New Era College Subject: macroeconomic econ 102d (august 2012) Lecturers name: ms.

yogambigai rajamoorthy
Students Name: Id number:

Teoh su hua Ng chai chin Kong siew jing Cheong wei xiang Chai jian heng

1230139-dba 1250106=dba 1230104-dba 1230131=dba 1230140-dba

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Introduction

Introduction
Malaysia is a middle-income country. Malaysia is attempting to achieve high-income status by 2020 and to move farther up the value-added production chain by attracting investments in Islamic finance, high technology industries, biotechnology, and services. Malaysia exports particularly of electronics, oil and gas, palm oil and rubber to other countries. As an oil and gas exporter, Malaysia has profited from higher world energy prices, although the rising cost of domestic gasoline and diesel fuel, combined with strained government finances, has forced Kuala Lumpur to begin to reduce government subsidies. Malaysia could be vulnerable to a fall in commodity prices or a general slowdown in global economic activity because exports are a major component of GDP. Malaysia also has run business with some countries such as TOYOTA(cars),mobile device and electrical etc. The Malaysian economy has made an enormous leap since 1957. The transformation of the country's economy from one based on primary commodities like tin, rubber and palm oil to a dynamic and vibrant industrializing nation is attributed to a variety of pull factors. Malaysia's political and economic stability, prudent and pragmatic investor friendly business policies, cost productive workforce, developed infrastructure comparable to that of any western country and a host of other amenities make this country an enticing place for investors. We will compare with other countries economic growth to explain Malaysia economic conditions.

Unemployment
The unemployment rate can be defined as the number of people actively looking for a job divided by the labor force. Changes in unemployment depend mostly on inflows made up of non-employed people starting to look for jobs, of employed people who lose their jobs and look for new ones and of people who stop looking for employment. Related terms are the labor force, the participation rate and the employment rate. The labor force is defined as the number of people employed plus the number unemployed but seeking work. The non-labor force includes those who are not looking for work, those who are institutionalized such as in prisons or psychiatric wards, stay-at home spouses, children, and those serving in the military. The participation rate is the number of people in the labor force divided by the population of working age that is not institutionalized. The employment rate is defined as the number of people currently employed divided by the population of working age. In Malaysia at low levels of income, its easy to take advantage of cheap labor for low-skilled manufacturing exports that facilitate the transition from low to middle income. However, making the leap from middle to high income is much more difficult. As incomes increase, so do costs, which means countries like Malaysia must move up the value chain, by exporting more technologically advanced products. In addition, they must innovate and use capital and labor more productively. This means having a better-educated workforce and an innovative domestic private sector that invests in research and development. However, the cheap labor looking for jobs in Malaysia, so that the people of our country to reduce employment opportunities.

Monetary Policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment. Monetary theory provides insight into how to craft optimal monetary policy. It is referred to as either

being expansionary or contractionary, where an expansionary policy increases the total supply of money in the economy more rapidly than usual, and contractionary policy expands the money supply more slowly than usual or even shrinks it. Expansionary policy is traditionally used to try to combat unemployment in a recession by lowering interest rates in the hope that easy credit will entice businesses into expanding. Economic activity in several of the advanced economies continues to be affected by ongoing fiscal consolidation, impaired financial intermediation and weak labor market conditions. In emerging economies, while domestic demand remains an important source of growth, exports are affected by weak external demand. In the domestic economy, recent data and surveys of business conditions suggest that consumption and investment activity remains resilient. Looking ahead, domestic demand will continue to be the anchor of growth. Household spending continues to be supported by stable employment conditions and income growth. The strong investment activity is mainly led by the domestic-oriented industries, the oil and gas sector and the steady progress in the construction of infrastructure projects.

New 3th series of Malaysian banknotes:

RM100-Natural wonders

RM50-Agricultureand Technology

RM20-Marine Life

RM10-Flora

RM5-Wildlife

RM1-Traditional Sport

As Malaysia's Central Bank, Bank Negara Malaysia promotes monetary stability and financial stability conducive to the sustainable growth of the Malaysian economy.

Key policies
Vision 2010
In 1991, the government declared that it was the objective of the nation to become a developed nation in its own mould by 2020. It visions Malaysia to achieve an industrialized and a fully developed nation status by sustaining growth at 7 per cent per annum and initiating structural changes in the economy as well as within the manufacturing sectors. The key to the attainment of a fully developed nation is overcoming the nine strategic challenges.

New Economic Policies

Start New Economic Policy (NEP) in 1971 was a watershed in the Malaysian economic policy history. The NEP underscored the importance of achieving socio-economic goals alongside pursuing economic growth objectives as a way of creating harmony and unity in a nation with many ethnic and religious groups. The overriding goal was national unity. To achieve this goal, two major strategies were adopted:

To reduce absolute poverty irrespective of race through raising income levels and increasing employment opportunities for all Malaysians; and

To restructure society to correct economic imbalances so as to reduce and eventually eliminate the identification of race with economic function.

Malaysia Incorporated Policy

The Malaysia Incorporated concept was first announced by the Prime Minister in 1983 and it represents a new way of approaching the task of national development. Both the public and private sectors adopt the idea that the nation is a corporate or

business entity, jointly owned by both sectors and working together in pursuit of a common mission of the nation.

Human Resource Development

Expanding the supply of highly skilled and knowledgeable manpower to support the development of a knowledge based economy based on education and training. Increasing educational facilities and quality training to enhance income generation capabilities and quality of life. Improving facilities for quality education and training system to ensure that manpower supply is in line with technological changes and market demands.

Manufacturing policies
Encouraging Exports Enhancing Competitiveness Strengthening the Industrial Cluster Preparing The Industry Towards Globalization Preparing The Industry Towards Globalization

Economic Growth
Malaysia vs China
Malaysia economic growth has been largely because of investment in real estate sector, non-tradable sectors and capital intensive infrastructure. Malaysia is one of the world's largest exporters of semiconductor components and devices, electrical goods, solar panels, and information and communication technology products. However, since opening up to foreign trade and investment and implementing free market reforms in 1979, China has been among the worlds fastest growing economies, with real annual gross domestic product (GDP) averaging nearly10% through 2011. In recent years, China has emerged as a major global economic and trade power. It is currently the worlds second largest economy. China could become the worlds largest economy at some point in the near future, provided that the government is able to continue and deepen economic reforms, particularly with regard to its inefficient state owned enterprises and the state banking system. China is a very strong country because it maintained a centrally-planned, or command, economy. A large share of the countrys economic output was directed and controlled by the state, which set production goals, controlled prices, and allocated resources throughout most of the economy. Compare that to say China or Malaysia, China is higher growth economic. In addition,the higher the number of workers relative to the population as a whole, the greater the potential output per capita. And the greater the number of potential workers about to enter the workforce, the greater the potential impact on economic growth.

Malaysia vs U.S

The Gross Domestic Product (GDP) growth rate provides an aggregated measure of changes in value of the goods and services produced by an economy. The economy of the United States is the largest in the world. The United States is a market-oriented economy where private individuals and business firms make most of the decisions,. The federal and state governments buy needed goods and services predominantly in the private marketplace. America's high rate of population, the majority of the people of Malaysia to the United States to find jobs because the United States on the exchange rate is very big different compared with Malaysia. The exchange rate of currency is higher than Malaysia.

Malaysia vs Japan
Japan's industrialized, free market economy is the second-largest in the world. Its economy is highly efficient and competitive in areas linked to international trade, but productivity is far lower in protected areas such as agriculture, distribution, and services. Japan's reservoir of industrial leadership and technicians, well-educated and industrious work force, high savings and investment rates, and intensive promotion of industrial development and foreign trade produced a mature industrial economy. Japan has few natural resources, and trade helps it earn the foreign exchange needed to purchase raw materials for its economy. Malaysia has a rich deposit of natural resources such as tin, oil palm and tobacco etc. Malaysia advanced than Japan, because the people of Malaysia are relatively lazy. The Japanese government has been to explore a lot of talent, but the Government of Malaysia has no action.

Economic situation
Economic situation has some current issues in relation to the Government policies and measures, namely minimum wages, My First Home Scheme, One Malaysia Housing Programme, One Malaysia Shop, 2012 Budget announcements, various initiatives for SMEs and the impact of the Competition Act. Announced by Bank Negara Malaysia, the Malaysian economy expanded by 5.1% for the whole year of 2011 due to unfavorable external environment. Growth prospects have become increasingly uncertain with the policy uncertainty on the resolution of the ongoing sovereign debt crisis in Europe amid fiscal consolidation in the advanced economies could add further strains to the international financial system, thus affecting the prospects for continued global growth. Going forward, the more challenging external environment could present greater downside risks to Malaysias growth prospects and domestic demand is expected to continue to be the key driver of growth.

GDP of Malaysia
MALAYSIA's full-year gross domestic product (GDP) is poised to grow by as much five per cent. The Gross Domestic Product of Malaysia is depends on its agricultural sector, manufacturing industries and the service sectors. In 2008, the agricultural sector had contributed 9.7 % towards the countrys GDP. The

contributions of the manufacturing industries were estimated as 44.6% and that of service sector was 45.7 % towards the countrys GDP. As per the GDP - PPP (Purchasing Power Parity), Malaysia is ranked 29th in the world. A GDP growth rate of 20 % was noticed towards the end of 20th century. The government's investment plans for nation-building activities under the Economic Transformation Programme will continue to support domestic demand. A thriving domestic economy and a steady

interest rate outlook in Malaysia will be positive for the ringgit even though the global risk environment is still dependent on developments in the Eurozone. Gross Domestic Product(GDP)

The diagram of above, the country of most high GDP is China. The country of most lowest is Malaysia. Why makaysia is most lowest in the 3 of this countries? The reason is

Economics growth of Malaysia.

Monetary Policy