Bank Negara’s INCEIF says Malaysia ‘in a crisis of confidence and credibility’
Malaysia, which is contending with a weakening ringgit, cannot solely place the blame on external factors as the nation grapples with a confidence and credibility crisis, according to the International Centre for Education in Islamic Finance (INCEIF). Bank Negara Malaysia established INCEIF to develop the Islamic finance industry's human capital. digitaledge Weekly in its latest August 31-September 6 issue, quoted INCEIF emeritus professor Datuk Mohamed Ariff as saying the country needed to act fast to restore confidence and credibility. Mohamed said: “It appears that the country is in denial mode. The sharp fall in commodity prices, rapidly shrinking ringgit, ballooning external debt, ailing stock market and falling central bank reserves are all taking a heavy toll on the Malaysian economy. And yet, we keep hearing that the fundamentals are still strong." "Such talk only serves to dampen investor sentiment further, as these give rise to the impression that the government cannot even recognise or understand that there is a problem in the first place, let alone fix it,” he said. According to Mohamed, the country's confidence and credibility crisis stemmed mainly from domestic factors. He said these factors included the absence of checks and balances besides a lack of transparency, disclosure and accountability. “The crisis the country currently faces is largely homegrown. It smacks of poor governance and mismanagement. The ongoing financial scandals speak volumes. The poor handling of the issues with no straight answers and the absence of checks and balances have affected the country’s image in the global arena. "The economy is bogged down in a crisis of confidence and credibility. To put the economy back on track, we must restore confidence and credibility, which can only come with increased transparency, disclosures and accountability," Mohamed Ariff said. His comments came at a time when the ringgit had depreciated to fresh levels against major currencies after China devalued the yuan and cut interest rates. The ringgit also weakened in anticipation of US rate hikes this year. Last Wednesday, the ringgit weakened to a new point against the US dollar at 4.2995. Compared to the Singapre dollar, the ringgit depreciated to a fresh level at 3.0563. On Friday, the ringgit changed hands against the US dollar at 4.1990. Compared to the Singapore currency, the ringgit was traded at 2.9903. – digitaledge Weekly, August 30, 2015.
