Media statement by Dr. Hiew King Cheu in Kota Kinabalu on Tuesday, 8^th May 2012:

Weak Malaysian Ringgit

The differences in the face value of the Malaysian Ringgit when compared with the Singapore Dollar and Brunei Dollar in the region are really alarming to a lot of Malaysian. The Ringgit used to be a strong currency, and if not stronger than the other currencies in the region. Today the Malaysian Riggit has fallen to a very low level of worth and can no longer recover its comparative foreign exchange value.

When asking on why the value of the ringgit had drop so much in the foreign currency exchange, the Ministry of Finance replied that this is largely depending on the current currency exchange market condition from time to time. It is also depending on the market demand and the development in the country. The value of the ringgit with compared to the Singapore and Brunei Dollar is affected the exchange rate at that time.

Even though Ringgit drop by 2.3% against Singapore and Brunei dollar in 2011, if we compared this for a longer period of time from 2010 to 2nd April 2012, the Ringgit actually had increased our Ringgit value against the Dollar by 0.1% during that period.

For Singapore, they utilized a monitory system to stabilize their Dollar exchange rate. However Brunei through their Currency Board ascertained their currency value to be set and based on the Singapore Dollar. Therefore, when Singapore Dollar increases in value, the Brunei Dollar also increases the same. This is different in Malaysia, whereby we are using a system of currency value increment based on the monitory policy of the country to ensure the stability of our currency is inline with the trend of economy development. The Singapore rate of inflation has increased seriously and they have to increase the face value of their currency to counter their inflation.

Malaysia has the policy of "Non Internationalization" of the Ringgit, whereby the Ringgit is not being traded outside Malaysia. This is to ensure that the Ringgit value is not subjected to speculative activities outside Malaysia. The trading of Ringgit is only allowed to be carried with the licensed bank in Malaysia.

However, Malaysia has a liberal currency exchange policy, which encourages the trading of foreign currencies to enhance the competitiveness in the local economy and the international business sectors. This is also to promote the overall business by using the local currency.

The Minister has not answered the question as to why our Ringgit has fallen that far when compared to the Singapore and Brunei Dollars. The Ministry had siding that Singapore and Brunei saying that they have their system in controlling and stabilizing their currency in the International currency market, and why should we not following the same monitory system? Furthermore, why should we close our door for not going international, and why should we compare with the Singapore and Brunei Dollar by giving us the detail on a 2.3% value drop but in fact we had increased by 0.1%. Today, the international business is done in US Dollar no matter it is export or import. The true fact is, the Ringgit exchange rate is based on international exchange rate, and if the Ringgit is being "locked in", how can we be competitive? How many people actually deal their international business in Ringgit?

It is a shame that the Malaysian Ringgit is falling behind while Singapore and Brunei Dollar is moving ahead. Why we have not adopted the same policy on currency like them?

* Dr Hiew King Cheu, MP for Kota Kinabalu