On 27th September 2024, the Ringgit closed at RM4.14 to 1 USD. In my last article, I had predicted the ringgit to reach RM4.20 by end of December 2024. At this rate of improvement of the Ringgit, many experts are expecting RM4 to 1USD to be the norm in 2025.
While this is broadly very good news, however, I have to caution all that we would like the Ringgit improvement to be gradual rather than sudden, as this will make Malaysian exports less competitive in the coming months. In addition to that, we have to track and possibly take measures from the current flood of cheaper China origin goods in the region. This phenomenon may impact our manufacturing sector.
Overall, the Ringgit’s rise means that foreign direct investment is really flowing in. This is evident in the number of construction of data centres and expansion of high-tech manufacturing facilities. I was in Penang and Kedah very recently to visit five of these high-tech semi-conductor factories; namely Hotayi (Taiwanese), Infineon (German), Silterra (Malaysian), AT&S (Austrian) and Renesas (Japanese).
The ringgit is also stronger because the domestic capital outflow has somewhat stopped, be it from the private sector or the GLICs. This is important as it signifies that the domestic sentiment in Malaysia now firmly believes that we have political stability and that the country is now ready for domestic re-investments. The flow of tourists, particularly from China has also helped but ironically, in the most recent long weekend, the stronger Ringgit encouraged many Malaysians heading to our neighbour Thailand for the break.
While we await structural governance reforms, I am at least comforted by our economic policies making progress. In particular, many of us are awaiting the implementation of government policies for two sectors; (a) renewable energy sector and, (b) rare earth. At the moment both sectors are in a deadlock situation but efforts to refine them is in progress.
If the policies for these two sectors can be resolved to be fair to all parties and are decisively forward looking, these two sectors should be sufficient to power the Malaysian economy closer to net zero and into a new green tech boom, thus supplementing our expanding semi-con and data server capabilities.
More importantly, if the Madani government is able to overcome the undue influence of crony capitalism, and herald a new generation of entrepreneurs who are more nationalistic and willing to pay workers fairly, we will see a truly resurgent Malaysia.
As your MP, it is my mission to work on, influence and deliver economic progress while at the same time, continue to push for governance reforms. Maybe, this is the deal that we in Malaysia have to accept for now, that is to focus on feeding the stomach first and then only to free the mind. However, I sincerely believe that it is not futile or wrong to push both economic and political reforms at the same time. And that is exactly what I will continue to do.
