PETALING JAYA: A PKR MP advised against premature celebrations following Datuk Seri Anwar Ibrahim's announcement of Malaysia's highest-ever approved investment of RM329.5bil in 2023.
Petaling Jaya MP Lee Chean Chung(pic) highlighted concerns about the weakening ringgit against the US dollar despite the high approved investments in the country.
He explained that approved foreign investments represent commitments that have yet to materialise fully, such as the establishment of factories and the employment of workers.
"It’s just committed investments that, due to several factors, have yet to materialise. So it is still too early to celebrate the success until the time gap is shortened," he said in a statement on Friday (Feb 23).
After chairing a National Investment Council meeting on Thursday (Feb 22), the Prime Minister revealed that Malaysia recorded a historic high of RM329.5bil in approved investments last year, marking a 23% increase from 2022's total of RM264.6bil.
Anwar, who is also the Finance Minister, said last year’s figure was 23% higher than 2022’s total of RM264.6bil.
Lee also pointed out that the country’s overnight policy rate is still low at 3%, compared to the US’s 5.5%.
He said this encourages investors to hold on to their funds in US dollars rather than converting them to ringgit until they need to do so.
“The value of a currency is determined by aggregate supply and demand. When most parties prefer to hold the US dollar, the ringgit will be pressured to depreciate,” he said.
In addressing the country's economic challenges, Lee suggested three strategies, including strengthening the monitoring of dollar transactions by importers and expediting local approval processes for foreign direct investments.
He said strengthening monitoring of dollar purchases by importers, ensuring adherence to trade regulations, and validating remittance documentation are essential to mitigate the impact of the depreciating ringgit.
Secondly, accelerating local approval processes for FDIs to expedite their operational setup within the country. A holistic assessment of the entire investment journey, beyond just approvals, is essential for sustained economic growth.
Thirdly, beyond interest rates, policymakers should consider factors like inflation, capital flow, and overall economic prospects.
The government is encouraged to monitor and facilitate the implementation of key initiatives such as the National Energy Transition Roadmap (NETR), MyDigital, and the National Industrial Masterplan (NIMP) to instil confidence and attract long-term investments, Lee said.
