PETALING JAYA: Prime Minister Anwar Ibrahim has spoken of the need to carry out a balancing act between interest rates and halting the decline in the value of the ringgit.
He said low interest rates had contributed to the falling ringgit. On the other hand, a high interest rate would burden the small and medium-sized enterprises, but also prevent foreign investors from spending their money outside Malaysia.
“If I have RM1 million, I want to put it in a bank. I have a choice of Malaysia, Singapore and Indonesia. Singapore and Indonesia have high interest rates,” he said as an example.
“So, I choose to save it outside (in Indonesia and Singapore). That is our problem now,” Bernama quoted him as saying at a dialogue session with students of Universiti Sains Islam Malaysia.
A student had asked what the government was doing to strengthen the country’s currency.
Anwar, who is also finance minister, said despite the declining ringgit, the country’s economic growth continued to rise in the first quarter of this year, surpassing those of Singapore, Indonesia and China.
Malaysia’s level of foreign investment was good at RM71 billion in the first four months, he said. “We just have to find ways to bring back investments with several incentives.”
One way was to set up a financial hub in Johor and via the Malaysia My Second Home programme.
“We are thinking of several more measures.”
However, Anwar admitted that foreign investors still have a perception of instability in the country following rumours of a change of government in August.
“It is good that people are more confident in me than them (investors),” he said. “They say if Anwar is still leading, they have confidence the government will be stable. If others take over, they will withdraw.”
The prime minister added: “I’m not campaigning for the unity government but this is a fact.”