My dear Subangites, 

On 28th February 2024, I delivered my Reply to the King’s Speech in Parliament. 

Since then, I have been receiving many feedback and comments regarding the same. 

Many have also requested an English version of the same. In response to those requests, this month’s jottings is essentially the English translation of my speech on reforms and the falling ringgit. 

Thank you Speaker, for giving me the opportunity to address the King’s speech.

After a year of the Madani government, I note that the Reformasi agenda has started. There has been parliamentary reforms and the enactment of the Fiscal Responsibility Act, albeit less strict and not as comprehensive. But despite that, there are still many more reforms that needs to be addressed.

Dear Speaker, the Madani Government now has a strong two-thirds majority. The Yang Di Pertuan Agong has advised the opposition during his maiden address to Parliament on Monday.

Thus, 2024 is the best chance to execute important Reformasi agenda policies.

So, my first point is that there are no more reasons this year not to be carrying out better governance reforms. Thus, 2024 is a very important year, much more crucial than 2023. This year will be the year that determines whether the Madani Government had the political will to execute more reforms.

I would like to ask the Right Honourable Tambun to give his views on the institutional reforms that will be implemented this year. In particular, will the Parliamentary Services Act and the Political Financing Act be tabled and passed this year?

My second point is on the hot topic of the Ringgit currency.

I do agree that the Madani government’s economic statistics in 2023 are better compared to the PN Government’s economic data of two to three years ago.

Currently, inflation is under control at 1.5% in December 2023, meaning that the average inflation in the first year of the Madani government is only at 2.5%.

This is far better than the 3.3% inflation rate of 2022 under the previous government. On unemployment, the 2023 Madani government recorded a rate of 3.3%, better than the previous government’s unemployment rate of 3.7% in 2022.

So if inflation is reduced, there is more employment, and with an improved and steady economy, why then has the Ringgit continued to fall?

Dear Speaker, in 1981 when I was 12 years old, my father sent me to study in Singapore. At that time, I remember that the Ringgit and Singapore dollar were more or less on par one for one.

The Ringgit to US Dollar was at a level of 1 USD to 2.5 Ringgit. More recently, the Ringgit to the Singapore Dollar has reached RM3.55, and the Ringgit to the US Dollar at RM4.80.

Dear Speaker, since the age of 12, I have seen the Ringgit steadily decline. The point I am trying to make is that this fall is not caused by one year of the Madani Government, but that this has been an accumulated problem of 30 years.

Dear Speaker, in the last 30 years, the Ringgit has steadily declined, but Malaysia has also enjoyed a good and successful export growth. Every year, we export more than we import. For the past 30 consecutive years, we have recorded trade surpluses.

What is puzzling is that in this very same period of 30 years, the Ringgit has continuously declined, but at the same time, we recorded trade surpluses. This is indeed a very strange economic puzzle; an economic conundrum.

Dear Speaker, to understand this phenomenon, we need to understand two things. First, like all goods and services, the Ringgit is also subjected to the laws of supply and demand.

If the supply is high and demand is low, the price be it apples or oranges or the Ringgit will fall in value. If the supply is low and demand is high, the price of apples or oranges or the Ringgit will rise.

Supply and demand is one of the most basic of economic principles. I explained this to my 11-year-old daughter at breakfast this morning and she understood it instantly. So, if the economy is better and our exports are strong, why then is the demand for the Ringgit not increasing, but instead devaluing?

The second thing you need to understand is that supply and demand can be impacted by behavioural economics. I believe that this is the main and real cause of the Ringgit’s devaluation.

The Malaysian Ringgit is primarily affected by the behavioural economics of confidence. What is this “confidence”? The clearest manifestation of confidence or, rather, lack of confidence that is most apparent in Malaysia’s economy, is the large capital outflow of the last 30 years.

In other words, the lack of investment confidence and overall poor confidence levels are the main factors for the steady outflow of capital, driving the devaluation of the Ringgit despite the trade surpluses.

Furthermore, 90% of Malaysia’s exports from the Electrical and Electronics sector – a robust industry, is not a contributor to the Gross National Income. Most of these factories are owned by foreign entities and the workforce largely consists of foreign workers.

This is the failure of the half-baked “Look East” policy of the past, which has neglected to facilitate an effective transfer of technology and failed to create many innovative and competitive Malaysian companies. Instead, it succeeded in creating a crony capitalist system that thrives on energy concessions, toll concessions, telecom concessions, port concessions, and monopolies of rice and sugar.

Industries such as palm oil, which were built on the hard work of Malaysian industrialists, are subjected to windfall tax but the extremely rich cronies, with lopsided government concessions, are not subjected to windfall tax.

If we continue to practise this wasped system, the better entrepreneurs will prefer to become cronies, and the already wealthy cronies will continue to pursue capital outflow, buying businesses, luxury houses, and assets abroad. Most of their economic gains have effectively become capital outflow.

If this system continues, the Ringgit will continue to decline and the people of Malaysia will continue to suffer while the Malaysian elite will continue to enjoy a luxurious life in “Kampung Knightsbridge, London”. The super-rich, the cronies of the two Tuns, have long parked their money in Singapore, London, Switzerland, BVI and tax havens around the world.

Dear Speaker, the decline of the Ringgit is thus not the fault of the Madani Government, which has only been in power for a year. It is a decades-long crony capitalism problem that has recently reached a tipping point.

In conclusion, Crony capitalism is the main contributor for the depreciation of the ringgit for 30 years until now. It is 99% of the cause!

What then caused this current tipping point of the Ringgit? In 2023, with the formation of the unity Madani Government, ordinary people, especially the middle class, had very high expectations that widespread reforms will happen.

When widespread reforms were not implemented, the confidence level of the middle class started to evaporate. I deeply understand this phenomenon as my constituency Subang, is the pre-eminent middle class city in Malaysia.

Thus then 2023 fall in confidence of the middle class, was the main cause of the recent Ringgit tipping point.

Thus the solution is not to be found from traditional fiscal or monetary policies. There is no need to adjust the Base Lending Rate as inflation will rise later. The solution is the realm of behavioural economics of politics, incentives, nudge, and societal re-engineering. How do you stop the emtixms capital outflow that weakens the Ringgit? The answer is comprehensive Reformasi, which is the first point of my speech.

The time to ponder in a Shakespearean manner has passed, it is no longer a case of should we reform or not to reform. The time for “to be or not to be” has passed. No more excuses, 100% Reformasi is the only solution.

Apart from reforming our system to fight crony capitalism and return confidence of the middle class, I would like to suggest two short term solutions that the Government can pursue now.

Firstly, instruct all GLICs and GLCs to be on standby to bring home money, equities and assets from abroad. We have to defend the Ringgit and not let the RM5 per US Dollar psychological mark be breached. If we cross the RM5 level, there will be an unimaginable economic spiral of which consequence will be severe. Second, the Government needs to quickly encourage the acceptance of high net worth resident investors. We need to provide a platform for them to invest and migrate to Malaysia.

This means clear immigration rules, with no corruption in the system. Roll out the red carpet and facilitate their residency and investments into Malaysia. In my interactions with many high net worth individuals from the Asia Pacific region, from Japan, Korea, China, Taiwan and Hong Kong, they are far more interested in migrating to Malaysia than to Singapore, Thailand or Vietnam.

Singapore is just too expensive, Thailand and Vietnam lacks a good comprehension of the English language. Malaysia has good food, good weather, peaceful life, cheap golfing, and better infrastructure than Thailand and Vietnam.

Even though Malaysian politics can be turbulent, high net worth individuals are not voters and do not interfere in domestic politics. They are here to spend and invest. What they are asking for is a corrupt-free government that can implement clear and efficient immigration rules.

These two things are short term solutions that theGovernment can and should pursue immediately.

Dear Speaker, the two points I presented are practical and achievable. I hope all Members of Parliament can engage and give feedback to the contents of my speech.

Thank you Dear Speaker for this opportunity, I fully supportthe King’s Speech presented by the Yang di-Pertuan Agong last Monday.