RAM Ratings ranks Selangor, Sarawak, Perak, Johor and Penang as robust

Published on 24 Sep 2018.

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RAM Ratings views the implicit strength of five Malaysian states as robust, while placing two states each in the very strong and strong categories and ranking the remaining four states as adequate, given wide differences between the states, ranging from their economic structures to financial management as well as institutional strengths and capacities. Selangor, Sarawak, Perak, Johor and Penang, that are in the robust category, generally feature favourable economic metrics, where diversification has led to growth resilience. Financial management is sound, with persistent operational surpluses and sizeable reserves. On the other hand, states placed in the lowest category have significant development gaps and noticeable institutional shortcomings that result in large arrears in both revenue collection and debt repayment. Such variations between the states are considered in RAM’s State Implicit Strength – the first of such publications on Malaysian states to meet market demand for financial and macroeconomic views on all 13 states. 

“RAM’s State Implicit Strength reports expand on our Malaysia States Data Scan which was released last year. The State Implicit Strength facilitates a better understanding of state credit fundamentals and represents how RAM ranks the ability of states to extend extraordinary support to state-owned entities and government-linked financial institutions,” says Esther Lai, RAM’s Head of Sovereign Ratings. RAM’s commentary – State Implicit Strength Enhances SOE Ratings – elaborates on the states’ credit fundamentals and explains our approach to rating different transactions involving Malaysian state governments.

In view of greater accountability and transparency, states as well as state-owned entities are likely to be more financially independent as transfers from government coffers to the broader public sector are tightened amid measures to strengthen their performance. “In line with our thought leadership and market development initiatives since 1990, RAM’s latest innovation is a response to the growing interest in fund raising for state-related projects,” adds Foo Su Yin, CEO of RAM. 

RAM ranks the implicit strength of states as robust, very strong, strong and adequate, depending on their respective economic and financial metrics as well as institutional settings. Based on our rating framework, stronger state implicit strength and a higher likelihood of extraordinary support accords multiple notches of enhancement to the stand-alone credit strength of the state-owned entity. Besides aiding debt arrangers in structuring fundraising exercises, the state implicit strength also supports the needs of other stakeholders with an interest in the financial health of states, their growth and economic structure.

To purchase State Implicit Strength reports at RM150 per copy or RM1,500 for all 13, please contact Ain at (603) 7628 1108 or Faiez (603) 7628 1104, or fax (603) 2711 1701/(603) 7620 8250, or e-mail ain@ram.com.my or faiez@ram.com.my.

View RAM’s State Implicit Strength Brochure here.


Analytical contact
Esther Lai
(603) 7628 1037

Media contact
Padthma Subbiah
(603) 7628 1162

Publication Sales
Ain Sulaiman/Faiez Zulkifli


The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
© Copyright 2018 by RAM Rating Services Berhad

Publication Date Published Category
StandPoint Commentary - State Implicit Strength Enhances SOE ratings 24-Sep-2018 Commentaries View PDF