KUALA LUMPUR – August 20, 2015: Contrary to the opinion of many that the country is on the verge of an economic collapse due to the weaker ringgit, independent macro-economic analyst, Professor Dr Hoo Ke Ping told The Mole that such negative sentiment was not based on facts.
Hoo substantiated his views by presenting several points to prove that the current ringgit depreciation is actually not the same as experienced during the 1997-98 Asian Financial Crisis, which then had affected Malaysia and and other emerging economies in the region.
“One of the ways to determine how bad our economy is doing is by comparing its current performance with the worst period we have ever performed.
“So in comparison with what we endured during the 1997-98 Asian Financial Crisis, this is just a minor economic setback.
“Mind you that in 1998, our market share collapsed, it was cut down to more than 70 per cent whereas currently it is only down to 15 per cent.
“Also, at that time our foreign debt is approximately US$160 billion and we only have around US$ 20 billion reserve…now our total foreign borrowing is not even US$ 35 billion while our reserve is at best, US$ 99 billion,” said Hoo.
In terms of domestic debt, Hoo explained that while our current debt is relatively high but it is still less than 100 per cent to our gross domestic product (GDP) ratio whereas in 1998 such debt had easily exceeded 158 to 200 per cent to GDP.
Hoo also clarified to The Mole that there is no reason for Malaysians to panic because the current currency depreciation has not escalated into a regional crisis.
“Unlike now, in 1998 there was a huge regional crisis. Several countries almost went into bankruptcy they are South Korea, Thailand, Indonesia and even Hong Kong which was known at that time for having a good economic governance.
“Even Japan too almost went bankrupt in June 1998…so back to the present situation, do you see any other countries within our region that is facing bankruptcy? No.
“So if there is no regional crisis implicating us and our neighbours, there is actually no reason for us to panic. Despite the odds, our economy are still strong,” he said.
He also said that regional crisis back then was an international plot to sabotage the Asian economy whereby “currency speculators, at that time, had combined to whack one currency after another.”
Hoo insisted that back in the late 1990s, currency speculators such as George Soros and James Rogers cooperated with former United States Treasury Secretary Lawrence Summers to destroy the economy of any country that wanted to replace the USD$ as the main global currency.
“Among the list of countries that these economic saboteurs were out to destroy were Malaysia, Indonesia and Japan.
“You see, at that time Mahathir (Malaysian former prime minister Tun Dr Mahathir Mohamad) along with Suharto (Indonesia former president) and Hashimoto (Japan former prime minister Ryutarou Hashimoto) wanted to form the Yenzone and used it as the third global currency.
“Therefore, Summers was allowed by the US government to walk with the speculators and whack not only Malaysia and Indonesia but also Japan.
“Japan almost went bankrupt until Ryutarou called Clinton for help. So today there is no such plot and in contrast to 1998, everyone is economically friendly with each other…mainly to keep China at bay,” Hoo said.
In terms of political crisis capable of upsetting the ringgit, Hoo claimed that though Malaysia’s current political scenario is “lively”, it is not as severe as it was in 1998.
“(Datuk Seri) Anwar Ibrahim who was at that time the finance and deputy prime minister tried to overthrow Mahathir with the help of Madeleine Albright (US former secretary of state).
“So Mahathir had to take control and bring order to the house by sacking Anwar which inadvertently sparked more political unrest.
“Such unrest was one of the primary factor that led to the downfall of ringgit to RM4.71 to US$1 in 1998.
“But today we don’t have any Madeleine Albright to create another Anwar. The only thing we have right now is John Kerry (current US Secretary of State) that is shaking Najib’s hands…and even Obama (US President Barrack Hussein Obama) is on good terms with Najib.
“Hence, there is actually no global political power that is trying to upset the ringgit right now.
Hoo also holds the opinion that foreign and local publications and politicians who are pessimistic of Malaysia’s economic and financial future can “keep on harping on their gloomy economic outlook but as far as the statistics are concerned…we are doing fine.”
Prominent journalist and blogger Datuk Ahirudin Attan, was also optimistic on the well-being of the ringgit.
In his latest posting, ‘Oh no, where’s our Ringgit?!’, Ahiruddin reposted Bloomberg’s report that listed the top ten troubled currencies in the world.
“Our naysayers, of course, will find it very hard to accept the exclusion of the ringgit in Morgan Stanley’s latest Troubled Ten Currencies.
“The fact is, we are looking ok. The key to our being ‘ok’ is the current account deficit and our current account deficit has been well managed by the government over these few years and has been consistently coming down,” Ahiruddin wrote.
According to Bloomberg’s report, the ten troubled currencies are: Taiwan Dollar, Singapore Dollar, Russian Ruble, Thai Baht, South Korean Won, Peruvian Sol, South African Rand, Chilean Peso, Colombian Peso and Brazillian Real.