The only way a country can sustain higher exchange rate compare to others is through harnessing the national competitiveness in industry sector that is non-replaceable by other countries, like what US and Singapore did. This mean, has a well functioning financial market that will invested in technology start-up , has a policy that promote entrepreneur and start-up, has a pool of talents, and most importantly, an environment with good universities, company who provide internship opportunities that keep on attracting the talents.
You can see why so many countries stuck at the so called middle-income trap, where one of the examples will be Malaysia. This happened when our country is relying on cheap exchange rate instead of technology advantage to compete in global market. Hence, we dare not raising our exchange rate, making import (like car and electronic goods) cheaper to raise the overall living quality of our citizens.
We might still have competitive edge in,
i. perhaps one of the most stable political environment in the trade road between east and west,
ii. abundance of young cheap graduates with english speaking ability
iii. "First Person" advantage in some of the chips industry.
However, if we continue seeing our best graduates go after the doctorate profession or busy helping the O&G companies digging the black gold out from underground, you would wonder what will happened to Malaysia when the oil rush finished, whether we will fall into the resource curse.
Just nonsense.
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