Discretion with central bank to compel exporters

KUALA LUMPUR: The government will leave it to Bank Negara to decide whether exporting companies should be compelled to convert their export proceeds into ringgit, says Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz.

He said the move, which was done by the central bank at the end of 2016, had its advantages and disadvantages as a form of capital control in controlling the difference in interest rates between the ringgit and foreign currencies, Bernama reported.

“If we look at the interest rate differential (between the overnight policy rate at 3% and US Federal Reserve’s funds rate at 5.25%) it is quite large, the US dollar rate is even higher than the ringgit rate.

“This is under Bank Negara’s purview. I leave this (matter) to Bank Negara’s discretion on how to control it,” he said in a statement after officiating the pre-launch of the International Electric Mobility Showcase 2023 (IEMS) yesterday.

In December 2016, Bank Negara stipulated that local exporters must convert 75% of the revenue generated from exports into ringgit and only 25% is allowed to be retained in foreign currency.

Tengku Zafrul called for local companies, especially government-linked companies (GLCs), to play a role in supporting the growth of the ringgit and not just leave the responsibility solely to the government.

“This is important, we must show confidence in our currency, especially Malaysian companies and GLCs which are involved in exporting.

“As a trading nation, we are a net exporter. We have a current account position, which should be positive for our currency, but we must also make sure that we remain passionate about supporting our country’s currency as well,” he said.

On the potential collaboration between Malaysia and Tesla, Tengku Zafrul said it is not only limited to the electric vehicle (EV) sector but other sectors as well.

He said there would be a call between Prime Minister Datuk Seri Anwar Ibrahim and Tesla founder and chief executive officer Elon Musk sometime before the end of this week.

He added that what the country wants is to attract more potential or investment commitment in the automotive sector and other sectors within Malaysia.

Tesla, an EV designer and manufacturer headquartered in Austin, Texas, United States, will be making its official debut in Malaysia with the official unveiling taking place in Kuala Lumpur on July 20.

Meanwhile, the 14th International Greentech & Eco Products Exhibition (IGEM) 2023 is expected to secure RM4bil of green technology and sustainability investments as compared to RM3bil targeted in the previous year.

The Malaysian Green Technology and Climate Change Corp (MGTC) group chief executive officer Shamsul Bahar Mohd Nor said the event this year is projected to attract over 40,000 visitors as well as 400 booth exhibitors from various countries.

In conjunction with IGEM 2023, the IEMS 2023 aims to provide a platform to promote and spread awareness of the end-to-end enablers for advancing the growth of the EV industry in Malaysia.

Shamsul said MGTC remains committed to promoting the growth of Malaysia’s EV industry, in line with the nation’s vision of achieving net-zero greenhouse gas emissions by 2050.