KUALA LUMPUR: The ringgit's depreciation will help boost export competitiveness and tourist arrivals in the country, says the Malaysian Institute of Economic Research (MIER).

Executive Director Dr Zakariah Abdul Rashid also said the decline would encourage wider import substitution activities into the country.

The ringgit has hit an all-time low in five years as emerging Asian currencies lose ground, among others, due to retreating crude oil prices.

As oil is a key Malaysian exports, making up to 30 per cent of the gross domestic product (GDP) in 2014, the decline in crude oil prices by 50 per cent from June last year, has had a significant impact on the ringgit.

The exchange rate between the ringgit and the US dollar went up by between RM3.28 to RM3.50 in 2013 and 2014.

"However, with good governance, the fall can improve trade balance and further accelerate foreign direct investments, in taking advantage of the lower cost of doing business in the country," Zakariah said.

He told reporters this at a media conference on the MIER 4th Quarter 2014 Update and Malaysian Economic Outlook, here today.

He said MIER anticipates 2015 to be tough, with the GDP growth expected to moderate at five per cent, and was bullish on Malaysia's tourism market following the ringgit's decline as travelers choose the country as their holiday destination.

"We are also confident that the Malaysia Year of Festivals 2015 campaign would help boost tourism receipts," Zakariah added.

MIER estimates the 2014 growth at 5.9 per cent, well above the socially efficient level of output (5.5 per cent per annum), and the output gap remaining moderately positive, pointing to a continued robust domestic demand. -- BERNAMA