KUALA LUMPUR: Economists have backed the government's view that Malaysia will face significant negative impacts if BlackRock Inc pulls out its investments from the country.
They acknowledged that a complete withdrawal of BlackRock investment can harm the nation's economic growth and give a bad signal to global investors.
Several quarters have been urging Putrajaya to scrap the Malaysia Airports Holdings Bhd (MAHB) privatisation deal with Global Infrastructure Partners given the latter's ties with BlackRock.
BlackRock has been accused of "profiteering from genocide" through its stakes in the US defence firms that allegedly manufacture weapons used by Israel.
International Islamic University Malaysia political science department assistant professor Dr Lau Zhe Wei said Malaysia cannot afford to withdraw "all Israel-linked investments" and questioned whether Malaysians can accept not using platforms such as Facebook, GPS and Google.
"Nowadays, anything that is related to Jewish, for example, is related to Israel. We talk about Facebook, GPS and Google, for example. The whole thing that we use is something that you can avoid.
"So back to the question. Is it possible for us to not accept these investments? If from the beginning we never accept it and we can survive without using it, then it's perfectly fine.
"We can withdraw the investments very easily, but how are we going to replace the value? Are they imprinted onto our economy? Are we ready to face the impact? These questions are actually not to be answered by politicians alone but by Malaysians as well. Are we prepared for the implications? If yes, then go ahead and cut off all ties."
Lau added: "The withdrawal of BlackRock's investments from Malaysia will definitely chase out investors."
Lau was commenting on Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz's remarks that BlackRock pulling out its investments from the country will have implications and negative impacts on efforts to realise the country's investment and economic agenda.
Tengku Zafrul said BlackRock, which is the largest asset manager in the world with assets under management worth US$10.5 trillion as at March 31, holds equity investments in 100 listed companies in Malaysia as of May this year.
"Overall, BlackRock owns assets worth RM27.5 billion in Malaysia," he said during the minister's question time in the Dewan Rakyat today.
BlackRock is also a shareholder of several large multinational companies operating in Malaysia including Microsoft, Boeing, Intel and Texas Instruments.
Putra Business School economic analyst Associate Professor Dr Ahmed Razman Abdul Latiff agreed that a complete withdrawal of BlackRock investments can hurt Malaysia's economic growth.
He, nevertheless, suggested that if need be, Malaysia ought to seek alternative global investors to replace BlackRock investments gradually.
Centre for Market Education chief executive officer Carmelo Ferlito said a BlackRock withdrawal will give a bad impression to the outside world
"It would seem that Malaysia follows non-economic logic and can take ad hoc decisions on single investors. This may discourage other investors and give the wrong image," he remarked.
Meanwhile, an analyst said the BlackRock issue seems to have stemmed from the United Nation report which calls for defence companies to stop delivery to Israel.
"The report further warns financial institutions investing in the arms companies involved in supplying weapons to Israel. So it's guilty by association.
"If this is the basis of barring investors, we will have to be consistent and also ban from countries that oppress Muslims or are actively persecuting them. This list can be extended to include India, China and Myanmar.
"If we include the oppression of other religions and cultures, the ban list would be longer," he told Business Times.
The analyst added that the banning of Blackrock will lead to a significant element of uncertainty in investing and divesting from Malaysia.
"It will increase barriers to investment especially those involve taking risks and this will significantly curtail fund flows into Malaysia.
"In an open economy as Malaysia which depends on external demand, technology and talent to support economic growth, it would lead to a weakening of investor sentiment and future prospects surrounding Malaysia."
He added that it would make it challenging to market investments in Malaysia given the uncertainty over policy and social sentiments.
"The immediate impact of the ban on investments would be limited if the consortium (that is taking MAHB private) is able to find other investors. The damage to the Malaysian story, however, would be more lasting," he noted.