(AFP) - Some businessmen and economic pundits favour Malaysia to maintain a fixed currency peg for at least two years to enable companies to plan ahead and to avoid the perils of uncertainty.

Since September 1998 Malaysia has fixed the ringgit at 3.80 to the US dollar following the bruising financial crisis that began four years ago this month.

Abdul Rashid Rahim, chief operating officer of DRB-Oriental-Honda Sdn Bhd, a joint venture between Honda and two Malaysian firms told reporters recently that the fixed peg had allowed them to plan effectively for the future.

"The biggest thing the peg has done to all Malaysians is that it has made easier for us to plan ahead. We know what is coming. Previously it was a yo-yo," he said.

Abdul Rashid said the company had been able to program the ordering of car part imports for the next two years based on the 3.80 exchange rate. Construction work on a 170 million ringgit (44.7 million dollar) Honda assembly plant in Malaysia would begin in September.

The government has come under increasing pressure from local exporters to float the ringgit within a narrow band to allow it to adjust to market demands amid declining regional currencies.

Nizam Idris, regional economist with Singapore-based IDEAglobal, told AFP Sunday that he expected Malaysia to keep the 3.80 peg for at least two years to beat off speculation.

"Regional economies are now experiencing cyclical downturn. If you change the peg now, then there will be speculation on the ringgit all the time," he said.

Asian countries are fearful that the downturn in the US and Japanese economies could send them spiralling into another slowdown. Nizam said the peg should be changed only after a recovery of the Malaysian economy and a rise in Asian currencies.

For DRB-Oriental-Honda to peg their buying at 3.80 means that they have been given some form of assurances from the authorities that it would not be changed for at least two years, he said.

"I think they must have got a clue from the government. I think it is an interesting revelation by the company," Nizam said. Nizam said if Malaysia now decides to change the peg to 4.0, it would mean that DRB-Oriental-Honda would see import costs rising by six percent.

"It will be an added cost for them. I do not think the government will sabotage them," he said.

Don't fiddle

Zainal Rampak, president of the Malaysian Trades Union Congress told AFP Sunday that the peg must be maintained because the economy was still in a state of recovery.

"What we fear is the people may take the money out if the peg is revised and the economy will slip further, resulting with a negative impact on workers. "I am for it - for the peg to be maintained for at least another two years. Don't fiddle with it," he said.

Ramon Navaratnam, a former deputy secretary general of the Treasury department and now corporate adviser to conglomerate Sunway Group said a steady peg was preferred because it was easier to do business and keep speculators away.

But Malaysia would come under pressure to review the peg if the US and Japanese economies did not recover, he said. Almost 21 percent of all Malaysia's exports are to the United States, making it vulnerable to the economic slowdown there.

Navaratnam said if there was a slump in external demand, current account surpluses and foreign exchange reserves would fall and people would lose confidence and take their money out of Malaysia. And thus the peg would become unsustainable.

"But it appears as of now, the government does not want to change the peg," he added.