THE issue of the ringgit's value, especially in relation to the United States dollar, has attracted much discourse.
Some jump on the issue to score political mileage. We know the ringgit's instability is a consequence of interest rate adjustments in the US.
The US raised its rates as part of measures to bring down inflation.
Since the dollar is widely used in international trade, all currencies are impacted.
That outflow of funds from other countries contributed to the depreciation of currencies around the world, Malaysia included.
Though our inflation level was manageable, Bank Negara went ahead with an upward revision of the overnight policy rate to minimise the outflow of external funds, which can worsen the ringgit's position.
At a TV dialogue recently, three local economists deliberated on the issue. They agreed that the issue is unnecessarily politicised.
Instead of tackling the root cause of the issue, policymakers keep blaming each other, causing more confusion among the people.
The root cause, according to the three, is not new as it has been discussed for more than 10 years now. Yet no action has been taken.
A factor contributing to the value of the ringgit is the outflow of foreign exchange.
Take food imports, for example. About 60 per cent of our food is imported.
Billions of ringgit flow out every year to buy not just food such as beef, but also feed for livestock, aquaculture contributory and fertiliser.
It is not that we have not created policies to improve our food security. We once invested in projects to increase the supply of beef. Unfortunately, the projects did not deliver as promised.
The experts at the dialogue did mention that most of the time we were reactive rather than proactive.
One good example was the project to expand the cultivation of grain corn.
That idea was mooted many years ago, but was not acted on.
The same idea came up again recently when the global price of grain corn rose because of the supply disruptions brought about by the Ukrainian-Russian conflict.
The three experts, however, agreed on the need for coherence and consistency in policies. Often, policies get changed whenever a new government is voted in.
They cited Japan, Thailand, and Taiwan, where the countries stay focused on the execution of agreed policies despite the changes in governments.
They attribute this to their strong civil service, which is not easily swayed by politics.
And since many expect our government to keep changing, there needs to be a discussion on how to maintain stability in policies.
We can consider enacting legal instruments to achieve that.
Concerns were also raised during the dialogue that the way we design policies has not changed much since the early years.
Instead of strategising to migrate to high-value industries, we keep following the path of low-cost labour and price control.
It was clear from the dialogue that we should not be overly concerned about the movement in the ringgit's value.
If the fluctuations do not turn extreme, there is no cause for worry.
All agreed that low-value and high-value ringgit have their advantages and disadvantages.
We should capitalise on the advantages and take action to mitigate the negatives. A lower-value ringgit is seen as good for our exports.
The trio suggested investing more in tourism promotion to bring in more foreign exchange earnings.
The world tourism market is predicted to be massive after the end of the pandemic.
To manage the minus side of a lower-value ringgit, we should reduce imports. Our high food imports were flagged as one key area to work on.
The call to increase food production is not new. The reason why we have failed is attributed to the lack of persistent action.
This is where we need to review our strategies to sustain the economy.
* The writer is a professor at the Tan Sri Omar Centre for STI Policy, UCSI University