Declining Ringgit a no-confidence vote on PH-BN government

(NST) – THE ringgit is being battered, a fact everyone agrees on. It is as to how to rescue the ringgit is where they differ. But one thing is for sure, that the depreciation of the ringgit has nothing to do with the state of the Malaysian economy is economic nonsense.

It is also a dangerous view to take if you are tasked with nursing the health of the economy. Dangerous because they will be prevented from doing the right thing, which is to reengineer the economy. Repairing the economy is not unlike mending the heart.

Malaysia needs an open surgery of the economy and like in an open heart surgery, the heart is taken out and life kept living by other means. Now people are hotly debating what “other means” are.

Those who have lived through such a surgery of the economy will remember the ringgit peg. It worked in 1998, but there is no guarantee it will work again. Then it was thought that the weak ringgit was the work of currency speculator George Soros.

The allegation wasn’t without basis. Six years before, Soros broke the Bank of England with his “Black Wednesday” raid. Britain’s central bank reportedly spent £3.3 billion, but still it wasn’t enough to stop the bleeding.

How could it? It was no match for Soros’ US$10 billion. If media reports were right, Soros made US$1 billion. Not an economic gain in any sense of the word. But that is a Leader for another time.

Be that as it may, some deep thinking on the nature of economic surgery is needed. Unthinking dismissals won’t help. Such deep thinking must focus on the drivers of the exchange rate and on the disabilities of the Malaysian economy.

This is no job for politicians whose longest time horizon is the next election. Politics almost always trumps economics, but it mustn’t be allowed to. Technocrats must be in the driver’s seat, though they often have been for fiscal policies, not monetary ones.

Uninformed politicians often dictate both. How much the uninformed minds of politicians are licensed to dictate both will determine the fate of the economy. The dollar is on the tear because it is the world’s currency, though the global shine is wearing off with more developing and emerging economies trading in their own currencies. The ringgit has a growth room here.

The ringgit will do well, too, if we rehabilitate the economy. Opportunities are many but one example will drive home the point about how the fate of the ringgit is tied to a robust economy. The agriculture sector presents such a rehabilitation opportunity.

Growing it means Malaysia will save more than RM75.71 billion on its food import bill, that is how much in the red we were last year. In 2021, it was RM63.65 billion. Except for 2018, Malaysia’s food import bill has been a rise-and-rise story since 2012.

The sad fact is that we can grow most of the food we import. Why we stopped growing them at home isn’t a mystery. Politicians and technocrats alike fell in love with a new darling: manufacturing. But not all we manufacture we can eat.

Some food has to be grown. It is not too late to rekindle the old love for agriculture. It’ll sure save us and our ringgit.