The Dissolution of a Monetary Union: The Case of Malaysia and Singapore 1963–1974

ruk_n_rul, 8 months ago

We got cocky leaving the union, thinking we’d leave Singapore in the dust. The exact opposite happened.

cendawanita, 8 months ago

It’s actually a good move, economically speaking in the bigger picture. No doubt Singapore’s much more developed economy with its value-added industrial sectors was going to zoom straight ahead as soon as they’re no longer committed to be in the federation and with that, the attendant need to contribute to the development budget of the rest of Malaysia. But because of that, it would have been a long-term economic suicide (see Brunei) to keep hitching your wagon to it. We’re definitely slower, no doubt, and corruption and inefficiencies don’t help. But a more expensive currency (that the central bank has agreed to lose some control over so that’s your monetary policy levers handicapped) with not even basic manufacturing to be competitive, and with that no budget to develop (except of course overvaluing fossil fuel earnings capacity thereby developing only that ecosystem as priority)? Ayyyyy that’s an even worse future.

ETA: there was no expectation we’d “leave them in the dust”. In fact it was more like, we couldn’t afford the projected inflationary pressures from a strengthening Singaporean dollar.

ruk_n_rul, 8 months ago

Aight, that makes sense.

cendawanita, 8 months ago

(my personal opinion on the impact of the agreement which is still ongoing to the less-developed country: mefi.social/@cendawanita/110982575930231563)