Less than 24 hours after Prime Minister Anwar Ibrahim touted Malaysia recording a total approved investment of RM329.5 billion in 2023 as one of his government's achievements, a PKR lawmaker has cautioned against premature celebrations.
Petaling Jaya MP Lee Chean Chung sought to interpret the contradicting messages concerning the nation experiencing a record-depreciated ringgit while welcoming an unprecedented quantum of incoming FDI.
“First, approved foreign investment is merely the FDIs that were approved to enter Malaysia but likely yet to reach our shores. It’s just committed investments that, due to several factors, have yet to materialise.
“So, it is still too early to celebrate the success until the time gap is shortened, e.g. factories are built, offices are filled with employees, and the production lines are running,” he added.
Second, Lee (above), who is also a member of the Parliamentary Select Committee (PSC) on Economy and Finance, said Malaysia’s Overnight Policy Rate (OPR) is still low at three percent, compared to the United States’ 5.5 percent interest rate.
“Funds denominated in US dollar prefer to stay as it is until there are real needs to convert to ringgit, such as investing, purchasing raw materials, buying lands or converting cash for other assets. The value of a currency is determined by aggregate supply and demand. When most parties prefer to hold the US dollar, the ringgit will be pressured to depreciate,” he added.
Suggestions
Describing reverting to a capital control regime as a “no-brainer”, Lee said it leads policymakers to ask - what else can be done?
The MP then focused on three suggestions, which included a more stringent monitoring of dollar purchases by importers, checking underlying trade documents and legitimate remittance proof are essential to curb this trend.
Likewise, Lee said, Firms Listed Abroad (FLA) must be advised not to hoard the dollar for trading profit at this critical juncture.
“Bank Negara must act more persistently than using the strong dollar as an excuse to let it slide,” he added.
The second suggestion, he said, is accelerated local approval for FDIs so that operations can be set up in Malaysia in an expedited manner.
“Mida (Malaysian Investment Development Authority) should not be accounted just for approved investment, but also the entire investment journey.
“A joke on one-stop investment centre is that it stops after just one step. KPIs of investment attracted should be measured holistically, and officers that are diligent and hardworking should be rewarded based on the outcome,” he added.
As for the third suggestion, Lee said, apart from the interest rate, the supply and demand of a currency are influenced by several factors, including inflation, capital flow, money supply, and more importantly as a developing country, prospects of an economy.
“While the political stunts continued to be played by the opposition doesn’t help, it is also time for the unity government to monitor the implementation of the National Energy Transition Roadmap, MyDigital and the aspiration of the National Industrial Masterplan at the micro level.
“In the long-term, it is about investing and feeling hopeful about the future of Malaysia,” he added.
Anwar, after chairing the National Investment Council Meeting yesterday, said the total approved investments in 2023 were 23 percent higher than in 2022.
He said this is the highest number of approved investments in the country’s history and foreign investments were the main contributor at 57.2 percent, compared to domestic investments at 42.8 percent.
The prime minister said this is the “answer” to the numerous quarters who have questioned the Madani government’s achievements. - Mkini
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