The ongoing political tension in neighboring Thailand is not good for Malaysia, the Malaysian Investors' Association (MIA) said on Wednesday.
"It's contagious. When your neighbor's house is on fire, you feel the heat. The collapse of the Thai financial market in 1997 spilled over to Malaysia.
"Hopefully, history does not repeat itself," said MIA president P.H. Lim.
Thailand's GDP for this year is expected to dwindle further to minus 3.5 percent.
Many countries including the European Union had issued warning to their citizens not to travel to Bangkok and other parts of Thailand.
The current turmoil, combined with the airport shutdown late last year, will likely slash tourism revenue by a third or 200 billion bahts (5.6 billion U.S. dollars) from 2008 as foreigners shun the country, according to the Tourism Council of Thailand.
Thailand's currency value would weaken against the U.S. dollar, Lim said. Currently, one U.S. dollar equals 35.38 bahts.
"The currency depreciation will have a negative impact on our Malaysian ringgit as fund managers group Thailand and Malaysia as part of the ASEAN Zone, a big family of 500 million consumers," he said.
However, Singapore banks are likely to benefit when there is a currency flight from Thailand to seek a safe haven, Lim said.
The impact could economically spill over to Malaysia due to transboundary investments, tourism and trade between Malaysia and Thailand, he said.
Malaysia is a big importer of Thai rice, fish, vegetables, fruits and other agriculture products.
"Chaos in Bangkok followed by a State of Emergency will cripple transportation and mobility of goods. The loss per day may run into 100 million ringgit (27.7 million U.S. dollars).
"If the situation prolongs and is likely to drag on, we will see inflation in prices of Thai rice, fish, vegetables and other goods from Thailand," he said.
Source:Xinhua
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