Any positive news regarding the Malaysian economy has been wiped out by allegations of corruption at the government level, says an American fund. – The Malaysian Insider file pic, January 16, 2016.Malaysia’s faltering economy, hit by claims of “rife corruption” at the government level, is a sign that foreign investors should steer clear, a financial adviser says today.

In an article on the website of Nasdaq, the electronic US stock exchange, Peter Kohli said previous positive news regarding the Malaysian economy had been affected by allegations of corruption at the government level. 

“Malaysia’s economy is not firing on all cylinders,” he said, noting news reports in November that industrial output had slipped.

“I have written previously about Malaysia becoming a manufacturing hub for companies like Hyundai, but that positive news has been tempered with allegations of rife corruption in the government.”

Kohli, who is CEO of DMS Funds, said news of a RM2.6 billion political donation transferred into Prime Minister Datuk Seri Najib Razak’s personal accounts in particular have not helped investors’ confidence.

Other factors making Malaysia unattractive were the ringgit’s position as the worst performing Asian currency against the US dollar in 2015, and the slump in world oil prices. 

“I wish I had better news, but as long as the economy keeps contracting, foreign retail investors should stay clear. Look to Malaysia’s southern neighbour, the Philippines, as a better bet,” he said in the article.

Najib, who denies any wrongdoing, recently announced an impending revision to Budget 2016 in light of the country’s falling revenue from lower oil prices and uncertainties in the global economy.

The prime minister said the national budget needed to be “more realistic” and in line with the current economic situation, adding that outside factors beyond Malaysia’s control had influenced the economy, not the mistakes or weaknesses of the country.

Najib has been under fire over allegations of corruption and financial mismanagement related to his brainchild, state-owned investment firm 1Malaysia Development Bhd (1MDB), which had racked up debts of more than RM45 billion.

Elsewhere, a Bloomberg article quoting government estimates said Malaysia as Asia’s only major net oil exporter risked losing RM300 million for every US$1 per barrel drop.

The ringgit, Asia’s worst performing currency in 2015, slumped 19% last year and reached a 17-year low of 4.48 a dollar in September. – January 16, 2016.