THE government will not impose capital controls except in urgent situations Read more: 'No capital controls plan

THE government will not impose capital controls except in urgent situations, such as a recurrence of the 1997-1998 Asian financial crisis.

Deputy Finance Minister Datuk Donald Lim said Malaysia had the ability to control the in-flow of capital and it was monitoring the situation.

"Our reserves are high at US$105 billion while our external debt remains low at 30 per cent of gross national product," he said in reply to a question by Khairy Jamaluddin (BN-Rembau) yesterday.


In a supplementary question, Khairy said the International Monetary Fund and World Bank had warned of the "hot money" problem, whereby sudden capital inflows could affect economic stability.

Lim said the government was monitoring of the types of fund that was entering the country.

"However, should there be an urgent situation like the one we faced in 1998, we will take strict actions."


Lim also said most of the foreign direct investment in Malaysia was channelled to the manufacturing and services sectors.

Lim said the amount of capital entering the country in the first half of the year showed an increase compared to the same period last year due to improved investor confidence and growth in the economy.