KUALA LUMPUR – The government will continue to focus on strengthening the economic fundamentals and structural reforms to ensure the country’s economy remains stable following the ringgit’s depreciation against the US dollar.
Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz said as stated by the World Bank, there is no quick and easy fix to the ringgit’s weaknesses compared to the strengthening US dollar.
Being a small and open economy, Malaysia is not spared the fallout from challenges confronting the whole world, he said in a statement issued today in response to various reports, concerns and questions put forward to his ministry, especially relating to the ringgit’s position and current developments in the nation’s economy.
Among others, he said, the government will ensure the nation’s current account always remains in surplus, driven by exports that continue to rise, and that the country does not experience a twin deficit.
“The current account has stayed positive this year with a total of RM3 billion for the first quarter and RM4.4 billion for the second quarter,” he noted.
Furthermore, Tengku Zafrul said, the government will continue its fiscal reform measures, including the tabling of the Fiscal Responsibility Act towards the end of 2022.
“The government will also diversify the nation’s economic structure and activities, particularly emphasising sectors that focus on the sustainability and environmental, social, and governance aspects as well as the digital economy,” he said, adding that these will create job opportunities that may offer higher salaries to Malaysians.
Of equal importance is that the country’s financial system and stock market continue to function well and in an orderly manner, he said.
To date, there has been no disruption to financial intermediation and lending activities continue to run smoothly, he noted.
“Business activities continue to have access to financing from banking institutions and the capital market. Meanwhile, the stock market continues to show a net inflow of RM6.7 billion from foreign investors and RM2.3 billion from retail investors,” he added
Tengku Zafrul said Malaysia’s resilience to capital outflow and external shocks will continue to rise due to Bank Negara Malaysia’s flexible and dynamic ringgit exchange policy or fundamentals, its sufficient and strong international reserves, the stock market that comprises multiple sectors, the country’s robust banking sector, and solid institutional investors.
“Moving forward, the government is committed to ensuring that the well-being of all Malaysians is protected, whether (they be) households, individuals, or businesses. This has been set in motion with the planning for Budget 2023, which will be tabled on October 7,” he said.
The country is not facing a financial or economic crisis such as it did in the years 1998, 2009, and 2020, as during those years the gross domestic product (GDP) contracted, Tengku Zafrul stressed, adding that the government is confident that this year’s GDP growth will surpass the original projection of between 5.3% and 6.3%.
He also said that proactive government measures which have been announced, such as the subsidy allocation of almost RM80 billion – which includes price controls for various essential goods – will continue to cushion the people from the impact of price increases driven by external factors that are beyond the government’s control.
Tengku Zafrul said the government will also continue with people-friendly projects with high multiplier effects value such as improving people’s housing; flood mitigation; water, electricity, internet, and 5G infrastructures; as well as public transportation such as the Mass Rapid Transit 3 project and Pan Borneo Highway. – Bernama, October 1, 2022
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