Southeast Asian countries are called the Asian tigers thanks to their fast growing economies and technological development. Most people would guess that investing in these countries might be very profitable. Of course, there are many benefits in investing in these countries as their economies are hitting new highs year-on-year. However, we should look closer at the problems of these countries and talk about how to avoid the pitfalls of investing in these Asian tigers. Amidst all the hype that these developing economies are getting, one country is gaining bigger attention from foreign investors-Malaysia.
Malaysia is a small country in Southeast Asia. For the last decade, this country has shown tremendous growth. Its technological advance is enormous. This is supported by the growing number of business centers that are being established in the country.
This country seems very profitable for potential investors who are eyeing Malaysia as their next cash cow. However, there are many topics which should be considered before inking an investment deal. Firstly, we have to look at the previous performance of the Malaysian share funds. During the first few years, the funds recorded impressive performance. However, latest figures show that growth has been slowing down. Some argue that this situation is due to the stabilizing market. However, economic experts say that this is not entirely true.
The economic growth is slower because of the growing oversupply. People are unable to buy the available product supply which subsequently affects the price. Another factor that can be blamed is political instability. Like in other countries, political instability influences the behavior of shares on the market. The changing governments and the presence of fragile political systems have long-term impact on the future behavior of your investments.
Political instability can also be related to currency problems and risks. If you’re a wise investor, then currency risk should be one of your biggest considerations. It should also be noted that there are specific rules applying to specific countries. This means that you have to study the country’s banking profile before splurging your money. A rule in Singapore, for example, may not be applicable to Malaysia. With regards to the banking system, we cannot forget to mention that high loan rates, 4.2% p.a., are also key considerations for investors.
An investor should also take note of the country’s features such as its population. Overcrowded cities often result to traffic jams which can be harmful to business operations. The country’s system is placed at higher risk which may enormously influence investors and their assets.
People’s perception towards corruption can also be seen as another fundamental indicator of a country’s investment profile. For Malaysia, corruption has become a normal part of the system. Fixing this norm is very important for countries like Malaysia to sustain economic growth.
Some experts and analysts recommend investing in Malaysia. While the country does exhibit many advantages, each potential investor should take notice of the above mentioned factors which deeply influence day-to-day development of all Southeast Asian countries. Investors have to consider that previous economic performance of a country does not guarantee a sure win.