Guan Eng: Entry to US currency watchlist highlights Malaysia’s economic strength

KUALA LUMPUR (May 30): The inclusion of Malaysia in the US Department of Treasury’s watchlist actually highlights the strength of the nation’s economy, as the list includes other major trading economies as well, said Finance Minister Lim Guan Eng

“While the US Treasury has included Malaysia into its expanded Monitoring List of Potential Currency Manipulator, the report does not name Malaysia as a currency manipulator.

“In fact, the inclusion of Malaysia into the US Treasury’s Monitoring List along with other major trading economies like Germany, South Korea, Japan and Singapore only highlights the strength of the economy and the role played by Malaysia in the global economy,” said Lim in a statement today.

He further said all countries with total trade exceeding US$40 billion a year with the US are assessed by the US Treasury and Malaysia is among the 21 countries assessed. Countries that meet two out of three conditions set will be placed into the list.

He said Malaysia was included due to the country having a trade balance with the US of more than US$20 billion a year, as well as having a healthy current account surplus of more than 2% of its gross domestic production (GDP).

“Both factors demonstrate the competitiveness of the Malaysian economy, instead of currency manipulation. Our competitiveness can be proven further by the country’s performance in the World Bank’s Doing Business 2019 Index and the recently updated IMD World Competitiveness Ranking 2019.

“The World Bank ranks Malaysia as the 15th easiest place to do business out of 190 economies, an improvement of 9 places from the 24th place in the previous year. Malaysia will continue to build its economic competitiveness, fairly by adopting new technology, investing in its infrastructure, enhancing transparency, and simplifying government as well as business processes, while promoting free trade regionally and globally. Meanwhile, IMD ranks Malaysia as the 22nd most competitive economy in the world, retaining our position from the previous year,” he said.

The minister further pointed out that tourism revenue has been growing, up 16.9% year-on-year to RM21.4 billion in the first quarter of 2019, with total arrivals increasing 2.7% to 6.7 million tourists, which contributes to the country’s current account surplus.

Meanwhile, he also explained that a country would only be named as a currency manipulator, if it meets all three conditions set out by the US Treasury.

“But as noted by the US Treasury, Malaysia does not intervene in the foreign exchange market to suppress the value of the ringgit, and therefore does not meet the third requirement.

“Additionally, Bank Negara Malaysia has stressed that Malaysia runs on a floating exchange rate regime and any interventions carried out are only to avoid excessive volatility in the ringgit. 

"As a result, the inclusion of Malaysia into the US Treasury’s Monitoring List has no impact on the Malaysian economy, with no penalties or sanctions imposed on Malaysia,” Lim said.

So, Malaysia will continue on its path to build economic competitiveness, fairly by adopting new technology, investing in infrastructure, enhancing transparency, and simplifying government, as well as business processes, while promoting free trade regionally and globally, he added.

Click here for more property stories.