Brexit : Is there impact on Malaysia

This week, the UK leaving the European Union (EU) has become a huge news. What is impact to Malaysia? has given some of the thing that could impact Malaysia such as :-

1) Tertiary education
– Malaysians are attracted to tertiary education in the UK, which contributes to the rise in property investment in the country.

Though Brexit will unlikely affect the quality of the education offered to students, the sliding sterling can be beneficial to many parents who are paying for tuition fees in Sterling — that was about 6x to the Malaysian ringgit last month.

At the time of writing, the ringgit was at 5.5586 to the pound. If the currency continues to slide, Malaysian parents may be able to gain a respite from the sliding ringgit.

2) Investment to the UK
Due to the UK’s popularity with international students, many Malaysian property investors are looking to invest in student accommodation in the UK.

In fact, Malaysians make up one of the biggest investors in the property market in the UK, especially institutional investors such as the Employees Provident Fund, Retirement Fund Inc. (KWAP) and Armed Forces Fund Board (LTAT).

According to Virata Thaivasigamony, director of Cornerstone International Properties, a property real estate investment firm, 73% of overseas Malaysian property investors in 2015 have gone into purpose-built student accommodation (PBSA) due to its 8% yields.

However, with the risk of recession post-Brexit as predicted by the International Monetary Fund (IMF), experts are worried that the faltering economy would badly affect property prices, thereby hindering the ability to construct more homes, and also allowing overseas investors to buy property at a lower value.

This could be good news for new Malaysian property investors with holding power, who are looking to break into the UK property market. With the lower currency exchange rate and also lower housing prices, it could be time for these investors to start shopping for a good buy.

However, if this does happen, it will not be favourable to existing property owners. In light of the possible recession, property investment can be difficult, either in rental or in sale.

3) British pensioners in Malaysia
– The British state pension system allows pensioners to receive their pension abroad. Although the pension paid is not subject to income tax in Malaysia, it is still affected by the currency volatility.

With the possibly continuous downward slide of the sterling pound due to Brexit, British pensioners in Malaysia can expect a much smaller retirement income moving forward.

In conclusion, the economic consequences of Brexit are likely to be indirect through aversion to risk assets or reduction in confidence. However, the depreciation of GBP might affect Malaysian investors in the UK. The wider impact is likely on the political aspect of the EU project.

More About Brexit on IMoney, click here

Source :- Malaysiakini

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