KL expects better balance of payments

KL expects better balance of payments

KUALA LUMPUR (AFP): Prime Minister Mahathir Mohamad said that
Malaysia's current account deficit could improve next year
without any deceleration in growth.

"What we need to do is to increase our exports and reduce our
imports," Mahathir was reported saying by Bernama news agency.

Malaysia would not have to reduce its robust growth to reduce
its balance of payments, Mahathir said, maintaining that the
government forecast of 9.6 percent growth this year could be
achieved.

The finance ministry had projected growth to slow to 8.5
percent next year.

But Mahathir said: "We are targeting for high growth even for
next year," adding that measures taken by the government to
improve its balance of payments were "waiting to show results."

"For example, we want to export more but if we don't produce
more, how can we export more ... to produce more takes time,
Mahathir said.

Malaysia's high current account deficit, which is projected to
widen to 19.1 billion ringgit (US$7.64 billion) next year, higher
than the government forecast of 17.06 billion ringgit, had raised
concern among foreign fund managers over the economy.

The government itself has predicted this year's current
account deficit at a wider-than-expected 18.14 billion ringgit
from 11 billion ringgit last year.

But officials have repeatedly assured investors that the
deficit was due to rising imports to sustain the country's racing
economy, which has experienced eight straight years of annual
growth surpassing eight percent.

Mahathir said the government had decided that the country
should not import unnecessarily.

Meanwhile, the statistic department said that Malaysia's
external trade deficit from January to September widened to 8.2
billion ringgit (US$3.3 billion) from 1.5 billion ringgit a year
earlier due to purchases of aircraft and ships.

It said in its September trade report that the high deficit
was due to imports growing at a faster pace of 26.9 percent over
a 21.2 percent expansion in exports during the period.

In September alone, however, the trade shortfall improved to
254.2 million ringgit, compared with 1.1 billion ringgit in the
preceding month, and 474.8 million ringgit in September 1994.

The department said total imports during the nine-month period
surged to 143 billion ringgit from 112.7 billion ringgit a year
earlier, while exports grew to 134.8 billion ringgit from 111.2
billion ringgit.

The purchase of 13 commercial aircraft costing 2.4 billion
ringgit and nine cargo ships, including a liquefied natural gas
carrier at a combined value of 1.2 billion ringgit, contributed
to the higher deficit, it said.