Putrajaya has no plans to peg the ringgit or impose exchange rate controls, similar to what was done during the Asian financial crisis, says Deputy Finance Minister Steven Sim.
He said this was not the best solution for the challenges the country is facing currently.
Sim said during the oral question and answer session in the Dewan Rakyat on Wednesday (Nov 1).
00:00 Thank you, Mr. President. Thank you, Mr. President.
00:04 The government is not reluctant to implement additional RMB and steps in line with it,
00:12 namely the Foreign Exchange Control, which was once carried out during the country's crisis in Asia in 1998.
00:24 Because it is not the right solution to the challenges we face today.
00:31 First, the Malaysian financial system and economy are in a better position now to face the global financial market and the movement of exchange rates.
00:42 Second, Malaysia will lose its monetary base and will need to follow the interest rates of the currency that add up to the RMB.
00:50 For example, if the RMB is added to the US dollar, we need to increase interest rates in line with the interest rates in the US.
00:58 This action will certainly increase the cost of taxation for the people.
01:04 Third, to implement additional RMB, we need a major international reserve.
01:10 Otherwise, we will have to reintroduce the monetary control measures to prevent and overcome speculative pressure on the RMB.
01:18 If the monetary control measures are implemented now,
01:22 the negative impact on investors' confidence will involve high costs and can affect the currency flow
01:30 because Malaysia has a much larger currency market today compared to 1998.
01:35 Therefore, as a central bank responsible for the stability of the financial and currency markets,
01:41 BNN will ensure that the RMB balance is in a balanced state so that it is not volatile with the interest rate.
01:49 This will reduce the risk of the currency exchange rate from the US dollar.
01:56 The government through BNN will continue to manage the risks from domestic and foreign developments
02:02 and is ready to use its operating base instruments to ensure a more balanced market.
02:09 That's all. Thank you.
02:12 Thank you, Mr. Prime Minister.
02:15 Mr. Larut and Mr. Jaya have proposed in this new budget discussion
02:19 between low-hanging fruit and permission to strengthen the currency of the RMB
02:25 by encouraging more foreign investors to enter so that we can get dollar earnings and also buy RMB from foreign investors.
02:34 So that's a suggestion that I hope the government can consider from us.
02:39 My additional question is, what is the impact and effect?
02:42 And what is the effect on the country's debt, the company's debt, and the government's debt
02:48 due to the fall in the value of the RMB balance that is currently in place?
02:52 Thank you.
02:53 Thank you.
02:57 To the question or more to the idea of a suggestion about increasing or increasing tourism to our country,
03:07 a good suggestion I would like to share with my colleagues in the Ministry of Tourism
03:13 to see how we can increase not only tourists but also foreign investors to continue to enter Malaysia
03:22 and continue to increase the Malaysian economy.
03:24 For the information about the impact of the increase in the US dollar to our debt,
03:31 our debt to the US dollar is not big.
03:36 I will give the figure later, but it is not big.
03:39 So it is still under control.
03:41 Because most of our debt is in the domestic market.
03:44 It is denominated in the domestic market.
03:48 Thank you.
03:49 Sir, Pona.
03:50 Thank you, Mr. Speaker.
03:57 Honourable Minister, after hearing the answer given by the Honourable,
04:04 about the steps that must be taken, I would like to ask the government,
04:11 what are the steps other than what was mentioned earlier to ensure two important things.
04:18 The first step is the demand on the RMB.
04:23 The second is that the RMB is not being sold.
04:30 If we look at the market, for example,
04:34 several billions were sold in the past few months from the stock market.
04:42 Even if we look at the answer given by the Honourable yesterday,
04:46 which is the balance, which stated that the trading fell by 10%.
04:51 And this is what we want.
04:53 One, demand.
04:54 One, ensure the RMB will be maintained.
04:56 Not being sold.
04:57 What are the steps that must be taken by the government,
05:00 other than what was mentioned by the Honourable Minister,
05:03 other than the foundation of the government,
05:05 which needs to be clarified.
05:07 Secondly, other than the political stability, which is not so clear.
05:11 I would like to ask the Honourable, what are the steps to ensure,
05:14 one, demand, and secondly, ensure the RMB is not being sold.
05:19 Thank you.
05:22 Perfect.
05:23 I will answer.
05:24 I think for us to restore confidence in the RMB and the national economy,
05:31 that is what is often mentioned in the theme of the 2024 budget,
05:36 which is that we need to increase the scope of government delivery.
05:42 To increase confidence, to re-structure the economy, and so on.
05:45 So, in this short period of time, BNN has taken a number of steps.
05:53 For example, we will continue to manage the risks in terms of domestic and foreign development,
06:01 and be ready to use the basic instruments of its operations to ensure that the market remains regulated.
06:07 And the risks from the movement to reduce the value of the exchange rate of the RMB compared to the US dollar can also be reduced.
06:14 Through the instrument of value protection, for example,
06:18 the pressure on foreign loans that are in debt,
06:21 and the depth of the domestic currency market.
06:25 All these factors are expected to ensure that the business needs are fulfilled effectively,
06:31 while the costs and needs of foreign currencies are managed effectively.
06:36 For information, in the absence of a global financial market,
06:40 the flexible exchange rate of the RMB plays an important role as a shock absorber,
06:47 or a source of external shock, while reducing the impact on domestic economic activity.
06:53 And for the long term, the value of the RMB can be strengthened through the implementation of policy or structural foundations
06:59 that aim to improve the economic growth and the country's competitiveness, as I said earlier.
07:05 For example, we are trying to transform the country's economy,
07:11 guided by the framework of the economic model through measures such as NETR, NIMP,
07:17 the Semi-Federal Reserve, RMK-12, and so on.
07:20 In addition, the implementation of new investment policies or new investment policies with NIP
07:26 to improve the economy of investment and the country's productivity, as I said earlier,
07:31 to increase the level of efficiency in government delivery,
07:36 as well as the government's commitment to strengthen the fiscal capacity
07:40 through the implementation of the Public Finance Act and the fiscal responsibility.
07:44 The newly passed FRA is expected to have an impact on increasing investors' confidence in the Malaysian economy
07:53 and indirectly and directly strengthen our currency.
