THE RINGGIT depreciated to a new record low of RM3.23 against the Singapore dollar while hovering at a five-year record low of RM4.46 to the US dollar yesterday.
The ringgit is expected to decline further due to the drop in prices of crude oil and palm oil.
The US economy is also in technical recession after its gross domestic product (GDP) fell 0.9% in the second quarter of the year after contracting by 1.6% in the first quarter.
These developments of a declining ringgit against two of our three biggest trading partners bring higher risks of rising business costs and the cost of living, as well as an economic slowdown due to the US technical recession.
The Government’s policy flip-flops and inability to rein in corruption have caused Government coffers to almost run out of money.
Policy deregulation and liberalisation of quotas are the only tools left to revive business confidence.
The self-inflicted labour shortage of 1.2 mil workers over the last year, caused by bureaucratic red-tape, inter-ministerial confusion and the Government’s inability to keep its promises in its memorandum of understanding (MoU) with Indonesia, defines a failed Government and the incompetence of Human Resources Minister Datuk Seri M Saravanan.
“We have paid dearly”
Malaysian businesses have paid dearly for the Government’s failures. The oil palm sector, glove industry and automotive component parts manufacturers are facing losses of RM33.5 bil due to the labour shortage.
The total RM33.5 bil in losses from the labour shortage excludes losses in the non-oil palm, auto parts or glove industry.
If losses from other manufacturing, retail and hospitality, tourism and services sectors are tabulated, total losses will run into tens of billions of ringgit.
Many businesses have to reject new orders or even close down due to the foreign labour shortage. Some employers are so desperate that there are reports of them paying RM1,500 to RM1,800 per head to secure foreign labour.
Saravanan must simplify procedures for foreign labour intake and ensure they are transparent – not only to overcome corruption but also to arrest the decline of a depreciating ringgit and spur economic growth that will be affected by the US economy’s technical recession.
Decentralising application to individual states and not in Putrajaya is the first step but applications must be facilitated and processed quickly.
Saravanan must give a full accounting with a weekly report of how much foreign labour is processed against the number of applications. – July 30, 2022
Lim Guan Eng is the Bagan MP, DAP national chairman and a former finance minister.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
