Malaysia aims to become financial hub

Malaysia aims to become financial hub

KUALA LUMPUR (AFP): Malaysia is poised to emerge as a financial hub due to its strong economic growth and the globalization of the financial market, a junior minister here said yesterday.

Deputy Finance Minister Affifudin Omar based his optimism on the an expected flow of foreign funds.

"The government is also optimistic the prevailing current account deficit will be overcome by the turn of the century," he was quoted as saying by Bernama news agency.

The current account deficit -- measuring the deficit in trade, services, debt payments and overseas transactions -- rose to 17.8 billion ringgit (US$7.12 billion) last year.

Affifudin also reminded bankers and consumers not to "overlend or over-borrow," even though Malaysia would continue its robust growth.

"The government does not want the lower income group to borrow heavily or finance companies to lend heavily to consumers for the purchase of property," he said.

Economists have said Malaysia's problems are due to the country's high annual economic growth of more than eight percent since 1987.

In its 1997 national budget, the government forecast the current account deficit would narrow to 14.771 billion ringgit this year and improve to 11.497 billion ringgit next year.

Prime Minister Mahathir Mohamad in August dismissed the current account deficit as a major problem, saying the country's rate of national savings, presently at 34.6 percent of gross domestic product, was high.

Malaysia's economic growth is projected by a think-tank to ease to 8.3 percent this year from a dizzying 9.5 percent last year due to a slowdown in exports and slower growth in private investment.