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What Is A Balance of Payment?
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The Balance of Payments is a summary statement of all financial transactions between Malaysia andthe rest of the world, published every three months. Every international transaction results in a money flow. Inflows of money are associated with sales of Malaysian goods and services overseas and incoming loans, investment and income transfers. Outflows of money occur when Malaysians buy foreign goods and services or lend, invest or transfer income overseas. The Balance of Payments shows how well Malaysia is balancing its inflows and outflows. The Balance of Payment has two main sections, namely the Current Account and Capital Account. Current Account looks into the transaction relating to goods and services, investment income and transfers. Exports and imports of goods and services is under this section. Capital Account records all long term capital and short term capital in or out of Malaysia. Long term capital investment generally refers to the foreign direct investment which brings employment and economic growth to a country. Short term capital investment generally refers to the purchase of stocks and bonds, as well as money deposits which are consider relatively liquid and stay in the country on a short term basis. This short term investment is also known as “hot money”. |
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