Wednesday, Apr 07, 2010
(This item was originally published Tuesday.)
By Costas Paris
Of DOW JONES NEWSWIRES
SINGAPORE (Dow Jones)--Malaysian Prime Minister Najib Razak Tuesday said his country plans to issue U.S. dollar Sukuk bonds as a step toward creating a benchmark in the global market.
"We don't actually need it [the bonds] because there is enough liquidity in the system, but it's a way of getting a benchmark from the market on where we stand," Najib said, addressing a gathering of foreign correspondents in Singapore.
He didn't give the timing or the size of the issue.
Sukuk securities are structured to comply with Islamic law, which, for example, bars interest. Instead, these bonds make coupon-style payments derived from underlying assets.
According to RAM Rating Services Bhd., Malaysia's sales of Islamic bonds will probably more than triple to MYR33 billion-MYR34 billion (about US$10 billion-US$11 billion) this year as the global economy improves and debt markets strengthen.
Najib also said he is confident Malaysia will achieve an annual economic growth rate of 6.5% in the next decade and that the right policy tools are in place to avoid economic bubbles.
He said that with the right policy intervention, Malaysia will achieve economic growth this year one or two percentage points above the central bank's 4.5%-5.5% forecast.
"It will be hard work, but it [6%-plus growth] is achievable," the prime minister said.
He said the target of making Malaysia a developed country by 2020 remains in place. "We don't have a choice. We are confident we know what will be the right set of fiscal and monetary policies for us," he said.
Late last month, Najib announced that the government plans to continue selling state assets and launch more joint projects with the private sector as part of a new economic blueprint to attract foreign investment.
That blueprint, dubbed the New Economic Model, calls for higher investment--especially from the private sector--to propel annual economic expansion to 6.5% over the next decade.
The plan also includes a proposal to eliminating racial discrimination and quotas, which many economists say has held back the Southeast Asian nation's growth potential.
The prime minister, however, said Malaysia remains one of the most heavily subsidized nations in the world and that there is a need to cut these subsidies gradually.
He said oil subsidies alone cost the government MYR73 billion a year.
"We cannot go on like this with oil subsidies. But we won't cut them at once, this will be political hara-kiri. It will be done gradually," Najib said.
The prime minister also said there are no plans to list state-owned oil and gas company Petroliam Nasional Bhd., known as Petronas.
Talking about the global economic situation, Najib said the Group of 20 nations will be the driving force this century and that he expects trade friction between the U.S. and China to be "quite sharp."
"I see the pressure on China [from the U.S.] to revalue the yuan to be quite intense," Najib said, adding that, in the short term, the world could see a new wave of protectionism.
-By Costas Paris, Dow Jones Newswires; +65 64154 152;
costas.paris@dowjones.com
(Enlai Yeoh, Jacques Van Wersch contributed to this article.)
(END) Dow Jones Newswires
07-04-10 0351GMT
