ANALYSTS have commended Malaysia’s commitment to further improve ties with the United States following Prime Minister Najib Razak’s recent visit to Washington, DC.

This is despite the world’s largest economy having placed Malaysia along with other 15 countries on its trade deficit watchlist earlier this year.

RHB Research Institute Sdn Bhd Chief Asean economist Peck Boon Soon said Malaysia was ranked seventh on the merchandise-trade deficit list with a US trade surplus of US$25 billion (RM105 million).

“Although we are not sure about the next steps that they are going to take against the relevant countries, I believe following Najib’s visit, the US will not take any drastic moves to penalise Malaysia,” he told Bernama.

In April, US President Donald Trump was reported to be planning to launch an investigation into the 16 countries, including Malaysia, for allegedly enjoying trade surplus over the US due to alleged unfair trade.

International Trade and Industry Minister Mustapa Mohamed had denied the claim, saying Malaysia’s trade surplus with the US stood at US$5 billion.

Affin Hwang Investment Bank vice-president and retail research head Nazri Khan Adam Khan said the visit could help improve Malaysia’s trade imbalance, with Malaysia buying more US products and the US investing more in Malaysia’s equity market.

“There are more investments that the US can make in Malaysia. With the US investing in our market, obviously it will build confidence among other foreign companies to come and invest in our local exchange as well,” he said.

Commenting on the Employees Provident Fund (EPF) and Khazanah Nasional Bhd’s plans to expand their investments in the US, Peck said there was nothing irregular about investing in the US. 

During his working visit to the US from September 11 to13 at Trump’s invitation, Najib announced that EPF alone expected to invest between US$3 billion and US$4 billion.

“The EPF and Khazanah have been investing in good businesses all over the world. Since the visit took place in the US, so the news reports highlighted the investments there.

“In fact, they are investing everywhere but whether the investment will have good returns depends on the company’s judgement,” Peck said.

Nazri believes it is wise of EPF to invest in the US, considering the Malaysian market has saturated and is a bit slow.

“The EPF has a bigger total fund now. It cannot depend on the Malaysian market alone and needs to go to big markets like the US.
“But it needs to ensure whatever investment it makes is within its circle of competency and it should not venture into an area that it is not comfortable in.

On the deal for Malaysia Airlines Bhd (MAB) to buy 16 aircraft from American aircraft maker Boeing, Nazri said the plan was in line with MAB’s expansion programme.

The deal includes the purchase of eight 787-9 Dreamliners by converting eight of Malaysia Airlines’ existing order of Boeing 737 MAX aircraft and eight additional purchase rights of 737 MAX 8s, as well as Boeing’s Global Fleet Care service to maintain the national carrier’s current and future Boeing aircraft.

“The 787-9 Dreamliners is considered as future expansion. Without the new aircraft, MAB could not add new routes, especially in the European market as the current Boeing 777s are already old and cannot be used anymore,” said Peck.

Peck described the deal as the expected course for MAB to take if the airline were to have adequate financial muscle to keep upgrading its airplanes.

“We should not be too negative about it. If it wants to upgrade its planes, it has to go to either Boeing or France-based Airbus,”  – Bernama, September 17, 2017.