Prime Minister Najib was posed a question in the recent Credit Suisse Asian Investment Conference on the Malaysian Ringgit, on the plans of his government in reconverting the capital control and freeing up the Ringgit. Najib commented that Malaysia was "rather prudent on this issue and was not in a great hurry to make the Ringgit fully convertible".
Under capital control our Ringgit is not accepted out of Malaysia and if you were to travel it is suggestted that you carry enough foreign currencies like the USD or the destination currency of your travel as it will be difficult to convert your Ringgit and foreign banks will not take your Ringgit. You will have to seek out "street changers" or money changers and will have to find the right one who will take your Ringgit than when you find the right changer, it will be at a very much discounted rate.
Some Malaysians are still unaware that the Ringgit is of no use out of Malaysia and foreign banks will not change your Ringgit, as most will just use their credit cards but there are times when credit cards are no good and when you need cash of the local currency. Thanks to Mahathir capital control was imposed since 1998 which have effectively retarded the Ringgit. Which is clearly reflected in the fall in Foreign Direct Investment since capital control was imposed.
In my last trip to Hong Kong when Najib was attending the Asian Investment Conference, i was attending a meeting in an International Bank and had wanted to find out about the latest exchange rate for the Ringgit which has surprisingly been strenthening but to my utter dissapointment was that not only does the bank not take the Ringgit, they can't even offer me the latest exchange rate for the Ringgit. The reply was that they don't keep track of the Ringgit. In the global scenario, Malaysia is becoming more and more irrelevant and have been disregarded and are out of consideration. Other than our commodities of Oil and Gas and Palm Oil, we are not of primary consideration for other investments.
Under capital control, it is sometime seen to be a form of currency manipualtion and can be manipulated. Capital control as a form of counter measure can be considered in time of crisis but prolonged controls will bear no beneficial economic benefits as it is only a reflection of the weakness of the government fiscal policies.