Heres some logical dos and donts for the Federal Malaysian administration in Putrajaya, to restore seriously waning market confidence in our economy and currency. Itu pun kalau korang tak begitu hubristic utk dengar pandangan akar umbi yg hina dina. WHEN the currency weakens, its important to restore market confidence in the currency and economy, especially among investors. This can be done by the government being open, accountable, transparent, keeping a rein on polarisation in our ethnically plural society, and corruption, through the Courts and not persecuting the Opposition and/or dissent. Elsewhere, market and investor confidence in the economy can be maintained and/or restored by holidaying or studying in the country, and at the same time attracting tourism dollars, reducing dependence on foreign labour, seeking jobs and contracts overseas, exporting more, importing less unless it facilitates re-exports, attracting FDIs, increasing national savings and going up the value chain. Air Asia and Air Asia X are important. The strength or weakness of the ringgit depends on supply and demand factors in the forex market; what Bank Negara does in the forex market; the level of forex reserves, exports, imports, how much debt is in USD, the national debt burden, the ability of government to repay debts, the ability of companies to repay foreign debts, the level of non-performing loans, and the national savings level. We export and import in USD. Debts may be local, in ringgit, or foreign in USD. Hot money in USD should flow in as the ringgit weakens and vice versa -- but the reverse happens because of the herd instinct -- and hot money in ringgit will flow out as the ringgit weakens, and will not return when the ringgit strengthens but should return when the ringgit weakens. When the ringgit weakens, and assuming prices are stable, we will be getting more in ringgit (when the USD is converted into ringgit) for exports, and paying more in USD (when the ringgit is converted into USD) for imports. The situation is complicated when prices are not stable in the face of a weakening or strengthening ringgit. A further complication takes place when export USD does not come back to the country when the ringgit strengthens but should return when it weakens. If debts are in USD, the old debts increase in ringgit equivalent when the ringgit weakens and reduces in ringgit equivalent when the ringgit strengthens. Our exports will bring back more in ringgit -- and this will happen when the ringgit weakens -- but our imports should be stable in ringgit -- and this means diversifying import sources -- cheap imports from China are important -- when the ringgit weakens and reducing food imports. If we dont diversify import sources or cant, and dont grow more food locally, it will not be good for the economy. Its okay to import food however if we own and control, if not manage, the sources of such imports. Lastly, a few other factors are also equally important: exporting and importing directly, strategic reserves and stockpiles, hedging in fuel and commodities, seeking market and investment niches in the economies of India and China, while attracting 40 per cent of our tourist traffic from these countries, stepping up our role as a global centre of excellence in education to train people both Malaysians and foreigners for the local and global economy, the Malaysia My 2nd Home Programme especially in India and China, foreign interest in the property sector and strengthening the role of buying houses in global trade. The Peninsula will continue to be buffetted by the vagaries in the global economy. Sabah and Sarawak will be cushioned to a certain extent by the government sector, tourist traffic, the Malaysia My 2nd Home Programme, foreign interest in the property sector, the many locals working outside, cheap foreign labour, ample local food supplies, food exports to Brunei, the peninsula and Singapore, seeking jobs and contracts, market and investment niches in the economies of India and China, cheap imports from China, upstream and downstream diversification and backward and forward integration of the economy and the organic growth of the economy. Get me? ORGANIC GROWTH...not spun growth of crony capitalism. Hidup Kuasa Pasaran!! Death to Crony Capitalism. Letih!!
Posted on: Sun, 04 Jan 2015 04:12:25 +0000
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