KUALA LUMPUR, May 30 ― Malaysia’s inclusion in United States Department of the Treasury Monitoring List along with other major trading economies only highlights its global economic strength, the Ministry of Finance (MoF) said.
Its minister Lim Guan Eng said while the US Treasury has included Malaysia into its expanded Monitoring List of Potential Currency Manipulator, the report does not name Malaysia as a currency manipulator.
“In fact, the inclusion of Malaysia into the US Treasury’s Monitoring List along with other major trading economies like Germany, South Korea, Japan and Singapore only highlights the strength of the economy and the role played by Malaysia in the global economy,” he said in a statement here.
Earlier this week the US Treasury, in a semi-annual report to Congress, said it reviewed the policies of an expanded set of 21 major US trading partners and found that nine required close attention due to currency practices.
Ireland, Italy, Malaysia, Singapore and Vietnam were new additions to the watch list, which also includes China, Germany, Japan and South Korea. India and Switzerland were removed from the list of countries under extra scrutiny.
The US Treasury’s three criteria for determining whether a country can be labelled a currency manipulator previously were a significant trade surplus with the United States, a sizeable current account surplus and evidence of one-sided, persistent currency intervention.
Lim explained that all countries with total trade above US$40 billion (RM167.9 billion) a year with the US were assessed by the US Treasury for closer inspection and would be placed into the list if two of three conditions set by the US Treasury were met.
“Malaysia is included the Monitoring List due to 2 factors. Firstly, Malaysia has a trade balance with the US of more the US$20 billion a year.
“Secondly, Malaysia has a healthy current account surplus of more than 2 per cent of its Gross Domestic Product (GDP),” he said.
He said both factors demonstrated the competitiveness of the Malaysian economy instead of currency manipulation as evident by the country’s performance in the World Bank’s Doing Business 2019 Index and the recently updated IMD World Competitiveness Ranking 2019.
“We are also encouraged by the rise in tourism revenue by 16.9 per cent year-on-year to RM21.4 billion in the first quarter of 2019, with total arrivals increasing 2.7 per cent to 6.7 million tourists. This also helps contribute to Malaysia’s current account surplus,” he added.
Lim said Malaysia’s inclusion into the US Treasury’s Monitoring List has no impact on the Malaysian economy, with no penalties or sanctions imposed on Malaysia as the country did not fulfill the third requirement ― evidence of one-sided, persistent currency intervention.
“Additionally, Bank Negara Malaysia has stressed that Malaysia runs on a floating exchange rate regime and any interventions carried out are only to avoid excessive volatility in the Ringgit,” Lim said.
Lim added that Malaysia will continue to build its economic competitiveness fairly by adopting new technology, investing in its infrastructure, enhancing transparency, and simplifying government as well as business processes while promoting free trade regionally and globally.
The report, usually released in April, was delayed this year and the US Treasury expanded its monitoring criteria to include not just America’s 12 largest trading partners but any country with more than US$40 billion in bilateral goods trade.
It also lowered the current account surplus threshold from three per cent of GDP to two per cent, suggesting an expanded list of countries surveyed.