Weak Ringgit Adversely Affecting Business, says Top Businessman
credit: Free Malaysia Today
SHAH ALAM: The winner of the Selangor-Asean Business 2017 top CEO award, Lim Kuang Sia, says the weak ringgit is causing problems for local businesses.
The managing director and chief executive officer of Kossan Rubber Industries warned that this was not good for business and the nation’s economy.
He expressed bafflement over the fact that data showed the country’s economy was doing well, yet the value of the ringgit was down.
“Businessmen prefer the ringgit to be stable because for an overseas buyer, there is no such thing as cheap.
“If today we sell them at a cheaper price and tomorrow we sell the same product at a higher price, they will say it is expensive. And if we sell to them cheap today but cheaper tomorrow, they say we have been selling to them at a higher price.”
Lim’s public listed company exports gloves and automobile spare parts, mainly to the US.
Lim recently won the CEO award at the Selangor-Asean Business 2017, organised by Invest Selangor, an agency that provides information, advisory services, as well as start-up or expansion assistance to potential and existing investors.
Lim said a weak ringgit reduced the purchasing power of the country, causing the disposable income to drop. “Once the disposable income drops the local demand for goods drops too. That is what the local businessman worry (about).”
He noted that the value of the ringgit had dropped from RM3 to US$1 to RM4.20 to US$1.
He felt the ringgit should not be weak based on the government’s economic data. “The nation’s current surplus is good, the liquidity of the country is good, foreign reserves good, unemployment figures are low and our inflation figures are low. But the ringgit is still devalued.”
Putrajaya has said exports for 2017 grew by 32.5% to RM79.4 billion while imports increased by 30.4% to RM73.91 billion, resulting in a trade surplus of RM5.49 billion.
Bank Negara Malaysia has said its foreign reserves are on the uptrend and have touched the US$100.4 billion mark (equivalent to RM431).
BNM said the US$1 billion increase, as at August 15 (from July 31), was sufficient to finance 7.9 months of retained imports and was 1.1 times the short-term external debt.
The overall inflation rate was recorded at an average of 4.1% for the first half of 2017.
Concerns over the growth of digital economy
Lim also raised the issue of a lack of awareness about the digital economy among SMEs and the need for better internet coverage and speeds.
He said for e-commerce to grow, the internet speed and coverage needed to be improved. He said the government should speed up its efforts in this direction.
According to Akamai’s 2017 report, the international IT firm reported that Malaysia’s internet connection speed saw a 40% improvement from the first quarter of last year, but it still lags behind other nations in the region.
Malaysia’s internet connection speed is also less than half of Singapore’s, at 8.9 Mbps against the city state’s 20.3 Mbps.
Lim said another reason for the slower progress was the lack of awareness among small and medium enterprises about the digital economy.
Lim, who is also the chairman of the chamber of commerce in Klang said he, together with the Selangor state government, continuously organised seminars to create awareness among SMEs on the benefits of e-commerce. “A lot of conventional business is disappearing, being overtaken by the digital economy.
“The business model is different today. It is about how to make a product cheaper for the user. It is by taking away the unnecessary cost. It is called efficiency. This is what creates value creation.
“A lot of people do not have the awareness how to be part of the digital economy,” said Lim who has been running his business since 1980.