THE ringgit has fallen to its lowest value since the 1997 Asian financial crisis. The reaction from the opposition has been one of frustration and panic, raging against the finance minister. The reciprocation from the Finance Ministry has been an alleviation of fear, stating the external influence of Malaysia’s main export partners have contributed to its slide. To his credit, there is some proof of this, with many currencies globally depreciating against the US dollar. However, the ringgit has also slipped against the Singaporean dollar, Japanese yen, and euro. What does this mean?
A weakening ringgit implicitly means there is less confidence in Malaysia’s economy, contributed to from various factors including political instability and specific economic vulnerabilities. This impacts foreign investments in Malaysia, driving away investors that are unsure of a return on their investments. Some may even cut their losses and take their business elsewhere, further undermining the economy and affecting the masses.
The response to the fall of the ringgit has to be a deeper introspection on Malaysia’s economic foundations. While we have a trade surplus, our imports introduce particularly worrying vulnerabilities. Malaysia is a huge food importer, spending RM63.6 billion in 2021 on this. With a weak ringgit, imported food will undergo inflation at a higher rate, resulting in overall higher food prices. In fact, Dr Michael Jeyakumar Devaraj, chairman of Parti Sosialis Malaysia, brought up food security earlier this year when he focused on the effects of the Russia-Ukraine war on grain exports from that region.
It is prudent to take preventive measures now to bolster food security such that all residents of Malaysia have access to nutritious food at affordable prices. For this, we must review our agriculture policy that currently favours cash crops, such as palm oil and rubber, to ready more land for food production. Farmers currently producing food for the local population should not be evicted, as is being done in Perak, and instead should be assimilated into the national agricultural agenda. Farms should be collectivised and above all, parasitic middlemen need to be eliminated so more profits go to farmers. This will enable farming to be an attractive career option.
In thinking about the effects of the weakening ringgit, we must also take some time to think thoroughly whether this global system is one we should conform to. Right now, Malaysia is seen as a place where capitalists, particularly in the Global North, can make profits. They look at Malaysia as providers of cheap labour and taxation, enabling them to extract more labour from our workers at a cheaper price. This disproportionately takes money out of our country and constantly impoverishes workers. Funds that could have been used for social needs are instead extracted and kept for the benefit of capitalists.
Any move to get these funds, through taxation for example, elicits threats from these capitalists to close their business in Malaysia and set up shop elsewhere. The impact of this feeds into global ratings bodies that then again devalue our currency and assign us low ratings, further diminishing chances of investments. This becomes a vicious cycle in itself.
So, we see the global credit, banking and financial systems all conspire to extract the wealth of Global South nations that desperately need development due to their history of being plundered during colonial times. It is in fact a continuation of imperialism and we must do whatever we can to extract ourselves from it.
So long as the economy is held by private hands instead of collectively owned by all Malaysians, we will be subject to this tyranny. Even if they are local capitalists, similar methods will be employed, not to expropriate riches to other countries, but hold them in this country away from the workers who created it in the first place and need it much more.
If we have an economic system that is collectively owned, where all or most needs are provided through local sources and imports were only for those goods that are not essential, the economy would be in such a robust state that relative currency values become less influential. For example, if we didn’t need to import food, we wouldn’t be subject to the higher costs of import needed to make food available. This is the kind of economic programme Parti Sosialis Malaysia (PSM) is interested to pursue.
It is not that we don’t want investments. We just are very aware of how these investors, whether local, from the Global North or elsewhere, utilise our resources and exploit our workers just to enrich themselves. We do not think it is fair that Malaysians are made to suffer through this oppressive system because political leaders are unwilling or unable to envision a better, more equitable one. We can!
The cornerstone of our programme is balancing the scales of power between the common Malaysian and the capitalist, the former whom are now abject slaves to the latter. We recognise the limitations of taxation and instead offer restructuring the economy entirely to benefit workers.
This we wish to do by strengthening the worker’s voice in demanding for their rights. Through unions and people’s organisations, workers can come together and threaten to withhold their labour in order to force their employers to accede to their requests. We also wish to push forward a federal Jobs Guarantee Scheme to minimise the unemployment pool, which is used by capitalists as a way to diminish salaries and work benefits. Through this, private entities will be forced to compete with the Jobs Guarantee Scheme to provide better terms for their workers.
With the previous agricultural programme, the Jobs Guarantee Scheme can be used to establish collectively owned industries that are not supported by the private sector. Green technology, social work and care work are possibilities. These unlock the potential of possibly unemployed people to positively impact the economy. As this method of economic organisation grows, capitalists will find it difficult to compete, especially as new taxes are introduced which they can’t threaten away as the dependency of the economy on their business diminishes. Slowly we can collectivise the whole economy and finally give the common Malaysian a say on trade matters.
This is not only the economic programme of the PSM; it is the only economic programme that is sustainable and sensible for all Global South countries, especially Malaysia. – September 26, 2022.
* Arveent Kathirtchelvan is PSM youth wing chief.
* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.