BOMBSHELL – RINGGIT CAN FALL TO RM5 PER USD, WARNS MAHATHIR – EVEN AS ‘PM OF GAZA’ ANWAR TOLD TO SHIP OUT AMID CALLS FOR A NEW ‘PM FOR MALAYSIA’ – AND MoF SLAMMED FOR DOING ALL THE WRONG THINGS!
Written by Wong Choon Mei, Politics Now!
KUALA LUMPUR (Politics Now!) – Malaysia’s controversial ex-prime minister Mahathir Mohamad has said it again – peg the ringgit! Not only that Mahathir warns the ringgit may weaken to the dreaded psychological low of RM5 to US$1, if nothing was done.
“Just imagine what that would mean to your cost of living,” said the ‘Grand Old Man’ of Malaysian politics as he pushes to outlaw currency trading.
According to Bloomberg, the ringgit is the worst performer in emerging Asia this year, sliding almost 8% versus the greenback. It slumped to almost 4.8 per dollar last month, the weakest level since January 1998, the height of the multi-year Asian Financial Crisis.
FIRESTORM OF GOOD & BAD
Like him or hate him, Mahathir stood out in 1997
Mahathir’s comments are bound to invite a firestorm of responses, both negative and positive, as the Malaysian currency plunges to its lowest in history.
On the opposing side will surely be his political nemesis Prime Minister Anwar Ibrahim and the businesses, both local and foreign, who suffered severe losses the last time that the legendary leader thumbed his nose at world bodies such as the IMF and World Bank and proceeded to do things his way.
VIDEO – RINGGIT FREEFALL TOWARDS 5: MALAYSIA’S ECONOMIC QUANDARY, ANWAR’S WATERLOO?
Yet Mahathir’s peg and the slew of tough foreign exchange controls he slapped on during the Asian crisis worked almost like a charm and stabilized the ringgit within a relatively brief period of time.
Those who saw their businesses finally stop skidding helter-skelter into bankruptcy will surely cheer and support his view. Who can forget how his iron-fisted and unorthodox methods chased away the hot money as well as the forex speculators who had ganged up behind the likes of George Soros to pummel the ringgit to pulp
“It’s something to be considered…Foreign investors were very happy,” Mahathir was reported as saying, as he pushed for currency trading to be outlawed.
Reactions in other Asian countries – Indonesia, Thailand and South Korea – that opted to follow the IMF prescriptions
Indeed, many foreign investors then as well as now have huge long-term investments in Malaysia and a ridiculously weak ringgit only trivializes and makes nonsense of their revenue here when translated back to a stronger home currency.
And the same goes for local investors. Those who need to import raw materials or have foreign currency borrowings are also likely to defend Mahathir’s controversial means.
Only the hot money and the speculators out for a short-term kill but ended up burnt would curse the ‘Grand Old Man’ – and these included many locals who could not resist the temptation to make a quick buck at their countrymen’s expense.
Other ‘vultures’ included Mahathir’s political rivals who were quick to blame him and use the fiasco to topple him. Yet he was not the Finance Minister – it was his arch-enemy who at that time was in charge. Not unexpectedly, Mahathir later accused Anwar who was then not only his Deputy Prime Minister but also the Finance Minister of instigating some bankers and financiers into selling down the ringgit so that he could take over the PM post.
Anwar, who of course refuted all the allegations, was nonetheless sacked and thrown into jail over sodomy and abuse of power charges.
DR M & DAIM PLOT NOT POSSIBLE – FOREX MARKETS NOW TOO BIG
Former finance minister Daim Zainuddin
Ironically or not, Anwar is now Prime Minister as well as Finance Minister! And deja-vu! the ringgit is being blasted to bits again!
The burning question in the minds of many in the markets is will Anwar do a Mahathir? Meaning – will he point the finger and accuse Mahathir and another long-time political rival Daim Zainuddin of ganging up to slaughter the ringgit and put him out of business as PM?
But Mahathir is now 98, Daim is 85 and Anwar himself is 76! They were 73, 60 and 51 when the Asian crisis cast its evil shadow over Southeast Asia 25 years ago – causing countless bankruptcies and tens of millions of people to suffer untold misery.
If indeed this is the same old plot but the reverse way around, then OMG! why are these guys still around? So goes the debate and chatter in the coffee shops and dealing rooms around the country.
“This is a question only Malaysians can answer for themselves and perhaps only at the ballot box can they get an effective answer,” a former head of money at an international bank told Politics Now!
“If you are fed up at how your lives are being pushed around by the same old, tired political faces or the same old tired policies pitched by only slightly different political faces, then you do something about it!”
“I don’t have exact figures but a quick and dirty gauge is the forex market in 2023 is at least 5 times bigger than in 1998, about US$7.5 trillion versus US$1.5 trillion in daily average turnover. So I would say, very tough for currency manipulators these days to stage such a prolonged attack on the ringgit. For me, Anwar and unity government have no one to blame but themselves.”
INVESTORS GIVING UP ON MALAYSIA? FROM DR M TO ISMAIL SABRI, NOTHING WAS DONE – AND NOW UNDER ANWAR, STILL NOTHING BEING DONE
Past prime ministers of Malaysia
The latest ringgit plunge may also be due to the failure of past administrations to put in long-awaited financial reforms since Mahathir retired in 2003, and his successor ex-premier Abdullah Badawi released the peg in 2005.
The de-pegging deeply angered Mahathir and led to Badawi’s eventual ouster and replacement by the notorious Najib Razak of the 1MDB thievery debacle in 2009.
In the early stages of his premiership, Najib did try to “liberalize” Malaysia’s economy that experts had even then warned was in danger of being snuffed to extinction by an overly-protective affirmative action policy, seen as favoring only the Malays but excluding almost everyone else, including non-Malay citizens and foreign investors.
Indeed, through the decades, many have accused the then Umno-BN government of using protectionist policies to mask the corruption that had become endemic and a thriving business across all ranks in the country especially the civil service.
The ‘pre-1MDB’ Najib, who repealed the draconian Internal Security Act that Mahathir frequently used to keep his political foes in check, soon found himself forced to stop the mini steps he had taken to bring on the ‘long-term structural reforms’ demanded by investors and advised by experts.
From long-time mentor, Mahathir suddenly became his political foe even to this day, beating the Malay drums of war that their community would lose political dominance if Najib continued to free up space for other ethnicities including foreign investors.
Not surprisingly then, that when Mahathir ousted Najib to become prime minister again in 2018, he did practically nothing to make things rights despite riding back to power on the back of the multiracial Pakatan Rakyat coalition consisting of Anwar’s PKR party, the DAP and Amanah parties.
Muhyiddin Yassin and Ismail Sabri, the 8th and 9th prime ministers that followed Mahathir’s own ouster in 2020 steadfastly pursued a Malay-centric platform that worsened the climate for investors.
It didn’t take long for Malaysia’s economy, with its inherent weaknesses and fragility exacerbated by the Covid-19 pandemic, to nose-dive towards ‘banana republic’ status, with the youth chief of Muhyiddin’s Bersatu party infamously declaring that printing money was a feasible and sensible option to put the country back on track.
HISHAM TO REPLACE ‘MIRAGE’ ANWAR?
Hishammuddin rumored to have the support of the Malay elites to be the next PM
So it was that when Anwar finally became PM in 2022, the hopes within and outside the country were high that change for the better had finally come for Malaysia – a country that held so much promise, due to its multiracial talent and plentiful resources.
But it was not to be. The reformist image Anwar carefully cultivated after his first jailing in 1998 turned out to be just that – an image, A mirage.
Although it’s not been a year since Anwar came to power, the track that he has taken has raised alarm bells. Instead of getting down to brass tacks on financial, social and economic reforms, team Anwar has chosen to focus on trying to build him into a cult hero.
His ministers and political secretaries have rushed to clamp down on critics until even the influential Johor crown prince Tunku Ismail found it necessary to publicly address the issue. The prince, whose father the Johor Sultan is due to become Malaysia’s next King on Jan 31, 2024, opined that all Malaysians have the right to express their opinion on politics, including the performance of the government of the day.
As Anwar’s popularity freefalls along with the ringgit, the rumor mills have been grinding non-stop that former minister and Umno elite Hishammuddin Hussein has pulled together enough support to oust Anwar and become the next PM soon.
PM OF MALAYSIA OR PM OF GAZA?
Anwar, PM of Gaza? Or PM of Malaysia?
To many, it is no surprise that investors appear to have given up on Malaysia, leading to the capital flight that is now wrecking the ringgit’s value. They don’t see Anwar or his strongest ally, the DAP, as possessing the capability, know-how, experience or courage to do the things that need to be done to ‘save’ Malaysia.
That Anwar has studiously avoided issuing statements to calm the nation when the ringgit breached 25-year-lows is telling. Instead of marshalling all resources to steer the nation through its own crisis at home, Anwar has chosen to champion and defend Hamas in the Israel-Hamas conflict.
To add insult to injury, his aides in the Finance Ministry have been issuing vague statements that a weak ringgit is actually to Malaysia’s advantage since it is a net exporter. There were also many avowals, perhaps with an eye on political popularity, that his government will never let the central Bank Negara increase interest rates so that borrowers would not have to suffer.
Without doubt, there are many alternative solutions to the boom-and-bust cycles but in times of crisis, it’s every man and every nation for himself and itself. What more now, when the world is undergoing sea change in the way it trades and pays for its goods.
DE-DOLLARIZATION SEA CHANGE & TEAM ANWAR’S GLARING LACK OF EXPERIENCE
De-dollarization is what Malaysia needs but is the ringgit ready?
De-dollarization is not just the name of the global game but a final destination – so the key question for nations like Malaysia is, how strong is its currency?
Is the Ringgit ‘good’ enough to be accepted by other nations instead of the U.S. dollar or does it need some more adjustment – sadly of the downward sort – before investors and other trading-partner nations see value in it.
The absence of leadership and sheer lack of experience has drawn sharp rebuke from many.
“Anwar has to decide if he is PM of Malaysia or PM of Gaza. If he prefers Gaza, then he should quickly pass the baton to Hisham. Otherwise stay focused on Malaysia,” a political commentator told Politics Now!
“If you just keep quiet, or say things things like a weak ringgit is good for our exports or ‘don’t worry, Bank Negara won’t raise interest rates’ – you might as well open the door for speculators to drive the ringgit down and don’t think it can’t breach RM5. Some say Mahathir is being conservative, can you image!”
BIRD FAECES ON MALAYSIA’S ECONOMIC TOMBSTONE?
Indeed all it takes is for other nations, including Thailand and other ASEAN neighbors, or the U.S. Federal Reserve to raise rates or maintain a hiking stance for the ringgit to splatter like bird faeces on the pavements of Kuala Lumpur.
Perhaps ‘rusty blade’ Anwar and his deputy ministers including DAP’s inexperienced Steven Sim and Umno’s plodding Ahmad Maslan are just too slow to skip in time with the rest of the world. And yet too arrogant to listen to the wealth of experts and economists available to advise them.
Perhaps, it is this seeming all-round bungling, the lack of clear direction and know-how, the confusion from political interference and most of all, the absence of a captain when SS Ringgit is sinking that will raise the tombstone for Malaysia’s ailing economy.
Written by Wong Choon Mei, Politics Now!
Politics Now!