KUALA LUMPUR: Malaysian prime minister Najib Razak, asking investors to take advantage of Malaysia’s economic recovery, on Tuesday (Jan 23) said the government will never again peg the ringgit currency against the US dollar.
At a gathering of business leaders and entrepreneurs, Najib also said his government has learned from “lapses of governance” at state investment fund 1Malaysia Development Berhad (1MDB), which has been the subject of probes in at least six countries.
In 1998, during the Asian financial crisis, then-prime minister Mahathir Mohamad, now Najib’s bitter political rival, pegged the ringgit against the dollar. The peg was maintained until 2005.
Najib said the pegging resulted in a loss of confidence among global investors.
“We have made it very clear that we would never repeat the measure (pegging ringgit to the dollar), trusting that while there may be short term fluctuations, in the longer term the level of the ringgit would reflect the strength of the Malaysian economy,” Najib told the conference in Kuala Lumpur.
The ringgit, which was battered in some recent years, strengthened more than 10 per cent against the dollar in 2017. In July to September, the economy had annual growth of 6.2 per cent, the fastest pace in more than three years.
Najib said the government will focus on lowering the fiscal deficit and keeping government debt in check.
It is “essential” to keep government debt below the self-imposed level of 55 per cent of gross domestic product and to ensure that sovereign credit ratings “remain within the A band,” Najib said.
BIG INVESTMENTS FROM CHINA
The prime minister dismissed claims by critics that his government has compromised on sovereignty by allowing huge investments by China’s state-owned firms into key infrastructure projects.
“FDI levels vary over time, and such connections are part of, and key to, a healthy and diversified economy,” he said.
Najib, who faced a leadership challenge following the 1MDB scandal, is preparing to call general elections that must be held by August.
“There were indeed failings at the company (1MDB), there were lapses of governance. There was valid cause for concern,” Najib said in a rare comment about the scandal.
The findings from investigations were “taken on board,” with 1MDB seeing a management change and review of operations, he said.
1MDB has been the subject of money-laundering investigations in countries including the United States, Switzerland and Singapore. In civil lawsuits, the US Justice Department has alleged that about US$4.5 billion was misappropriated from 1MDB.
The Malaysian fund has denied any wrongdoing and Najib, who founded 1MDB, has denied all allegations of corruption against him.
In December, US Attorney-General Jeff Sessions described the 1MDB scandal as “kleptocracy at its worst”.