By Agncy Reporter
Published: Saturday, 25 Aug 2007

“On its own, the currency reform issue is not a major issue because it does not really change anything. But our concern is that the extent of its effect on the economic sector will depend on how people perceive it. If people perceive it wrongly, then of course, it will have a counter-productive result.

“In the market, and especially among the ordinary people, this movement may not be fully understood. And if it is not properly understood, it can generate unnecessary inflationary pressure.

“Secondly, we feel that right now, there are a lot more strategic issues that we need to concentrate on to stabilise the economy and to put it on a firm holding.

“The key issue affecting our economy is the low level of production, especially in the manufacturing sector. And I do not see that this particular policy will have any immediate impact on that. It may have some benefits to the banking industry because their costs will come down considerably.

“But if it does not really impact the productive sector positively and therefore not contribute to improved productivity in the economy, its immediate value has to be seen in the context of what costs did we incur in putting it in place in the first instance.”

What are the risks underlying the implementation of that policy?

“If people do not understand it and if they are not able to adjust their behaviour in response to the change, it may also have a negative impact on productivity.

“On the whole, we believe that even if the policy has some benefits, perhaps, it is not the most important thing we should be focusing on right now. We should be focusing of policies that have positive impact on productivity and on employment.”