FOOLISH NAJIB, CLEVER BEIJING: WITH RM144BIL OF DEALS, CHINA ONLY TOO HAPPY IF RINGGIT CRASHES TO 5.00 OR WORSE BEFORE COMING IN
Oil price plummeted to the extreme- low in July 2014. The RM- value followed suit. The historical decrease in the oil price caused the RM to hit the psychological level of RM4.00 per USD in Aug 2015. Ever since, the value didn’t seems to be surging or going below RM4 per USD.
The RM-value deteriorated further, following the victory of Donald Trump in the recent US’s Presidential election on Nov 9th of 2016. Of course, the obvious reason behind this is Trump’s unprecedented victory. Followed by the hyped speculation over the Federal Reserve’s normalization of interest rate this coming Dec. The speculation has rushed many foreign investors to sell off the government bonds and securities of many emerging nations inclusive Malaysia, to buy the US’s government bonds for higher returns.
Given that the capital control and pegging of RM(as it was done in 1998) are totally out of question for our central bankers, the policy makers have turned their heads to investment in sustainable developments with a strong belief that this would allay the impending economic situation and eventually strengthen the RM.
Jeffrey Sachs, a professor of Sustainable Development at Columbia University puts it this way: Sustainable development is not just a wish and a slogan: it offers the only realistic path to global growth and high employment. So, it is time to give it the attention-and investment-it deserves.
However, besides sustainable development, the local manufacturers need to innovate and increase productivity to improve the value chain, and that needs a stronger currency to generate confidence among the investors to take a long-term horizon to invest and improve the value chain.
Hence, the Malaysian government committed itself into the long-term development projects worth almost RM144 billion with China. The multibillion deal is consists of mega-projects like East Cost Railway Link(ECRL), Kuala Lumpur- Singapore High Speed Rail (KL-SG HSR) and the Malacca Port among others.
According to The Edge, a Malaysian business weekly, some business players, of the opinion that the Malaysia-China deal may cost almost RM300 billion, should it includes non-public government-to-government deals. According to Khoo Hsu Chuang, an editor for The Edge, these funds, as they come in, will be useful in halting the RM’s fall.
Though these mega projects involve China’s state-owned companies, it doesn’t mean that the Malaysian’s sovereignty is at risk. One should realize that, at the current economic uncertainties face by most of the emerging nations, China, the world’s second largest economy is the only hope, be it for the High-tech-infrastructure-development projects or strengthening the hard-hit currencies.
On the other hand, Tan Sri Ramon Navaratnam, Chairman of the ASLI (Centre of Public Policy Studies), opines that Malaysia-China deals are bold and bright and beneficial, not only to the government, and the economy, but also to the Rakyat as well.
ECRL and KL-SG HSR projects for example, are expected to spur the economic developments in all the areas where the intercity stops would be built. This kind of major new infrastructure projects will definitely create jobs and generate incomes for the Rakyat.
This will indeed, encourage spending and maintain the demand for local commodities at healthy level. And needless to say that the increase in demand for local commodities will catalyse the manufacturing of goods and services which would eventually shores up the economy and currency of ours.
So, that’s why Tan Sri Ramon Navaratnam urged the Malaysians to reject the narrow, parochial views of some who discourage the Malaysia-Chinese deal at the expense of our economic development.
Metaphorically speaking, we can’t afford to have a “Crouching tiger(Malaysia), hidden Dragon(China)” anymore, should we wish to see a bullish RM, which in fact translates the economic well-being of our nation. Therefore, we should let the dragon out, so that it could lead the tiger for a better future.