The former Prime Minister and the leader who got Malaysia out of the Asian Financial Crisis has called for the depreciating ringgit to be pegged.
Tun Dr Mahathir penned a long message on Elon Musk’s social media platform X saying fixing the ringgit could solve many issues plaguing the country. The depreciating currency could result in Malaysian exports becoming cheaper and would also mean the imports cost more which he said results in a higher cost of living. Which he added the answer may be to increase the minimum wage pointing to UMNO youths who were suggesting that the minimum wage should be RM2000/-. However, this will increase the cost of production and export prices resulting in Malaysia becoming less competitive.
The longest-serving Prime Minister further noted if there is an increase in productivity, the increase in the minimum wage will not increase the cost of production, so how to increase productivity? This can be done by improving efficiency, by automation and robots, by training workers to operate automated machines and robots, and by learning to service, maintain, and repair machines.
However, Tun pointed to the continued devaluation of the ringgit which would increase cost and the gains through greater efficiency and investment in automation and robots would soon be lost. He then stated the Bank Negara and the Government’s stand in fixing the exchange rate that is against international practice and that the country must practice international norms.
Tun Mahathir said the reason why the ringgit is depreciating is because currency traders are selling the currency and making a lot of profits from their trade. Questioning why should Malaysia help currency traders make money out of currency trading and why should Malaysia accept being made poorer so the currency traders can make money.
The ex-leader is suggesting that Malaysia fix the exchange rate as he did during the financial crises of 1997-1998. Reminding how it solved the devaluation and how the country recovered. And how even other countries were able to avoid the depreciation of their currencies being manipulated by the currency traders. He noted that there would be problems, as there were when in 1997 but the administration had set up special committees to deal with refinancing banks, dealing with non-performing loans, and payment of debts.
Tun Mahathir alluded to how these people who helped the crisis back then are still around and that the current government should consider fixing the exchange rate to solve the problem of the Ringgits.