KUALA LUMPUR: The country's international investment position remained favourable with a higher net external asset position of RM119.4 billion as at end-2023, said Bank Negara Malaysia.
This is equivalent to 6.6 per cent of gross domestic product (GDP) (end-2022: RM54.2 billion, or 3.0 per cent of GDP).
"The improvement mainly reflected the increase in external assets by RM180.6 billion in 2023, primarily in portfolio and direct investments," it said in its Economic and Monetary Review 2023 released yesterday.
The higher external assets also in part reflected exchange rate valuation effects, particularly due to the weaker ringgit against the US dollar, it added.
This more than offset the increases in external liabilities amounting to RM115.5 billion, mainly reflecting net inflows of foreign direct investment (FDI) and other investments.
Net foreign currency (FCY) external asset position stood at RM1.3 trillion, or 70.4 per cent of GDP (2022: RM1.2 trillion, or 64.5 per cent of GDP).
With this position, the ringgit exchange rate depreciation translated to a larger increase in FCY external assets compared to FCY external liabilities.
Malaysia's external debt amounted to RM1.24 trillion as at end-2023, or 68.2 per cent of GDP (2022: RM1.14 trillion, 63.9 per cent of GDP).
The central bank said the higher external debt was driven mainly by exchange rate valuation effects following the weakening of the ringgit, particularly against the US dollar.
The increase in external debt was also attributed to larger intragroup loans and higher non-resident deposits.
These were partially offset by net repayment of international bonds and notes, largely by corporates.
"Risks surrounding Malaysia's external debt were well-contained given the favourable maturity and currency profiles.
"Coupled with Bank Negara's prudential and hedging requirements on corporates and banks, external debt remained manageable."
As at end-2023, the external debt-at-risk for corporates and banks amounted RM9.2 billion and RM90.9 billion, respectively (2022: RM9.8 billion and RM85.9 billion, respectively).
Cumulatively, these amounted to 8.1 per cent of Malaysia's total external debt and 19.2 per cent of international reserves (2022: 8.4 per cent and 19 per cent, respectively).
About a third of external debt was denominated in ringgit (33.1 per cent; 2022: 33.1 per cent), and therefore not affected by fluctuations in the ringgit exchange rate.
Out of this ringgit-denominated external debt, 65.5 per cent were in the form of non-resident holdings of domestic debt securities and 16.8 per cent in non-resident deposits.
Meanwhile, the remainder of external debt dominated in FCY was largely subject to prudential requirements on liquidity and funding risk management, Bank Negara said.
Moreover, intragroup borrowings accounted for 43 per cent of FCY external debt, which were generally more stable and on concessionary terms.
Bank Negara's international reserves amounted to US$113.5 billion (or RM520.9 billion) as at end-2023 (2022: US$114.7 billion). This was sufficient to finance 5.4 months of imports of goods and services and was 1.0 time the short-term external debt.
"Notwithstanding this, other means of meeting external obligations remain available, and continue to be strengthened, in particular, the accumulation of FCY external assets by banks and corporates over the years.
"These assets, particularly the liquid portion amounting to RM873.9 billion, can be drawn upon to meet their short-term external debt obligations of RM518.4 billion without creating a claim on international reserves." it said.