Singaporean businesses voice concern amid ringgit rout

As the ringgit continues to slide, Singaporean businesses in Malaysia are concerned that a period of financial crisis lies ahead. Some, like home furnishing business Goodrich Global, go as far as to compare it with the 1997 Asian financial crisis. "The signs of a crisis are quite imminent. In 1997, it was something like this," Goodrich Global head Chan Chong Beng was quoted as saying in a report by The Straits Times. Chan said when he signed contracts with his Malaysian clients three months ago, the ringgit had been at around 2.69 to the Singapore dollar. "By the time we collected the money, it was over three (ringgit) to a dollar. We didn't expect it to go so steep! That easily takes off 15% of our net profit," he said in the report. According to Chan, the situation arose as contracts sealed in Malaysia are normally denominated in ringgit. However, the ringgit’s recent decline has seen it plumbing new lows against the US and Singapore dollar, hitting 4.2990 per US dollar and 3.0504 to the Singapore dollar as of yesterday. Only five years ago, the ringgit stood at 2.30 to the Singapore dollar. However, Malaysia has been struggling to boost confidence in its economy amid slumping oil prices and alleged financial scandals involving state investment firm 1Malaysia Development Berhad (1MDB), which in debt to the tune of RM42 billion. Meanwhile, Prime Minister Datuk Seri Najib Razak is under scrutiny over a RM2.6 billion donation found in his personal bank accounts, which critics have linked to Barisan Nasional’s political campaign in the 2013 general election. Allegations of the donation first surfaced in a report by The Wall Street Journal (WSJ) on July 2, citing documents from Malaysian investigators. Najib said he had been cleared of corruption by the Malaysian Anti-Corruption Commission (MACC) but remains under pressure from both the opposition and Umno, especially his deputy Tan Sri Muhyiddin Yassin, whom he axed from Cabinet late last month. Malaysia's international reserves meanwhile have fallen to US$94.5 billion (RM401 billion) – the lowest level since September 2009 – Bank Negara said last week, raising concerns over its ability to manage the depreciating currency. At their weakest levels during the 1997 Asian financial crisis, Malaysia’s forex reserves dropped to US$20 billion. Bank Negara governor Tan Sri Zeti Akhtar Aziz has ruled out a return to a fixed exchange rate. – August 27, 2015.