KUALA LUMPUR, Feb 23 — Foreign direct investment (FDI) in Malaysia has been rising even though the ringgit has been depreciating, Prime Minister Datuk Seri Anwar Ibrahim said today as he rebutted critics who claimed the currency’s decline reflects poor economic management.
The Malaysian currency slid close to its lowest level last seen during the Asian Financial Crisis in 1998 yesterday, which the Opposition have used as fodder to drive public criticism towards the Anwar government’s economic policy.
Speaking to reporters after launching the Tun Razak Exchange International Financial Hub here, Anwar said the ringgit’s performance doesn’t reflect Malaysia’s economic strength, a view echoed by economists and Bank Negara Malaysia (BNM).
“Okay, it's concerning, we’re looking at it and luckily it has gone up a little. But look at the overall investments, biggest ever in the country. Inflation down, unemployment down. Growth is sustained compared to our neighbours,” he told reporters.
“I think we should look at it from a comprehensive view and look at the capacity for the country to grow. To me the most reassuring is the investment figures.
“They always compare it to 1998,” said Anwar, who is also finance minister, of his critics.
“At that time the ringgit was down, inflation went up. Unemployment up and no investment,” he added.
Malaysia’s FDI increased to RM926.3 billion at the end of the fourth quarter of 2023 compared to RM914.9 billion the third quarter of last year, according to official data released last Friday.
The Anwar government said the inflow of investments reflect investors’ confidence in its economic plans, some of which will be rolled out starting this year.
The government has also managed to rein in inflation and unemployment, although underemployment remains a concern.
Still, Anwar's unity coalition has taken brickbats over the ringgit's decline, as criticism mounted that a weak currency would zap Malaysians' purchasing power and drive food import prices up.
The ringgit fell 0.3 per cent against the dollar last Wednesday, the weakest level since 1998 when it dropped to as low as 4.885 against the greenback.
Economists have attributed the decline to China’s sluggish growth, which has hurt Malaysia’s exports.
BNM said in a statement issued Wednesday amid a growing polemic over the foreign exchange rate that the ringgit’s performance does not reflect the country’s economic strength.
BNM governor Datuk Abdul Rasheed Ghafour said the ringgit's decline follows similar trends with other regional currencies, which he attributed to external factors like market adjustment to changing US interest rates and uncertainty around China’s economic prospects.
The central bank said it expects the ringgit to rebound this year as demand for Malaysian exports improve.
Yesterday S&P Global Ratings forecast a 9 per cent rebound in the Malaysian currency by the end of the year, adding that the weak currency doesn’t pose a risk to the sovereign rating.
Still, Anwar is set to face the Opposition on the topic when Parliament resumes next Monday.
Rantau Panjang MP Datuk Siti Zailah Mohd Yusoff said ringgit's performance will be a top agenda among the opposition lawmakers, who plan to “grill” Anwar for explanation.
Anwar was heavily criticised after he was accused of casually deflecting concerns about the ringgit earlier this week, but the prime minister told reporters here today that his statement was misinterpreted.
“The other day when I said the trade minister was supposed to issue a media statement on investment and trade, and the governor of the central bank would issue a statement but I was criticised for saying that.
“Well the governor told me that they are coming out with a full statement so I said leave it to him” he said.
