Stronger ringgit will benefit M40 and B40 groups

 

From Shamsul Nazir

The ringgit has strengthened in the last three months going up by 11%, strengthening against the US dollar, the euro and the British pound as the best performing currency in this period, not just in the region, but globally, too.

The ringgit’s stellar performance is more than a matter of national pride.

A relatively weak ringgit has meant higher costs for importers resulting in higher prices for agricultural commodities and fertilisers, although the impact was not confined to the agriculture sector: the cost of imports was also high for manufacturers, and the costs are, of course, passed on to the consumers.

It is not only the companies that benefit from a stronger ringgit, but also the rakyat.

A stronger ringgit makes the cost of imports lower. It makes it cheaper to import intermediate goods such as raw materials that we need to make the final product.

The M40 and B40 groups have been concerned about the cost of living.

We are a nation that depends on imported food items, be they fruits and vegetables or processed food. Since the ringgit has appreciated, we can hope that the cost of imported food will decline. We can expect this decrease to trickle down, lowering the cost of food and of eating out.

Since the US dollar is the currency used to settle international transactions, we will now need fewer ringgit to settle our purchases, from food, furniture to clothing and even the cost of transport.

We can expect wholesalers, traders and manufacturers to transfer the cost savings to consumers. This will benefit the M40 and the B40 groups who will be able to enjoy a lower cost of living, since everyday goods and services will be more affordable.

With the strengthening ringgit, the New Industrial Master Plan and the 13th Malaysia Plan can swing into action smoothly. Then the government will be able to launch its mega projects and the private sector will be able to proceed with its planned investment.

This will generate more economic activity, as a consequence of which more jobs will be created. We will therefore find more employment opportunities for the M40 and B40: wage levels will rise, improving their livelihoods. This will be timely because Malaysia’s wage levels have been stagnant.

The Madani framework has inspired confidence in the minds of investors resulting in the flow of funds into the country. Malaysia is the most promising economy in the region and that is why when investors were looking for locations other than the US where they could invest, they promptly chose Malaysia.

The narrative that the Ekonomi Madani framework propagates is comprehensive. It addresses issues relating to making Malaysia better in terms of its manufacturing sector, generating jobs, improving the living conditions of the rakyat and overcoming inequality and poverty.

In recent weeks we have seen how the government’s pro-active policies, coupled with the Madani framework, have been able to shore up investor confidence. Investors have been choosing Malaysia as their preferred destination. Not only will this benefit companies but also those in the B40 and M40 groups.

We can expect the upcoming 2025 budget to go further and address poverty, inequality and the cost of living. These are issues of concern to the people and I am sure they will be addressed in the budget. - FMT

Shamsul Nazir is an FMT reader.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.