Guan Eng: Malaysia must take heed of World Bank's recommendation to shore up declining ringgit, stem inflation

KUALA LUMPUR, Oct 3 — Malaysia should implement fiscal and structural economic reforms recommended by the World Bank in its bid to shore up the value of its depreciating currency and rein in inflation, DAP's Lim Guan Eng said today.

Lim a former finance minister, said there was no point in having expert economists if their advice is not heeded by the government since the government’s anti-inflation task force has failed in its objectives to stem inflation.

He also singled out Special Task Force on Jihad against Inflation chairman Tan Sri Annuar Musa for labelling the ringgit's depreciation as 'temporary'.

"To shore up the value of the ringgit, the World Bank recently recommended on September 27 that fiscal and structural economic reforms be carried out from education to improving the investment climate to make Malaysia more productive and competitive.

"Annuar is clearly ignorant of the adverse impact of the strong US dollar on our trade transactions and the fact that 80 per cent of our exports and imports are invoiced in US dollars.

"The weak ringgit will further escalate our food import bill, which amounted to RM63 billion last year and negatively impact food prices paid by the rakyat," he said in a statement here.

Lim also said the World Bank's advice came at an appropriate time as industry players such as those in the exports industry were revising their prices amidst the declining ringgit, citing DHL Express Malaysia's recent announcement on a 7.9 per cent price increase next year.

"Obviously, companies like DHL Express do not believe him when the ringgit has lost more than 11 per cent of its value since January 1 to a new 24-year-old low of RM4.65 recently, dropped to a historic low of RM3.26 against the Singapore dollar and weakened by more than 4 per cent to the Indonesian rupiah this year.

"DHL may be the latest but will not be the last business organisation to increase prices for next year due to lack of confidence in Annuar’s ability to check rising costs.

"Ultimately Malaysians have to pay more for the government's failure to rein in inflation," he said.

Lim then repeated his call for Annuar's resignation from the task force as the latter has failed to instill confidence in the government’s inflation fighting measures.

He also noted that Malaysia’s services trade recorded the highest deficit ever of RM60.7 billion in 2021, which will be exacerbated further by the weak ringgit.

Last month, Annuar Musa said Lim was in no position to judge the effectiveness of the task force and that only the people can decide whether the task force is a failure or not because they are the ones benefiting from its establishment.