1MDB issues affect sentiment of local investors, but not foreign investors

"We attached a lot of importance to it (1MDB) here, clearly, but I think outside the country, it (1MDB) is not quite as hot an issue as it is here," he said at the Malaysia Economic Update 2015 forum here, today.

From Fitch Ratings' perspective on the 1MDB issue, McCormack said there were obviously some concerns with respect to governance in Malaysia.

However, he had also raised concerns on China's current economic transformation, moving from investment-led export oriented economy to consumption-led economy, and service oriented to domestic demand economy, which could impact Malaysia.

"Asia in general had leverage China's previous economic model tremendously. If China succeeds in its reform, it will be different kind of growth that would be taking place (in China), not the previous one that could be capitalised immediately by other countries in Asia.

"Northeast Asia would benefit more as their current economic model could gear towards the consumption story of China, which is benefiting from the new growth model," he said.

Meanwhile, he said the implementation of the Goods and Services Tax and the subsidy rationalisation had begun to show positive impact on Malaysia, which led the agency to change its outlook on the country from 'negative' to 'stable' earlier this year.

In July this year, Fitch Ratings had maintained Malaysia's long-term foreign currency default rating at A- and local currency at A, with the outlook revised to stable from negative previously, while Standard and Poor's Rating Services affirmed its A- rating with a stable outlook.