Regular self-contradictions, Lim Kit Siang should mean what he says
Tougher legislation and stiffer penalties needed to deter perpetrators of pollution  

An awful publicity stunt on Ringgit issues: 3 recommendations by MCA to counter a rising US Dollar

On Thursday    22-09-2022 11:57:00

22 September 2022

Press statement by MCA Spokesperson Saw Yee Fung


An awful publicity stunt on Ringgit issues:

3 recommendations by MCA to counter a rising US Dollar



Opposition parties have been hyping up the issue of our weakening Ringgit. They claim our Ringgit’s depreciation is due to ineffective governance. It is thus necessary to clarify and correct these misleading messages.


Allegation 1The weakening of Ringgit is a permanent issue.


A weakening currency is a global issue and most countries are confronted with the same issue.
A rise in the value of the US dollar is due to heightened demand. As the global economy slows down, coupled with geopolitical conflict (Russia-Ukraine war), and the Federal Reserve raising the Fed rates to fight inflationary pressures, a risk aversion phenomenon is witnessed in the capital market where the capital flows out substantially from emerging countries. It is obvious that market uncertainties are the main reasons underlying for the weakening of the Ringgit instead of a “structural” problem. The same issue has happened multiple times in history when confidence in the global economy was shaken.


Allegation 2: The government failed to curb inflation.


Given Lim Guan Eng’s experience as the ex-Finance Minister, his ignorance on the use of the Overnight Policy Rate (OPR) as an appropriate economic policy that is leveraged by our country comes as a surprise. Guan Eng seems lost in confusion.


Bank Negara Malaysia’s (BNM) decision to raise the OPR is to maintain a low and predictable pace of increase in the general level on the prices of goods and services, taking into consideration economic developments and the outlook.


Moreover, Guan Eng refrains from admiting that the inflation is classified as import inflation. In other words, it is an expected outcome when the US dollar continues to grow stronger and becomes beyond the control of the government.


MCA would like to propose 3 recommendations to the government to counter the rising  US dollar. This is because a strong dollar also implies a climb in the prices of imported goods, hence, increasing the burden of the Rakyat.


Firstly, the government should provide subsidies to importers of essential goods to fight inflation, especially food importers.

 

According to statistics, Malaysia’s food imports stand at more than RM50 billion per annum. Of the imported wheat, more than 80% hails from Australia, a country which is currently facing a historic high in inflation rates due to the intensified geopolitical conflict between Russia and Ukraine. To reduce our dependency on imported foods, the government ought to include the agricultural sector as the main pillar in the national development plan and attract more young talents to be part of it.


Secondly, the government should provide tax deductions/exemptions to technology companies to boost investment


Malaysia should raise its standards and not be easily satisfied with foreign direct investment (FDI) setting up production plants in our country. Instead, we need to acquire and import more high-end and high-skilled technology companies to invest in Malaysia, like how our neighbour, Singapore has practised for the past decades. Apart from providing tax benefits to these technology companies, we need to provide further intellectual property protections to these companies. This is anticipated to provide a safety net to the technology companies and enhance the competitiveness of our SMEs.

 

Thirdly, the government needs to bolster confidence and international reputation to attract investment


We have formulated many good policies and economic planning including the Green Technology Master Plan Malaysia (2017-2030), Twelfth Malaysia Plan (12MP), and many more. However, the progress of all these planning is hindered if not forced to stop. A lack of political stability also adds to the loss of confidence by foreigners on our country. Having a strong and stable government to lead the economy amidst the changing international dynamics is a matter of urgency.


When Pakatan Harapan was in power, its governance was nothing more than a failure. Simply canceling the mega projects alone caused our country to incur a financial loss in the form of compensation of more than RM2 billion. To score political mileage, they continued to mislead foreigners and locals by telling them that the country is facing the risk of bankruptcy. It would be surprising if any investors are willing to take on these “manufactured” risks. 


Guan Eng continues to paint a scenario of an incompetent government. Global uncertainties are the main reason behind the challenges which domestic currencies of countries worldwide are facing. It is true that the Ringgit against the USD has fallen by 9%.


However, we must not neglect the fact that the Ringgit has climbed against other major currencies. For instance, MYR/GBP (+8%), MYR/EUR (+4%), MYR/JPY100 (+12%), MYR/CNY (+1%), MYR/THB100 (+1%), and MYR/PHP100 (+3%).


There is another possibility that perhaps, Guan Eng is better in economics than the leaders of these countries, including China and the United Kingdom. As an outstanding export-oriented country in the region, a weakening currency is a double-edged sword. The positive impact is that Malaysia’s exports will be more competitive.


However, importers will face challenges. We understand the dilemmas of all the industries. As a result, we propose a myriad of policies benefitting the people in Budget 2023.


 

Table 1: Currency Value (Ringgit Vs Others) 3/1/22 - 19/9/22

Currency

3/1/2022

19-Sep-22

Changes (%)

USD

4.17

4.55

9%

GBP

5.64

5.17

-8%

EUR

4.73

4.54

-4%

JPY100

3.62

3.17

-12%

CHF

4.57

4.70

3%

AUD

3.03

3.04

0%

CAD

3.29

3.42

4%

SGD

3.09

3.23

4%

HKD100

53.50

57.97

8%

THB100

12.49

12.31

-1%

PHP100

8.18

7.93

-3%

TWD100

15.11

14.47

-4%

KRW100

0.35

0.33

-7%

IDR100

0.03

0.03

4%

SAR100

111.17

121.07

9%

SDR

5.84

5.89

1%

CNY

0.66

0.65

-1%

BND

3.09

3.23

4%

 

Source: Bank Negara Malaysia. https://www.bnm.gov.my/exchange-rates?p_p_id=bnm_exchange_rate_display_portlet&p_p_lifecycle=0&p_p_state=normal&p_p_mode=view&_bnm_exchange_rate_display_portlet_monthStart=0&_bnm_exchange_rate_display_portlet_yearStart=2022&_bnm_exchange_rate_display_portlet_monthEnd=8&_bnm_exchange_rate_display_portlet_yearEnd=2022&_bnm_exchange_rate_display_portlet_sessionTime=1700&_bnm_exchange_rate_display_portlet_rateType=MR&_bnm_exchange_rate_display_portlet_quotation=rm


Facebook live recording link: https://fb.watch/fHwabDFpHs/  

-MCA online-

Related Post

Expedite flood mitigation plans, state govt urged

Bayan Lepas flood mitigation project fails to impress & worsens situation

Floods after just half an hour of torrential downpour: Penang state govt seriously failed to undertake flood mitigation measures

Striving to capture Chinese votes in Penang

BN government prioritises advancement of Malaysia