Jactim: Rethink ringgit policy
Exporters find it burdensome to convert export proceeds from US dollars
KUALA LUMPUR: Malaysia should consider mitigating the requirement for the bulk of export proceeds to be converted into ringgit as it is burdensome, according to the Japanese Chamber of Trade and Industry Malaysia (Jactim).
Its president Hiroyuki Imizu said the measure introduced by Bank Negara in December 2016 was burdensome for Japanese exporters in the country, as they have to convert their export proceeds from US dollars to the local currency and this also adds to their cost.
“Going forward, we hope the central bank would mitigate this requirement and allow more flexibility, as this would aid exporters on the whole.
“Furthermore, from the feedback of some of the parent Japanese companies which have operations in Malaysia, they are not too happy with this measure as it has, to an extent, affected their confidence level.
“So, we hope this requirement will be mitigated as this will facilitate exports from Malaysia,” he said at a press briefing after disclosing the latest findings of a business survey of Japanese companies in Malaysia.
The survey was jointly conducted by Jactim and the Japan External Trade Organisation (Jetro).
There are currently 1,400 Japanese companies operating in the country, many of which are involved in manufacturing.
The central bank in December 2016 introduced a variety of measures, among which requires exporters in the country to only retain up to 25% of export proceeds in a foreign currency, with the remainder to be converted into ringgit.
Higher balances would need the central bank’s approval,
The move by Bank Negara was aimed at reducing the volatility in terms of rebalancing demand for both foreign currencies and the ringgit. Imizu noted that from the feedback of the survey, it also showed that there was a need for the authorities, in the eyes of the Japanese companies operating here, to expedite the application procedure of foreign workers.
Currently, the procedure was cumbersome and delayed application, he added. Towards this end, he said, among some of the measures adopted by Japanese companies to address the difficulty in the hiring of foreign workers include employing more Malaysian workers and going into automation.
“There is a need to transform to Industry 4.0, increase productivity and invest in research and development in a bid to reduce the dependency on foreign workers,” he said.
In terms of foreign direct investment (FDI), he said on the manufacturing side, FDI from Japan into Malaysia was still at the top spot despite total flattish FDI (from Japan to Malaysia) over the last two years. By country, Imizu added that Japan was ranked second behind Singapore for FDI into Malaysia.
Besides attracting new FDI from Japan, he said Malaysia should also provide attractive incentives for existing Japanese companies operating in the country.
Meanwhile, Jetro managing director Akira Kajita said Japanese companies were keen to invest in new business areas in the country like aerospace, automotive components, medical equipment and renewable energy.
They have expressed their interest to set up their manufacturing bases in Malaysia and expand their supply chain within Asean.
He also pointed out that the business climate diffusion index for the first half of the year recorded 7.1 points, the highest points in the last five years, denoting that Japanese companies are expecting further improvement in the business climate in the future.
Kajita cautioned that from the findings, the number of companies citing currency movement as a factor affecting business performance had increased from the previous survey, where there was a decrease in the number.
He said this could be because those companies are watching foreign exchange risk caused by the future domestic situation and overseas economy carefully.