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Friday, September 16, 2022

RM4.54 Vs US Dollar


OutSyed The Box

Friday, September 16, 2022


RM4.54 Vs US Dollar


Just a while ago a friend sent me a message saying the USD was now at RM4.53.

So I checked again and it has hit RM4.54.





This is very bad news. There is a slow and steady slide of the Ringgit. I also received this a few days ago. Don't know who wrote it but it is relevant:


The Ringgit has not declined in value just recently. It has started a downward trend since the last 20 years. Today, the Ringgit has declined by 32% against the Singapore Dollar, 30% against China and Thailand, 21% against Europe, and 15% against the US Dollar.

So it can be concluded that the fall in the value of the Ringgit currency is a long-term trend that continues. The question is, why does this happen?

One of the reasons is the decline in Foreign Direct Investment (FDI). From 2000 to 2020, Malaysia only managed to attract 8% of the total FDI coming to the ASEAN region, compared to 24% before 1997.

Now, Singapore emerges as the biggest FDI attractor with 55% of the total FDI coming to the region.

In addition, Malaysia's export structure has also not been upgraded. Our industrialisation policy has failed to trigger the export of high-value goods, instead relying on cheap electricity and low-paid foreign workers.

This has resulted in our economy being more dependent on commodities: palm oil, oil and gas only. And we are aware that this unrenovated sector is not capable of bringing Malaysia to a better level in the next 20 years.

The cause of all this is poor governance, a business environment that is not stimulating and widespread corruption, as well as incompetent leadership.



My Comments :

The plantation sector (palm oil, rubber) contributes about 2% to the GDP. Total agriculture contribution to GDP is just over 9%. So it is not much.

Industry contributes over 37% - and the figure is increasing.





Malaysia's export of electronics last year was over RM450 billion. That is a very large portion of the entire industrial output of the country.

Obviously it is still not "value added" enough to push up the value of our currency. The Ringgit is still falling. A lot of money especially stolen money has also left the country. All this will cause the Ringgit to fall.

But at the end of the day a (higher) value of the Ringgit, like for any other currency, depends on the demand for the Ringgit. If there is less demand for the Ringgit, its value will fall.

Obviously we as a nation of 32 million people are not producing enough goods and services, especially for export, which is perhaps the most important factor in raising the value of the Ringgit.

We need to produce more, export more and earn more foreign exchange.

Folks, the government does not know what I am talking about. They will have a rough idea but they do not know what exactly to do.

If we stop exporting then our Ringgit will fall. For example if we ban the export of chickens to Singapore, there will be less demand for the Ringgit. It will fall.

If we destroy vegetable farms, durian plantations (which can export to China and Singapore) then our Ringgit will fall again.

If we make stupid rules and regulations which increases the cost of starting a business or starting a factory in Malaysia then our exports will decrease and the Ringgit will fall.

If we impose stupid taxes like windfall taxes, restrictive GST taxes (and fine and jail people if they do not follow the rules) then all that will impede our businesses and industries. All this will have an impact on the Ringgit.

The government people will not understand all this. Plus this is written in English.

The Ringgit will continue to fall.


By Syed Akbar Ali at September 16, 2022

5 comments:

  1. Sing ka Poh is perceived as having a squeaky clean government. Whether true or not , its the perception that drives FDI decisions.
    Malaysia has Kleptocrats in the lead.
    Sing Ka Poh looks among its hires theost talented and qualified. Malaysia looks at their Race and Religion first.

    Malaysia wants to ban this, ban that....Cakap Bahasa Melayu only...

    ReplyDelete
  2. A significant part of my business's revenue is priced in USD... I'm getting RM 4.54 for every USD..
    Hahahaha..
    thank you....

    ReplyDelete
    Replies
    1. Wakakaka…

      Could u make hay while the sun shines?

      Soon, yr US$ business would turn turtle bcoz of the collapse of the US market!

      Bet on it.

      Delete
  3. What Malaysia lacks is a government with a forward planning mindset.

    Take Singapore. They are investing billions in the mega Tuas port that will be completed in about 20 years.

    Their airport terminal 5 is scheduled to be functional in the 2030s.

    Whether these are wrong bets remain to be seen but Singapore embarked on these projects based on their analysis and projections of the future.

    On top of that, Singapore is budgetting about S$1 bil to fi ght the potential of Singapore being overwhelmed by the sea. They are learning from the Dutch about coastal protection.

    What about Malaysia? Are we equipping the young people in the right skills to ensure progression in the manufacturing value chain?

    Has the government worked together with the right group of farmers eg durian farmers to grow the revenue instead of grabbing lands that have been growing these durian trees for decades?

    But what we see is state government destroying durian trees and putting out lobsided contracts that are really making these farmers serfs to the government.

    Sadly, the kerajaan allah that Malaysia has is short of long term visionaries and that will continue so long as there are politicians that only work for personal benefit.

    ReplyDelete
  4. For those who r interested - check the current economic data of Israel & the stability of his new shekel.

    Any wonder how could a small country at the middle of a hostile environment - politically & naturally, could fare so well!

    ReplyDelete