COMPELLING REASONS FOR A STRONGER RINGGIT, SAYS FORMER MINISTER

KUALA LUMPUR, May 5 (Bernama) -- Malaysia should aim for a stronger ringgit
in line with its ambition to be a high-income nation as there are compelling
reasons for this uptrend, former Cabinet minister Shahrir Samad
said Wednesday.

This, together with the New Economic Model (NEM), was timely and would give
Malaysia a shot-in-the-arm to remain competitive, he said.

Equally upbeat is Sorbonne-trained economist Dr Norraesah Mohamad, who
attributes the quick recovery in the Malaysian economy to Prime Minister Najib
Tun Razak's "quick response" to jumpstart the economy in the midst
of a severe global recession last year.

According to her, a strong reason for the recovery is the RM67 billion
(US$1=RM3.2) stimulus package injected into the economy last year which is still
filtering its way down.

Extolling the virtues of a stronger ringgit, Shahrir said this would
encourage the import of capital goods, which would help contribute to innovation
and the automation of industries in the country.

“It will also reduce the government’s subsidy bill since petrol, sugar and
flour, as the main subsidised products, are all denominated in US dollars. With
a reduction in subsidies, the government’s operational expenditure and its
deficit will also be reduced.”

Shahrir said a stronger ringgit would also make travelling abroad more
affordable for Malaysians and this would enhance their leisure time.

"Above all, a stronger ringgit will help improve the living standards of the
people by increasing their purchasing power through cheaper imports and lower
inflationary pressure," he said.

The ringgit is now hovering at a two-year high against the US dollar at 3.19
compared with 3.42 at the start of the year and last year’s peak of 3.72
recorded in March.

At nominal terms, the ringgit has appreciated about 6.7 per cent
year-to-date
against the US dollar. Compared with other regional currencies, the
ringgit has gained the most against the greenback since the start of the year.

With the strengthening of the ringgit, Malaysians can also look forward to
improved export receipts that will create more employment opportunities among
the small and medium enterprises.

The multiplier effects are beginning to take root in a building boom across
the country, according to analysts.

Dr Norraesah, who is also an Umno supreme council member, said: "There is
more money in the economy. The stability of the economy has led to rising
consumer confidence and increased domestic spending.

"What this means is that there are more jobs, higher spending power and
greater potential for growth."

Both local and foreign analysts have been saying that the Malaysian economy
is enjoying a strong recovery, with growth this year likely to overshoot most
predictions.

Some foreign analysts are even predicting growth of 8.0 per cent this year.

Singapore's DBS Bank has raised its growth forecast for the Malaysian
economy to 8.0 per cent from 5.7 per cent previously, expecting the strongest
full-year growth since 1996.

The DBS report joins a slew of others from securities houses that had
forecast Malaysia could register growth of over 7.0 per cent this year.

The most bullish among local securities houses is AmResearch at 8.0 per
cent.

Danny Quah, London School of Economics and Political Science (LSE) economics
professor, had stressed the importance of the NEM, saying that despite Malaysia
being one of only 13 countries to achieve an annual growth of over 7.0 per cent
in the last 25 years, the country has yet to fall within the high-income group
of countries.

"Without the NEM, we will be overtaken by our competitors such as Vietnam
and Indonesia, and Malaysia will fall within the bottom-income group of
countries," he told a talk over the weekend.

Prof Quah praised the prime minister for implementing the NEM, adding that
"I am impressed with the political leadership over its needs for strategic
reform initiatives and the acknowledgement that change is needed.

"The prime minister is constantly talking about how the market needs to be
merit-based and the need for more transparency," said Prof Quah, who also sits
on Malaysia's National Economic Advisory Council.

-- BERNAMA




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