods and services taxes are both important.

Moreover, the abilities to heighten local competition and generate greater
domestic private investment are crucial.

Such measures could lift trend growth prospects as well as reduce the
relatively large role of the public sector in capital formation.

Against the backdrop of sound monetary management and sophisticated capital
markets, sustainable improvements in Malaysia's growth fundamentals and the
government's fiscal performance would provide upward rating pressure, it added.
-- BERNAMA