Jamaludin: M’sia alone to decide on ringgit peg


  • Business
  • Monday, 11 Aug 2003

BY K.P. LEE IN MANILA

MALAYSIA will not be pressured into making any rash decision on the ringgit’s exchange rate policy, said Second Finance Minister Datuk Dr Jamaludin Jarjis. 

He said “it should not be imposed by external parties,” adding that any change to the ringgit peg against the US dollar would be decided by Malaysia alone. 

In a wrap-up on Saturday following four days of regional ministerial meetings in Manila, Jamaludin said Malaysia shared China’s view that decisions on exchange rate policy be made by the respective governments concerned, without the interference of outside parties.  

Datuk Dr Jamaluddin Jarjis

With the continuing weakness in the greenback, economists believe that the ringgit at its present rate of RM3.80 is undervalued, and a growing chorus of voices is saying that it should be re-valued or un-pegged.  

China itself had been under pressure during the meetings here from its northern neighbours, Japan and South Korea, for a review of its currency’s peg against the US dollar. China’s finance minister Jin Renqing had last Thursday rejected the idea of floating or revaluing the yuan for the present and said its exchange rate policy was appropriate for the level of the country’s economic development.  

The yuan is pegged in a narrow band close to 8.28 against the US dollar and the latter’s weakness has put it in the same predicament as the ringgit.  

Some countries have argued that the undervalued yuan unfairly benefits Chinese exporters who can sell their goods at much cheaper prices in the global markets. 

On the threat of China’s economic clout growing at the expense of the Asean region, Jamaludin said ministers from the 10-nation grouping were optimistic that Asean could co-prosper with a growing China and saw the country’s huge market as an opportunity. 

“My colleagues and I agree that concerns on diversion of foreign direct investment, competition in export markets and a loss in market share are far outweighed by the opportunities in China’s huge domestic market,” he said. 

He said that, in any case, Asean companies would need to change the way they did business as regional and global liberalisation was fast under way.  

With various initiatives such as the Common Effective Preferential Tariff, the Asean Investment Area and efforts at enhancing regional financial and monetary cooperation, companies in the region would have to be more efficient in facing the new dynamics within and outside Asean, he said.  

To further expand regional trade, a new protocol governing the implementation of the Asean Harmonised Tariff Nomenclature was signed at the meeting to create a uniformed classification for traded goods and streamlining of customs processes throughout the region. 

Jamaludin added that Asean would continue to engage with China “constructively and inclusively” as it would with Japan and South Korea. 

He said Malaysia also shared China’s view that responsibility for correcting global imbalances could not be tackled by China alone, given its relatively small economy. 

Jamaludin said other large developing nations such as the G3 countries – South Africa, Brazil and India – should also review their trade policies and assume greater responsibility for the global economic recovery. 

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