MALAYSIAN ECONOMY BBCE3013 – Assignment 1

MALAYSIAN ECONOMY

BBCE3013 – Assignment 1

Answer all question.

Chapter 1

1. Explain the differences between economic growth and economic development from
the conventional perspective.
(6 marks)

Economic growth is the increase in a country’s national income or per capita income, or
the increase in the amount of goods and services produced by an economy from one
period to another. It can be measured as the percentage rate of increase in real gross
domestic product (real GDP). Economic growth is usually calculated in real terms, e.g.
inflation-adjusted terms, in order to obviate the distorting effect of inflation on the price of
goods produced. It typically refers to growth of potential output, e.g. production at full
employment, and shows the ability of an economy to produce a greater output of goods
and services annually. Economic growth is shown by the outward shift of the production
possibility curve; the outward shift indicating the level of a country’s economic growth.

Economic development is more comprehensive; it encompasses economic growth and

positive changes that improve quality of life. The changes comprise two components, i.e.
socio-economic and technical changes. They include the quantitative and qualitative
dimensions in the economy, involving multiple areas, such as development of human
capital, critical infrastructure, regional competitiveness, environmental sustainability,
reduction of poverty, distribution of income, healthcare, public safety and security, literacy,
and other initiatives. Economic development is the study of the economic aspects of the
development process in low-income countries.

2. List FIVE (5) contributing factors to the rapid growth of the Malaysian economy
since independence.
(5 marks)

i. Availability of vast resources, such as oil palm, rubber, pepper and petroleum
ii. Skilled and productive human capital
iii. Political and social stability
iv. Efficient economic organization underpinned by a progressive financial system,
well developed infrastructure and quality education system
v. Growth of the industrial sector and positive flow of foreign direct investment (FDI).

3. Briefly explain the THREE (3) sectors of the economic structure of Malaysia. Provide
an example of the economic activities for each sector.
(6 marks)

a) Primary sector: Activities that produced raw materials, e.g. agriculture and forestry.
b) Secondary sector: Activities that produced intermediate or final products, e.g. electrical
industry, manufacturing, construction, clothing and textile manufacturing.
c) Tertiary sector: Activities that produce services, e.g. education, health and financial
services
Chapter 2

1. Briefly explain the overriding objectives of the New Economic Policy (NEP) and its
two-pronged strategies.
(5 marks)
New Economic Policy (NEP) was formulated with the overriding objective of attaining
national unity and fostering nation-building through the two-pronged strategy of
eradicating poverty and restructuring society.
The first prong was to eradicate poverty, irrespective of race, while the second sought
to restructure society by eliminating the identification of race with economic function.

2. Briefly outline the features of the National Vision Policy (NVP).

(6 marks)
NVP encompasses the Eighth Malaysia Plan and Ninth Malaysia Plan. Its objective is to
achieve a united, progressive and prosperous Malaysian society. It is a 10 years policy
which established during year 2001 and ended by 2010 to fulfill the Third Outline
Perspective Plan (OPP3)of Malaysia. Besides, it also under the second phase of Vision
2020 to continue strengthen the basic transformation of Malaysia to a fully developed
nation. (NVP) engage in full and fair partnership by pursuing the strategies:
a. Eradicating poverty irrespective of race
b. Restructuring of society
c. A balanced development
d. The strategies of Vision 2020.

3. List FIVE (5) methods of privatization with its corresponding examples.

(10 marks)
a. Sale of equity (TNB)
b. Sale of assets (Selangor quarries)
c. Lease of assets (KTMB)
d. BOT (PLUS Malaysia),
e. Management contract (cleaning services in government buildings)

4. Briefly discuss FIVE (5) benefits of Information Communications Technology (ICT)

to Malaysian economy.
(5 marks)

a) Job creation
b) Increase economic growth
c) New industries
d) Transform labour market,
e) Accelerate innovations.

Chapter 3

1. Describe THREE (3) socio-economic problems faced by Malaysia after

independence.
(3 marks)
a) Poverty
b) Recession
c) Income distribution
d) Unemployment
e) Imbalanced development
f) Overdependence on the foreign sector
 2. Define the concept of absolute poverty and give example.
(4 marks)
Absolute poverty is a situation faced by people whose basic needs, such as food, shelter
and clothing, are minimally satisfied. Different countries perceive poverty differently—
some view basic needs as only food, shelter and clothing, while others consider basic
needs to include electricity, water, health facilities and education.

3. Identify FOUR (4) measures undertaken by the government to eradicate rural

poverty.
(8 marks)
a) Modernize the traditional methods
b) Resettlement of landless farmers and farmers with uneconomic sized holdings
c) In-situ development of existing agricultural land: provide facilities, e.g. funds
d) Promoting downstream processing of agricultural products among farmers

4. Explain THREE (3) strategies to overcome hardcore poverty in Malaysia.

(6 marks)
a) PPRT builds or repairs houses
b) Amanah Ikhtiar Malaysia (AIM) provides interest-free loans
c) Welfare assistance

5. What are THREE (3) effects of income inequality? Explain briefly.

(6 marks)
a) Low productivity
b) The rapid rate of industrialization
c) Unbalanced development between urban and rural areas
d) Unstable income from agriculture/prices of agricultural products are very volatile
e) Differences in human skills and educational attainment

Chapter 4

1. What types of crops were planted during the pre-independence period of the British
colonization in Malaya?
(5 marks)
i. Rubber
ii. oil palm
iii. tea
iv. coffee
v. cocoa

2. What were the roles of agricultural development? Discuss.

(6 marks)
a) Contributes to GDP, national income, employment and export earnings
b) Increases self-sufficiency and reduces dependence on supply of imported goods
(food security)
c) Increases food production, and Malaysia aims to be a halal hub for food
production
d) Improves balance of trade, thus reducing food imports and increasing exports
 e) Provides inputs for downstream industrial activities, which is important for
industrial development
f) Brings development to rural areas and reduces poverty, in line with the objectives
of the NEP and NDP
g) Promotes agro-tourism

Chapter 5

1. Elaborate on FIVE (5) problems faced by firms in the industrial sector.

(10 marks)
a) Weak industrial linkage between different manufacturers: SMEs do not fully
capture the potential to provide supplies for heavy industries, and heavy industries
do not capitalize on SMEs’ capability to play an ancillary role in the industry.
b) High production cost: Due to increasing labour cost
c) Dependence on foreign labour: Due to shortage of domestic labour supply in
specific industries.
d) Intense competition from emerging industrial nations: Countries like China and
India are able to produce at lower cost.
e) Shortage of R&D: Thwarts the industry’s ability to innovate

Chapter 6

1. State FOUR (4) functions of the public sector in Malaysia.

(4 marks)
a) Regulatory function
b) Allocative function
c) Distributive function
d) Stabilization function
e) Public goods provider

2. Differentiate between budget deficit and budget surplus.

(6 marks)
Budget deficit:
a) Government expenditure is greater than government revenue.
b) The government will increase its expenditure and reduce its tax collection from
the nation.
c) The purpose of implementing budget deficit is to solve the problem of
unemployment.

Budget surplus:

a. Government revenue is greater than government expenditure.

b. The government will reduce its expenditure and increase its tax collection from
the nation.
c. The purpose of implementing surplus budget is to reduce inflation

3. List FOUR (4) examples of the government’s operating expenditure.

(4 marks)
a) Emoluments
b) Staff pensions and gratuities
c) Grants and transfers to state governments
d) Debt and service charges
e) Asset acquisitions
4. List FOUR (4) examples of the government’s development expenditure.
(4 marks)
a) Economic services
b) Education, health and housing
c) Defence and internal security
d) Transport and infrastructural facilities
e) Public utilities

5. Discuss FIVE (5) ways in which the tourism industry can contribute to the Malaysian
economy.
a) Driving the tourism ecosystem. According to Tourism Malaysia official website,
they aim to promote malaysia to become an outstanding tourist destination by
presenting Malaysia’s unique wonders, attractions and cultures

b) Stimulating travel business. Malaysian Association of Tour and Travel Agents

(MATTA), a leading organisation, has also helped in promoting the interests of
the travel and tour industry in Malaysia.

c) Contributing to the hospitality industry. tourism has a direct impact on the

hospitality business in Malaysia. He cited that the largest portion from the direct
contribution of travel and tourism to GDP went to accommodation.

d) Shopping destinations and zones. It is noteworthy that certain shopping

destinations and zones have been earmarked for development. Such
developments can potentially stimulate economic activity and also impact retail
real estate values.

e) A leading travel and shopping destination. The fact that Malaysia had won
several leading tourism awards and leads in international shopping destination
rankings should not be taken lightly.

(10 marks)
6. Describe FIVE (5) strategies to promote tourism in Malaysia.
(10 arks)
a) Consider what makes your town or city unique. One way to do this is to make a
list of all the activities and attractions currently available in the town.
b) Conduct a survey of the members of the community. A survey is a valuable tool
during tourism planning as it helps you collect information on the town and
ensures the community can agree on the branding and marketing for the town.
Do face to face interviews or phone surveys
c) Do a survey of visitors to the town. You can conduct face to face interviews at the
local shopping mall. You can also ask visitors to sign up to a mailing list and
email them a survey
d) Create a marketing plan. A good way to do this is to determine target marketing
segments. Define market areas that will draw the most visitors, like a well known
hiking trail, an important historical site, or a museum.
e) Create a unique slogan. If you come up with a slogan, but its possible to remove
your town’s name and plug in another town’s name, it is not a unique slogan
 7. Briefly discuss the shortcomings of tourism in Malaysia.
(6 marks)

Tourism involves huge expenditure on part of the tourists. Travelling costs included vehicle
hire charges, hotel and resort rent, food cost, etc. This increases the overall spending of the
person. We need to take out few days out of your busy schedule to visit tourist places. Hence,
tourism is often time-consuming. Leisure trips are good for health, mind and body. However,
hectic trips may cause stress and effect health. It may also lead to environmental hazards such
as environmental pollution due to use of cigars, plastic bags. In order to attract more tourists and
earn more profits sprawling resorts are built cutting down thousands of casuarinas trees beside
sea beaches. These resorts destroy both scenic beauty of the place by paying no attention to
local architecture and ecology.

8. Briefly explain THREE (3) disadvantages caused by an influx of tourists.

(6 marks)
a) Stress on Insufficient Infrastructure. Many times, local governments are unable to
prepare for the dramatic influx of people that accompany a destination’s “busy
season”, or for a special event, like the ones that revolve around sports, such as
the World Cup or the Olympics, or a cultural event, like Carnival or Mardi Gras.
b) Loss of Privacy. There are countless local communities the world over that have felt
a loss of not only privacy, but the feeling that their town is no longer theirs. Whether
it’s a small medieval city in Italy, or a colonial town in Central America, excessive
tourism can can strip the locals of a feeling of privacy.
c) Higher Prices. Anyone who’s been to a popular tourist destination knows that
they’re going to spend a lot of money, not only due to the volume of purchases, but
because tourist destinations tend to jack up the prices of everything: food, hotels,
drinks, services, etc. Many tourists don’t think about this, but the locals must also
pay they exorbitant prices, which are at their current state directly due to tourism

Chapter 7

1. Explain FIVE (5) roles of the foreign sector in Malaysia’s economy.

(5 marks)
i. Employment creation
ii. Economic growth
iii. Transfer of technologies and skills
iv. Upgrade of infrastructure
v. Assurance of export markets and foreign exchange earnings

2. Explain FIVE (5) contributions of foreign direct investments.

(5 marks)
i. Trade liberalization enables lower prices of goods
ii. Benefits of free trade that increases efficiency and productivity, and provides a
variety of choices of goods and services
iii. Sharing of labour and expertise
iv. Sharing and transfer of technology
v. Economic growth through foreign capital inflow via foreign investments
 3. Identify THREE (3) disadvantages of globalization on the Malaysian economy.
(6 marks)
a) Unemployment due to shutting down of local industries
b) Instability in domestic markets due to international trade cycles
c) Environment damage due to pollution

4. What are FIVE (5) possible measures that may be taken by Malaysia to meet the
challenges of globalization? Discuss.
(10 marks)
a) Sound macroeconomic management to maintain macroeconomic stability
b) Banking reforms to maintain financial stability
c) Strengthening the human resource base and implement training reforms to
enhance productivity through a knowledge-based economy
d) Developing small- and medium-sized industries/Diversification of the
economy/Increasing the range of goods and services exported
e) Development of science and technology (S&T)

Chapter 8

1. State FIVE (5) problems associated with rapid population growth rate?
(10 marks)
a) Problem of food supply
b) Land pressure
c) Problem of providing enough health facilities
d) Social problem/Increased need for social services
e) Problem of providing adequate infrastructure and public utilities

2. Explain TWO (2) factors that influence the population growth rate in Malaysia.
(4 marks)
a) Birth rate (fertility rate) and infant mortality rate
b) Socio-economic factors: E.g. female education level increases, population decreases,
health facilities

3. State FIVE (5) factors that cause a fall in birth rates.

(5 marks)
a) High level of education
b) Better family planning
c) More working women
d) Higher cost of living
e) Couples getting married late/delayed marriage

4. Discuss FIVE (5) causes of unemployment among graduates in Malaysia.

(5 marks)
a) Pace of job creation cannot absorb the oversupply of graduates, due to the
substantial increase in the number of institutions of higher learning.
b) Mismatch between course syllabus and job requirements.
c) Lack of soft skills and English proficiency.
d) Changing economic structures and economic recessions.
e) Attitude problems and choosiness in job selection
5. Describe FOUR (4) measures to overcome the unemployment rate among graduates
in Malaysia.
(8 marks)
a) Improve job search information systems/through the Internet
b) Provide financial support for SME business
c) Encourage foreign direct investment
d) Training and retraining/Improve education standard, English languages and soft
skills

6. Explain FOUR (4) advantages of having a population of 70 million in Malaysia by

2100.
(8 marks)
a) A larger domestic market
b) To utilize the country’s abundant natural resources
c) To increase the supply of skilled workers
d) To help strengthen the country’s security

7. Explain the importance of effective human resource management in Malaysia.

(6 marks)
a) To enable the supply and demand for requisite skills to be better matched
b) To ensure economic development is not adversely affected by a shortage of
requisite skilled manpower
c) To enhance the rate of economic growth
d) To enhance the productivity of manpower