KUALA LUMPUR: The government should focus on addressing internal weaknesses rather than attributing the weakening ringgit to external factors.
Malaysian Inclusive Development and Advancement Institute of Universiti Kebangsaan Malaysia director Prof Tan Sri Noor Azlan Ghazali said besides the central bank, Putrajaya also needs to play an important role in improving the local currency's current situation.
Noor Azlan said Malaysia needs to act quickly to restore international confidence in its economy to be among the global investment destinations of quality.
The ringgit, he said, could be affected further and might move to a lower band if this perception continues.
"Since 2005, the ringgit has been in two bands vis-a-vis the US dollar. The first band is between 3.0 and 3.8 and the second band between 3.8 and 4.6.
"Now the ringgit has entered the third range where its value is much weaker compared to the dollar.
"Based on the current movement chart of the ringgit, the currency is not in crisis compared to the depreciation in 1998. However, if economic policy is not strengthened, the ringgit is likely to enter the fourth range where it will hit five," he added.
Noor Azlan said Putrajaya should concentrate on the country's economic fundamentals and not just focus on changes in the US and global economy as the causes of the ringgit's depreciation.
"The country's competitiveness is clearly declining. Based on the global IMD competitiveness ranking, Malaysia is now ranked 27th in the world out of 63 countries, lower than 10 years ago at 15th place (2013).
"Regardless of our arguments, the decline in competitiveness affects global perceptions of the economy," he said at a media roundtable on "Empowering the Bumiputera" here today.
Noor Azlan said the country's track record of policy inconsistency has come under scrutiny, with major projects like the Kuala Lumpur-Singapore high-speed rail facing multiple cancellations, leaving investors wary.
He said to address these challenges, there is a pressing need for Putrajaya to strengthen the country's direction and policy consistency.
"Without clear and consistent policies, Malaysia risks further erosion of investor confidence and could find itself struggling to recover from the economic repercussions of the depreciating ringgit," he said.
Noor Azlan pointed out Investment, Trade and Industry Ministry Minister Tengku Datuk Seri Zafrul Abdul Aziz's statement that Malaysia had posted a record-high of RM329.5 billion in approved investments last year.
However, questions still linger about the implementation timeline of the investments.
"Has it already been implemented?" he asked.
"MIDA (Malaysia Investment Development Authority) needs to do data tabulation, based on approved investment, to provide clarity. They need to show how many investments are there and when they are coming.
"Answering with clear economic facts is crucial to provide clarity to the public, especially during times of economic uncertainty, such as the current depreciation of the ringgit.
"Those who want to speak up have the right to ask, particularly when the ringgit falls," he said.