Penang Chief Minister Lim Guan Eng today urged the Finance Ministry to state clearly if the government plans to impose capital controls.

Lim said this was because fear of capital controls have affected the stock market.

He said the ringgit's fall against the USD to 3.92 was 'very worrying' as it was the lowest in 17 years.

"All this is due to self-inflicted wounds, of failure in government policies like the implementation of the GST and the allegations of financial scandals surrounding the 1MDB," Lim said at a press conference in Georgetown.

"Implementation of the GST was not able to ensure, heal or restore the country's financial health," he added.

Lim ( photo ) said there were analysts who predict the ringgit will slide even further to RM4.10 to the US dollar.

He described the possibility as 'frightening'.

Lim also cited a news report stating that in 2013, Malaysia's reserves were at US$140 billion and the ringgit was strong at RM3.20 against the US dollar.

However, Bank Negara then intervened to defend the ringgit but the ringgit continued to slide and Malaysian reserves reduced to about US$100.5 billion in just over a year,  he said.

'Will not work'

"It has now gone down US$40 billion in just one year. That is the figure as of July 15. There is talk that our reserves are much lower now," Lim claimed.

"The trend is really worrying. Many economists say that using our reserves to defend the ringgit will not work because there are sentiments and structural effects which are not in favour of Malaysia," said Lim.

"No matter how much money we throw in, we cannot stop the slide of the ringgit," he stressed.