KUALA LUMPUR: About RM58bil of Malaysia’s trade with three trading partners is transacted in ringgit, said Datuk Seri Anwar Ibrahim.
The Prime Minister said about 25% or RM39.2bil of Malaysia’s bilateral trade with China was transacted using the ringgit and renminbi.
“We have been the most successful with China,” he said during the Prime Minister’s Question Time in the Dewan Rakyat on Tuesday (Oct 17).
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Meanwhile, about RM10.7bil of trade with Indonesia and RM8.2bil with Thailand are transacted in ringgit and the local currencies of the two countries.
“This is an encouraging development although (we have a) long way to go as there has yet to be action from other countries. Vietnam and Cambodia had given acknowledgement through the local currency settlement framework which was inked during the 43rd Association of South-East Asian Nations (Asean) Summit in Jakarta recently,” he said.
The Prime Minister said Malaysia is among the Asean nations which has been aggressively pursuing the de-dollarisation approach to reduce dependency on the greenback.
Anwar added that the US Federal Reserve has hiked interest rates by 525 basis points since early 2022.
Meanwhile, Malaysia only increased its overnight policy rate (OPR) with 125 basis points. The US Fed rate hike which strengthened the US Dollar had taken a toll on the strength of regional currencies.
Datuk Seri Noraini Ahmad (BN-Parit Sulong) had asked Anwar on the de-dollarisation plans to encourage the use of ringgit in trade with other countries and the response to the initiative.
Noraini had also posed a supplementary question on whether the de-dollarisation approach will be extended to other countries which have a high trade volume with Malaysia including BRICS nations, namely Brazil, Russia, India, China, and South Africa and how Malaysia will ensure that investments especially from the United States is not affected.
Anwar said the greenback is still the main and strongest currency when it comes to international trade and many countries have chosen to use the US Dollar.
He said although about 15% of Malaysia’s trade is with Singapore, the republic is not keen on using ringgit as the trading currency.
He said China, on the other hand, has been receptive to trading in ringgit.
“I don’t see Japan and Hong Kong being interested (in trading in ringgit),” he said.
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South Korea is also not keen while India has restricted the use of Indian rupee for trade outside of the country except for citizens, he said.
As for Vietnam which is Malaysia’s 10th export market, the country has agreed to expedite negotiations on the matter.
“As for BRICS, the most obvious is China. There are no efforts so far to expand this to Africa and Latin America. I believe with the success on the Asean level in China, there is a possibility to realise this as it provides an opportunity to strengthen the currencies of both countries,” he said.
Last week, Anwar said Malaysia has begun to “actively and aggressively” use ringgit when trading with several countries, with the move towards de-dollarisation in an effort to increase demand for the local currency.
