Najib's decision against pegging wise - EXCLUSIVE

Deputy Prime Minister and Finance Minister Najib Tun Razak, despite his shortcomings, made a good decision not to repeg the ringgit.

From a economic point of view, his decision not to repeg would correct conform to the economic viewpoint of many ISI (Import Substitution Industrialisation) economists. In short, ISI economist like Ha-Joon Chang argue that a development of a nation should be a twofold process - first install high trade barriers and protectionist policies, then when the nation has the capacity to compete in the international market, remove those barriers.


The ringgit peg was done in 1997 as a counterbalance to the shrinking economy and the reduction of the competitiveness of many companies in the nation. The ringgit peg was one of the many interventinoist and protectionist policies taken to protect our industries.

We don't need to protect our companies right now. Instead, we need a high capital flow of income, and by relaxing our barriers and protectionist policies, it would certainly augur well for foreign investors.

In addition, the ringgit peg would take a lot of resources to implement, something our nation doesn't have right now. The ringgit doesn't drastically need repegging, as it is settling around a relatively stable position.

But that doesn't mean that Najib should rest on his laurels now. He should continue to monitor the international economy and make suitable decisions.