Firms ride out Malaysian controls

Business Asia, Nov 2, 1998

Singapore firms doing business in Malaysia have not been badly affected by its stringent currency controls, reports indicate.

Multinationals and Singapore firms with operations in Malaysia said they were little affected as goods they produced there were largely for export.

"There has been no perceptible impact," said Mr Wong Ngit Liong, managing director of Venture Manufacturing. Others said the Malaysia's fixed exchange rate of 3.80 ringgit to the dollar was fair and provided a measure of stability to help in decision-making.

"Pegging the ringgit at 3.80 may make manufacturing slightly less competitive, but short term it will provide a stable environment that will facilitate decision making," said a Singapore-based Hewlett Packard spokeswoman.

Reports indicate Singapore companies were also not worried about being unable to repatriate earnings as Malaysia's central bank, Bank Negara, had made clear that the capital controls imposed early last month would not interfere with direct investments and trade.

Companies also said Malaysia's easier interest rates were a plus factor for them.

"We now have savings from interest rate expenses as our interest rates in Malaysia have fallen from 14 per cent to 8 per cent," said Mr Maurice Alphonso, technical director of Plexchem Technologies.