Prime Minister Abdullah Ahmad Badawi today left open the prospect of change to Malaysia's six-year-old currency peg against the dollar as he sought to boost private investment in his first key meeting with top corporate leaders.

Abdullah, who is also finance minister, reiterated there are no plans to change the ringgit's value of 3.80 to the dollar for now but made it clear the government is willing to review the peg if the situation merits it .

"As far as the peg is concerned, it will stay as it is. I feel that the present situation does not yet warrant a change in the peg," he told reporters after a one-hour closed-door meeting with some 300 businessmen.

"One thing I have emphasised is that we are not dogmatic about this. We are not saying that it is going to be there forever and ever and ever," he said.

"If later on, some fundamental changes happen around us or the world over, then of course we have to reconsider the peg ... at the moment, it provides stability and helps (in ensuring) predictability."

It was the first indication of a possible policy change by Abdullah, who became premier just two months ago after taking over from veteran strongman Mahathir Mohamad who retired on Oct 31 after 22 years in power.

The ringgit peg is a remnant of capital controls imposed in September 1998 by Mahathir to battle the recession caused by the Asian financial crisis.

Caution expressed

Local businessmen welcomed the government's new stance towards the fixed-rate system but some expressed caution against any hasty change.

"We have to be very careful. The word peg itself says it's going to be for a very long time. If you keep on repegging it in a whimsical manner, you are actually introducing a lot of instability," Francis Yeoh, chief executive of conglomerate YTL Group, told reporters.

Yeoh said he did not see any changes to the peg for the next two to three years.

Some analysts said it was time for the government to remove the peg given the weakening dollar and Trade Minister Rafidah Aziz last week said a review may be called for if Malaysia's competitiveness was threatened.

Abdullah also urged the banks to give loans based on cashflow and project viability, rather than collateral, so as to help young entrepreneurs.

He said it was time now for the private sector to resume its role as the engine of growth after years of government pump-priming.

In his speech, Abdullah pledged to cut red tape and improve transparency in the award of government contracts to wipe out graft and improve the business climate.

"Tender processes need to be transparent, with open tendering being the norm. Direct negotiations will be limited to very special cases," he said.

Performance indicator

Abdullah said the government would introduce the use of explicit key performance indicators to ensure management accountability in all government-linked companies such as flag carrier Malaysia Airlines and power firm Tenaga Nasional.

Although the economy is out of the woods, Abdullah said Malaysia must continously "reinvent its economic model" to accelerate its transition to a knowledge-based economy and a developed nation by 2020.

"We cannot afford to be a jack of all trades but master of none," he said, adding that agriculture, biotechnology and Islamic banking and finance would be priority areas because Malaysia has comparative advantages in those sectors. - AFP