Gold dinar impractical
DO not discount the advantages of using the gold dinar as an alternative currency in bilateral trade with some countries.
This idea was put forward by our former prime minister Tun Dr Mahatir Mohamad as a way to reduce currency speculation.
However, I am not in favour of the PAS-led Kelantan government’s efforts to expand the use of the gold dinar and silver dirham in all transactions, including paying the salaries of civil servants.
It is impractical to use this currency for a number of reasons.
The dinar and dirham are essentialy gold and silver based items. Buying goods or services with this coin is similar to the exchange of goods and services for the gold or silver.
In other words it is a form of barter trade between two parties which requires a simultaneous desire for two different items to occur.
For example, one party desires the gold and another wants, say, some vegetables. Therefore it is impractical to use this currency in our daily lives as gold and silver are not the items that most people seek every day.
The second problem is that of divisibility. For instance, one gold dinar is worth RM800 and one dirham is worth RM25.
A person with a salary of RM 2,800 will be paid three dinars and 16 dirham every month. How is that person going to pay for a lunch that is worth RM4?
The third problem that will arise will be the question of accounting, particularly for multinational companies.
A lot of multinational companies report their performance in term of US dollars or their own currency. If the dinar and dirham is used as a mode to pay salaries and the mode of payment to local companies providing goods and services , how would this amount be converted to US dollars or other hard currency?
Would the use of the dinar and dirham cause any inconsistency in the accounting and performance report of a company?
Based on these reasons, I do not agree with Datuk Nik Abdul Aziz that there is no reason why transactions in the dinar and dirham cannot be practised in the state as it was widely used thousands of years before the fall of the Ottoman Empire.
The use of gold and silver based currency will not totally protect a country’s currency from fluctuation because gold and silver can also be subjected to manipulation.
Important factors that need to be taken into consideration before introducing a new currency should include its impact on the daily lives of people, the investment climate and international trade.
GOH HOE HOE
Penang
DO not discount the advantages of using the gold dinar as an alternative currency in bilateral trade with some countries.
This idea was put forward by our former prime minister Tun Dr Mahatir Mohamad as a way to reduce currency speculation.
However, I am not in favour of the PAS-led Kelantan government’s efforts to expand the use of the gold dinar and silver dirham in all transactions, including paying the salaries of civil servants.
It is impractical to use this currency for a number of reasons.
The dinar and dirham are essentialy gold and silver based items. Buying goods or services with this coin is similar to the exchange of goods and services for the gold or silver.
In other words it is a form of barter trade between two parties which requires a simultaneous desire for two different items to occur.
For example, one party desires the gold and another wants, say, some vegetables. Therefore it is impractical to use this currency in our daily lives as gold and silver are not the items that most people seek every day.
The second problem is that of divisibility. For instance, one gold dinar is worth RM800 and one dirham is worth RM25.
A person with a salary of RM 2,800 will be paid three dinars and 16 dirham every month. How is that person going to pay for a lunch that is worth RM4?
The third problem that will arise will be the question of accounting, particularly for multinational companies.
A lot of multinational companies report their performance in term of US dollars or their own currency. If the dinar and dirham is used as a mode to pay salaries and the mode of payment to local companies providing goods and services , how would this amount be converted to US dollars or other hard currency?
Would the use of the dinar and dirham cause any inconsistency in the accounting and performance report of a company?
Based on these reasons, I do not agree with Datuk Nik Abdul Aziz that there is no reason why transactions in the dinar and dirham cannot be practised in the state as it was widely used thousands of years before the fall of the Ottoman Empire.
The use of gold and silver based currency will not totally protect a country’s currency from fluctuation because gold and silver can also be subjected to manipulation.
Important factors that need to be taken into consideration before introducing a new currency should include its impact on the daily lives of people, the investment climate and international trade.
GOH HOE HOE
Penang
