GEORGE TOWN: The higher- valued ringgit will benefit manufacturers, travel agents and parents who are supporting their children’s overseas education, says the Small and Medium Enterprises Association Malaysia (Samenta).

Its honorary secretary-general SH Yeoh said that thanks to the strengthening ringgit, which made it possible to import cheaper raw materials, Malaysian manufacturers were now able to produce more efficiently and compete more effectively.

He said Malaysian exporters could better compete with countries that had yet to see their currency appreciate.

“The flip side, of course, is that their profits will also shrink correspondingly because their foreign earnings can now buy fewer ringgit.

“With the ringgit on the rise, Malaysia can now attract more quality talents into the country to overcome the labour shortage, which has been a perennial problem,” he added.

Yeoh said Samenta members involved in the travel trade could now expect more enquiries and bookings during the upcoming holidays, as the higher ringgit would lower their holiday expenses.

“Overseas education will also become much cheaper given the new exchange rate,” Yeoh said.

He also said the price of imported food and IT products such as laptops and smartphones might be adjusted later to reflect the ringgit’s higher value.

“This may happen in the next few months if the ringgit remains high.

“The reason is that the present stocks bought at the previous exchange rate need to be cleared first,” he added.

Meanwhile, moneychangers who had stockpiled US dollars at higher rates are struggling to sell them at the current lower rates now.

“Customers expect to purchase at the current rate, but we are unable to give a discount or sell it at a loss.

“Many are waiting and hoping for the US dollar to go even lower, and this situation has made the dollar go from one of the most popular to outside the top 10 now,” said Zubeir Mohamed Ishak, 52, at Masjid Kapitan Keling yesterday.

Zubeir noted that moneychangers had purchased the US dollar at an exchange rate of RM4.60 last month, which has now dropped to RM4.40.

Malaysia Semiconductor Industry Association president Datuk Seri Wong Siew Hai said while a stronger ringgit could enhance investor confidence, it could also lead to higher operational costs for the multinational companies (MNCs).

“Most MNCs trade in US dollars, so any improvement in the ringgit would result in additional costs for them, ranging from salaries to materials.

“The immediate impact may be minimal for companies with ringgit reserves but once depleted, they will feel the rise in costs when converting.

“A salary in ringgit would also be considered higher in US dollars compared with other countries in the region,” Wong said.

PKT Logistics Group chief executive and managing director Datuk Seri Michael Tio explained the benefits of a stronger ringgit for clients buying the US dollar.

“As logistics service providers, we will see clients who purchase in US dollar currency benefit from the ringgit’s improvement.

“Lower raw material costs will make Malaysian products more affordable.

“Additionally, lower import costs will benefit consumers and help reduce inflation,” he said.

Tio, however, warned that exporters selling in the US dollar might not see the same benefits.

https://www.thestar.com.my/news/nation/2024/08/07/experts-weigh-in-on-pros-and-cons-of-higher-valued-ringgit