Prime Minister Abdullah Ahmad Badawi will be responsible for an economic disaster if he fails to remove or revise the peg on the ringgit soon, said ex-deputy premier Anwar Ibrahim.

He said pegging the ringgit to the US' dollar is no longer tenable in the present economic condition and Abdullah must act fast for the interest of the nation and its people.

"My argument is that it (the pegging) is no longer tenable to keep at the present rate. Now is the time for (the government) to go back to floating system.

"I see no sense for a government to continue to talk about liberalisation at the same time having a system that pegs," he added.

The former finance minister told this to reporters after delivering a speech at a forum on ' Political Reforms in South East Asia ' in Kuala Lumpur yesterday.

However, Anwar said he does not know if Abdullah would be bold enough to reverse the decision made by his predecessor Dr Mahathir Mohamad in 1998.

"I don't know (if Abdullah is bold enough). But as I said (at the forum) earlier, he cannot continue to be in the state of denial. He has to take into account the interest of the economy and the nation and if he fails in making the moves now, he will have to be responsible.... I have stated my statement four to five months ago but nothing seems to happen," he added.

The ringgit has been pegged to the dollar since September 1998, when Mahathir imposed capital controls to halt a steep slide during the Asian financial crisis. Other controls were lifted as the economy revived, but the peg has remained.

Consider re-pegging

Anwar also said if Abdullah is uncertain to allow the ringgit to float, he should at least consider re-pegging the Malaysian currency.

"...if he is not for floating currency, at least (he should consider) re-pegging- which I don't share. But at least do something because something has to be done. You can't just wait," he stressed.

He said the revision of the ringgit peg must be done soon and Malaysia must not wait for China which allows only limited trading in the yuan within a narrow 0.3 percent beyond its official rate of 8.2770 yuan per dollar.

"It must be because we have wasted a lot of time. The argument that we wait for China would be disastrous because it has a much bigger economy."

He also expressed his regret that Malaysians in general seemed to be uninterested in the danger that the pegging has on the country's economy and for this he blamed the media.

"... It is disastrous once you start (pegging) because it is interfering and (therefore) kills the confidence in the economics in the long term. Pegging is for extreme measures. But unfortunately because the Malaysian media is such that the people are not seeing the alternative views.

"To them the peg did wonders. Except the MIER (Malaysian Institute of Economic Research) which has been consistently against the peg, no one else seems to bother," he said.

Anwar also touched on the issue during the forum where he stated that removing the peg must be one of the major reformations that must happen in Malaysia.

"As I have said before, I am not against the peg as a policy for national economic interest but only as temporary measure and that it cannot be made a permanent fixture. It has an adverse effect on the economic's long term sustainability. Countries like Thailand, Korea and other countries in the region have surpassed our economic performance," he noted.

He conceded there would be a 'turbulence' if the government removed the peg now but it warned that would be worse if the government stretched it further.

"It is a 'Catch 22' situation for the government. But there is a need to de-peg now. The convulsions ensuing in the years of economic slowdown will be even more disastrous for the people.

"Maybe it would not be a disaster for the ministers who have squandered millions or billions but it would hard for small independent companies, professionals and workers," he said.