Finance & Economics

Malaysia’s Prime Minister Pushes for Local Currency Transactions in Trade

Malaysian Prime Minister Datuk Seri Anwar Ibrahim intends to implement a strategy to gradually increase the use of the local currency ringgit as part of financial operations in the sphere of trade.

Malaysia's Prime Minister Pushes for Local Currency Transactions in Trade

The mentioned action plan is based on the desire to mitigate the impact of foreign exchange against the background of the strengthening of the US dollar against many currencies of Asian countries.

Since the beginning of this year, the Malaysian ringgit has shown a depreciation of about 5% against the currency of the United States. At the end of October, the ringgit exchange rate was fixed at the lowest level in the last 25 years. This dynamic is because the Federal Reserve has continued its policy of raising interest rates. Currently, the US dollar dominates the global trade space as the most actively used currency. Against this background, the weakness of any other national currency means an increase in import costs. Also, in the context of current realities, the burden of dollar-denominated debt for developing economies is increasing.

Datuk Seri Anwar Ibrahim, during a conversation with media representatives at the end of last week in Tokyo, said that the ringgit continues its decline among similar currencies. He noted that this trend is being recorded during the period of improvement in the performance of the Malaysian economic system. The Prime Minister said that currently in this country there is a low unemployment rate and an acceptable level of inflation, indicating that the increase in the cost of goods and services does not have a catastrophic pace. Separately, he noted that the Malaysian economy is in a state of growth. The Prime Minister said that the reason for the current exchange rate of the ringgit is the actions of the Fed. In this context, Datuk Seri Anwar Ibrahim noted that any other explanation contradicts fundamental economic principles.

At the same time, the Prime Minister stated the importance of the US dollar and that Malaysia is not planning to go through a complete rejection of this currency. However, he noted the intention to reduce the degree of dependence on American money. Datuk Seri Anwar Ibrahim stated that the US dollar is still an important means of international exchange.

Malaysia is currently taking measures to encourage regional trading partners to use the ringgit. The Bank Negara Malaysia, the central bank, carried out 19.7% of trading operations with Thailand in local currencies as of September this year. In the case of commercial cooperation with Indonesia, the corresponding figure was 17%. National currencies were also used in 23.3% of trade operations between China and Malaysia in September.

Datuk Seri Anwar Ibrahim, during a conversation with media representatives in Tokyo, also spoke about foreign investments in his country, which is currently one of the main manufacturing centers in Asia. According to him, foreign partners demonstrate confidence in cooperation with Malaysia. In this context, he highlighted investors from South Korea, the United States, Japan, and Europe.

At the same time, the Prime Minister noted that currently, against the background of generally positive economic indicators of his country, there are problems, one of the most sensitive among which is weak export demand. But these circumstances, according to him, have not become an obstacle to investments in Malaysia, which have been estimated in huge amounts over the past six months. As an example, the Prime Minister mentioned financial injections from the German chip manufacturer Infineon.

Datuk Seri Anwar Ibrahim noted that Malaysia is no longer part of the semiconductor industry and this pleases him. In this case, the Prime Minister meant the assembly process. He stated that chips have gone to the front-end, wafer fabrication process. In this context, the Prime Minister stated a high level of trust in Malaysian specialists in the relevant sphere.

Datuk Seri Anwar Ibrahim also drew attention to the fact that there is currently a high level of demand for data center expansion in his country. He noted that the Malaysian Government encourages companies to achieve relevant goals. In this context, the Prime Minister mentioned the building of an artificial intelligence data processing center in the southern state of Johor. The American chip manufacturer Nvidia and the Malaysian conglomerate YTL Power International are participating in this project.

The Prime Minister also said that the creation of new ministries of energy and digital technologies would facilitate the implementation of expensive and fast-growing initiatives such as a floating solar plant.

Datuk Seri Anwar Ibrahim noted the importance of a high level of management quality, simplification of business operations, and creation of infrastructure for receiving foreign investments. Separately, he said that poor governance and corruption have become factors of negative impact on Malaysia’s potential.

As we have reported earlier, TikTok Partners With Atome for Malaysia E-Commerce.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.