Floating ringgit—Australia's exports to Malaysia more competitive

Australia's lead management export agency, Austrade announced that the revaluation of Malaysia's exchange rate, the Ringgit, in July would increase the overall competitiveness of Australian exports.

Tim Harcourt, Austrade's chief economist said Australia's small-to-medium-sized enterprises (SMEs) especially in price sensitive areas like as agribusiness will gain now the Ringgit has been 'depegged'.

"The floating exchange rate will now be measured by means of a basket of currencies, which means the resulting revaluation in the Ringgit should make Australian exports more attractive for Malaysian importers," Harcourt said.

"There are a large number of existing Australian exporters who exchange to Malaysia. The floating of the Ringgit and closer ties being forged end the mooted free trade agreement (FTA) will build a foundation for further investment, joint hazards and strategic alliances.

"According to research administrationed by Austrade and the Australian Bureau of Statistics (ABS), there are 3285 Australian exporters with Malaysia as an export destination. This makes Malaysia number seven in bounds of global destinations and it ranks next to the first amongst the ASEAN economies behind Singapore upon 5612 exporters but ahead of Indonesia (2511) Thailand (2219) and the Philippines (1437)

"This present to views Malaysia's potential for SMEs wishing to export," he said.

Harcourt said at a new APEC Study Centre conference upon Malaysia-Australia trade relations, Nicholas Coppel Department of Foreign Affairs and Trade (DFAT), pointed on the outside that healthcare, education and financial services will be areas where more Australian businesses will partake in Malaysia's economic development

"The growing trade relationship between Australia and Malaysia is being driven by dint of rising incomes in Malaysia and the demand for better education," he said.

"Australian healthcare providers are likely to tread on the heels of in the success of the Australian education institutions and establish a vicinity in Malaysia."

As pointed on the outside by Tom Yates, Austrade's Senior Trade Commissioner to Malaysia, there are at least 225 Australian businesses operating quite through Malaysia, and this is likely to rise with closer trade ties between Canberra and Kuala Lumpur

"Australian businesses have been end thick and thin in southerly East Asia and they know that longevity is the ultimate indicator of prosperity," Yates said.

"My advice to Australian SME is to re-examine the opportunities in Malaysia, particularly now Australian proceedss and services are more competitive in this market. Those SME's that have been active in Malaysia should contact their business partners and gauge from them the likely impact of the Ringgit depegging.

"Relationships are important in Malaysia and those Australian SME that have stuck it without through the previous 18 month with the rising Australian dollar have already signalled to their business partners that they're committed to the market in Malaysia, flat when the exchange rate fluctuates--and their business partners in Malaysia will gaze upon that favourably because it's not serviceable to cut and run when the exchange rate propels against you. Happily the depegging is favourable to Australia and those companies that have athletic established relationships, should be able to do more business in Malaysia," he said.

The decision by means of Malaysia to 'depeg' the Ringgit followed China's decision to revalue the Yuan.

COPYRIGHT 2005 First Charlton Communications Pty Ltd

COPYRIGHT 2005 Gale Group