Despite a double whammy of crashing oil prices and a sharply-depreciating , Malaysia's economy remains in good shape, the country's minister of International Trade and Industry said.
"From our point of view, our economy remains strong and stable,"Mustapa Mohamed told CNBC at the World Economic Forum in Jakarta on Tuesday.
"There is a perception that oil plays a very important role. [In fact,] we're only a very small net oil exporter, while being dependent on manufacturing and other commodities [like rubber and tin]. We are very diversified," the 64-year-old said.
With petroleum products and liquefied natural gas making up 14 percent of Malaysian exports, analysts have been quick to point out the damaging impact of oil prices' drastic decline on emerging Asia's only major energy exporting economy.
Global oil prices have been in free-fall since last June on a host of concerns including weak demand, a strong U.S. dollar and booming U.S. oil production contributing to a supply glut.
According to the World Bank's estimates, Malaysia's gross domestic product (GDP) for 2015 is expected to slow to 4.7 percent, significantly lower from the 6 percent growth last year. The persistent rout in the price of crude oil was named as the key risk, with one-fifth of the government's revenue dependent on the commodity, the bank's East Asia Pacific Economic Update released on April 13 said.
But, the trade minister told CNBC the government has taken steps to prop up its economy. For one, the introduction of a goods and services tax (GST) of 6 percent this month will help to rein in the country's widening fiscal deficit.
"We recognize challenges, but we've responded with [policies like the GST] which will strengthen our fiscal situation and in turn the fundamentals of the Malaysian economy. We believe we will be able to inject stability into the system," Mohamed said.
A sharp plunge in the local currency has also taken a toll on the Southeast Asian economy, but Mohamed believes the ringgit's movements do not reflect domestic weakness. Going forward, the country's economic fundamentals will help the Malaysian dollar withstand a rise in U.S. interest rates, which is widely speculated to be September this year.
The minister's optimism is shared by the country's business leaders.
"I wouldn't worry so much about the ringgit. I have comfort in the governor of Bank Negara Malaysia who said the currency is under-valued. Remember we once pegged the currency at 3.80 to the U.S. dollar [in 1998 following the East Asian Financial Crisis]. We did pretty well then so I think we can live with current levels," Francis Yeoh, managing director of investment holding and management company YTL Corporation, told CNBC at the Credit Suisse Global Megatrends Conference on Tuesday.
The U.S. dollar was fetching around 3.6480 ringgit late Tuesday, with the Malaysian currency around 12.3 percent weaker compared to a year ago.
Political strife 'not a crisis'
However, concerns surrounding Malaysia don't end there. A potentially-destabilizing political strife emerged earlier this month when former leader Mahathir Mohamad demanded current prime minister Najib Razak to step down over his handling of the state-owned investment agency 1Malaysia Development Berhad (1MDB).
"When he cannot explain where billions of ringgit have gone to and his involvement with questionable people in the management of 1MDB, I feel that he is not fit to be the prime minister," Dr Mahathir wrote in a blog post according to the Malaysian Insider. In another stinging attack, the longest-serving premier in Malaysian history accused Najib of "kowtowing to Singapore' by compromising on issues like a high-speed rail project.
Responding to a question on whether the saga has created a "crisis of confidence" towards the government, Mohamed acknowledged that while the political challenge mounted by Dr Mahathir is "a challenge, it is not a crisis."
"There's no crisis of confidence. It is not the first time he's been critical of the government. We know there are things that need to be rectified [because] there is no place in the world that is perfect," he told CNBC. "[Despite] the intense attack on the prime minister, we've been able to ensure stability in the party. We are managing alright and we will get through this."