NEW YORK – Can Malaysia reduce or even eliminate its reliance on the US dollar as a medium of exchange and international trade?
Prime Minister Datuk Seri Anwar Ibrahim remained circumspect when posed with the question at a forum attended by investors in New York yesterday.
“Even China is dependent on trading in the US dollar,” he said.
Lamenting that the international financial architecture has made countries become tied to the dollar, he said that there is a need to trade in local currencies, if possible.
“Our position is if there is overdependence (on one currency), we should create (the opportunity) where we can trade in smaller currencies,” he said.
He pointed to the situation in Malaysia where the ringgit languishes against the dollar although there are elements in the economy that are improving.
“In Malaysia, inflation is down, unemployment is down, investment is up, growth is up… But the ringgit is down,” he said.
“The ringgit has nothing to do with the fundamentals. It is totally influenced by the decisions of the Fed in the US.”
Anwar was addressing the business community here during his talk on ‘Invest Malaysia: Regaining Malaysia’s Lead in Asia’ at Sofitel New York here. The event was organised by Bursa Malaysia.
Also present was Investment, Trade and Industry Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz and Bursa Malaysia chairman Tan Sri Abdul Wahid Omar.
The prime minister is scheduled to deliver his address at the United Nations General Assembly (UNGA) tomorrow.
US remains number one investor
He said the over-dependence on a single currency is not fair to countries like Malaysia that have to put in extra effort to convince investors to be drawn in.
“We can work with Asean, China and India to trade partially in local currencies. Our central bank is doing precisely that,” he said.
“Then at least we can ease or reduce the negative impact of excessive dependence on the dollar.”
Trading in local currencies is not new, he pointed out, as it has also become part of the international financial architecture after the economic crisis of the late 1990s.
“I do believe that there will be de-dollarisation (eventually) but some form of immediate measure is necessary to protect (the ringgit),” he said.
Several countries have already begun the process of decoupling themselves from reliance on the dollar.
Most significantly, the members of BRICS – Brazil, Russia, India, China and South Africa – recently mulled over the prospect of creating a common currency among them and reducing their dependence on the dollar during their summit in Johannesburg last month.
Anwar also said that the US remains the biggest investor in Malaysia despite the recent increase in investments from China.
“In terms of total investments, the United States is still number one,” he said. “We have benefitted immensely from US companies.”
He pointed, as an example, to the move by semiconductor giant Intel to set up a training and research facility in Malaysia, as it keeps growing its presence here.
He also noted plans by other giants like Amazon Web Services and Germany’s Infineon Technologies to expand in Malaysia, indicating that there is confidence in the country.
Positive Fortune 500 interactions
Earlier, Anwar had held meetings and interactions with fifteen leading US companies listed in the Fortune 500 list at the Harvard Club in New York.
They included Airbnb, Amazon, AWS, Boeing, ConocoPhilips and Kimberly-Clark.
He took the opportunity to explain the Madani economic framework supported by the New Industrial Master Plan 2030, the National Energy Transition Direction Plan as well as the 12th Malaysia Plan mid-term review.
“I also appreciate the positive feedback and constructive inputs shared by these companies,” he said later.
He lauded the various councils and chambers of commerce, such as the US-Asean Business Council and the United States Chamber of Commerce (USCC) as mediums between the government and the business community.
They have helped to catalyse the successful implementation of government initiatives that ultimately benefit the people, he said.
“The United States is Malaysia’s third largest trading partner since 2015,” he stressed in a Facebook post.
“In terms of investments in the manufacturing sector, Malaysia received RM1.84 billion (US$395 million) from the United States from January to June 2023 and these investments have contributed to as many as 1,558 job opportunities.
“Hopefully, Malaysia will be able to attract more new investments from American giants.” – The Vibes, September 22, 2023
