Thursday, September 11, 2008

Political Uncertainty In Malaysia Mars Some Investments: Report

Source : The Business Times, September 11, 2008

THE jury is still out on whether the Opposition's recent success in the Permatang Pauh by-election as well as the March general election have affected the country's attractiveness to local and foreign property investors, according to a new report by DTZ.

Stacking up: The country is seeing frequent headlines of political upheaval - raising concerns about stability

The current political situation has affected short-term fund flow, especially in equities, and created more 'fence-sitters'. But major real estate investments which require a longer term perspective have so far weathered the hiatus well, it said.

Malaysia has traditionally prided itself on its political stability and attractiveness to foreign direct investments. But since March 2008, when the ruling party lost its two-thirds majority, the country has seen almost daily headlines of political upheaval - raising concerns about political stability.

But empirical evidence gathered by DTZ Research has not provided solid indications that the increased political uncertainty has hit investment interests.

For one, there continues to be a stream of foreign investors coming to Malaysia for early prospecting or to explore opportunities, according to DTZ.

Although the number has declined compared with 9-12 months ago, DTZ attributes this to the sub-prime crisis rather than concerns about the country's political stability.

DTZ also points out that since March, there have been several open biddings for two key properties up for sale, both prime office buildings in downtown Kuala Lumpur.

According to DTZ, the responses to both properties were very encouraging. The decision to sell is also in no way a reflection of owners' concerns as they were made before the current political developments, DTZ says.

DTZ's reports conclude: 'Hopefully, the political situation will soon settle, and whether it is by the Opposition or the present government, the push to provide a stronger reformist economic policy that will steer the country towards greater development can only be a boon for investors.'

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