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The Sun
20 hours ago
- Business
- The Sun
MARC Ratings: Triple ‘A' with stable outlook for Johor
PETALING JAYA: Malaysian Rating Corporation Bhd (MARC Ratings) has assigned an unsolicited sub-sovereign credit rating of AAA, with a stable outlook, to Johor. The rating reflects the state's resilient and growing economy, consistent fiscal surpluses, low debt levels, and a stable political landscape supporting its long-term development. MARC Ratings noted that Johor plays a key role in Malaysia's economy, contributing RM148.2 billion or 9.5% to the national gross domestic product (GDP) in 2023. This strength is driven by a robust services sector – making up 54% of its GDP – and the country's largest agricultural sector, accounting for nearly 20% of national output. Johor's proximity to Singapore has generated significant spillovers in retail, hospitality, and investment, reinforcing its economic momentum. The upcoming Johor-Singapore Special Economic Zone (JS-SEZ) is expected to accelerate high-value growth by attracting advanced industries. In terms of fiscal management, Johor's debt has remained at just 0.1% of GDP from 2021 to 2023 – one of the lowest in the country – thanks to disciplined financial practices and growing tax revenues. The state has recorded consistent fiscal surpluses over the past decade, with the only deficit occurring in 2021 due to pandemic-related revenue declines, MARC Ratings said. These efforts have allowed Johor to build healthy reserves, rising to RM2.4 billion in 2023 from RM1.8 billion in 2013. At the same time, it has maintained a strong focus on development, with 39.4% of total expenditure allocated to development projects between 2019 and 2023. While Johor's revenue structure is solid, MARC Ratings said, it remains reliant on traditional sources like quit rent and land title premiums. To boost fiscal sustainability, the state has introduced new revenue-enhancing measures for 2025. The consolidated funds-to-expenditure ratio, though slightly reduced to 143.3% (2019–2023) from 174.5% (2014–2018), still signals strong liquidity and financial flexibility. MARC Ratings also highlighted Johor's consistent political stability as a key strength. 'The stable outlook reflects our expectation that Johor will continue its disciplined fiscal practices and maintain healthy surpluses in the medium term,' it said. 'Strong revenue from established sources and robust economic activity will support financial stability. Moving forward, additional revenue growth and efficient development spending will be crucial to preserving Johor's strong credit profile.'
Malaysian Reserve
a day ago
- Business
- Malaysian Reserve
Johor debt levels low, disciplined fiscal management, says MARC
JOHOR has been assigned an unsolicited sub-sovereign credit rating of AAA with a stable outlook, reflecting the state's resilient and expanding economy, persistent fiscal surpluses, exceptionally low debt levels and stable political environment that underpins its long-term development trajectory. In a note released today, MARC Ratings Bhd said in terms of fiscal management, Johor's debt levels are among the lowest in Malaysia, having remained at a low level of 0.1% of GDP from 2021 to 2023, supported by disciplined fiscal management and a consistently growing tax revenue base. 'Johor has sustained an impressive track record of fiscal surpluses over the past decade, with the sole exception of a deficit recorded in 2021 due to pandemic-related revenue shortfalls,' it said. It said the 'prudent' fiscal management has enabled the state to accumulate substantial reserves, which reached RM2.4 billion in 2023, up from RM1.8 billion in 2013. Nonetheless, it said the state has consistently maintained a high level of development expenditure, allocating 39.4% of its total expenditure towards development between 2019 and 2023. It noted that Johor holds a significant position in Malaysia's economy, contributing RM148.2 billion or 9.5% to the national real gross domestic product (GDP) in 2023. 'This strength is anchored by a robust services sector, which accounts for 54% of its GDP, alongside the country's largest agricultural sector, contributing nearly a fifth of national agricultural output,' it said. It added that the state's strategic proximity to Singapore has generated substantial economic spillovers, particularly in the retail, hospitality, and investment sectors, reinforcing Johor's economic momentum. The upcoming Johor-Singapore Special Economic Zone (JS-SEZ), with its ambitious development agenda, is expected to catalyse higher level growth by attracting high-value industries. While Johor's revenue structure is robust, it said the state could further benefit from strategies aimed at expanding its diversification as it remains reliant on traditional sources such as quit rent and land title premiums. As such, it said the state has introduced several revenue-enhancing measures for 2025 to build additional fiscal buffers to support long-term fiscal sustainability. The consolidated funds-to-expenditure ratio, while having moderated to 143.3% (2019–2023) from 174.5% (2014–2018), still reflects strong liquidity and financial flexibility. 'Furthermore, Johor benefits from strong and consistent political representation. Historically, Johor's political stability has been notably characterised by the longstanding dominance of the Barisan Nasional (BN) coalition, which has successfully secured the majority in all but one state election. 'The current alignment with the federal Unity Government enhances policy coordination and facilitates the implementation of national economic blueprints at the state level,' it said. — TMR
