ECO2023 WRITTEN ASSIGNMENT

KOLEJ PROFESIONAL MARA BANDAR MELAKA

ECO2023
MACROECONOMICS

SESSION 1/2021

WRITTEN ASSIGNMENT

Title: The current economic development and issues obtained from
published materials

Lecturer’s name: Mr. Mohd Syaifulhafizi bin Md Noh ID NUMBER CLASS
Submission date: 16 April 2021 BMF20-07-059 DBF3D
BMF20-07-060 DBF3D
NAME BMF20-07-062 DBF3D
Putri Nur Zarith Sufea binti Mohd Nor Sufian BMF20-07-066 DBF3D
Nur Syafiqah binti Zamhuri BMF20-07-068 DBF3D
Nurul Ain binti Othman
Siti Nadiah Wadihah binti Abd Razak
Fatin Munirah binti Muhammad Nadzri

TABLE OF CONTENT

CONTENT PAGES
Introduction 2

Article 3&4

Questions: 5-8
1) Comment on your findings, namely exports, imports, and 9 - 11
trade balance. 12 - 14
2) Malaysia's top four (4) trading partners and the respective 15 & 16
trade volumes in 2020. 17 & 18
3) Top four (4) sectors that contribute to Malaysia's exports 19 & 20
in 2020. 21 & 22
4) Top four (4) sectors that contribute to Malaysia's imports 23 & 24
in 2020. 25 & 26
5) The sectors in Malaysia that are worst affected by Covid-
19. 27
6) The incentives provided by the government of Malaysia in
helping these sectors.
7) Suggestions on how Malaysians can help improve the
country's overall Gross Domestic Product (GDP)
8) Provide data on Malaysia's Trade Performance in January
2021. Comment on Malaysia's performance.
9) The prospect Malaysia's international trade would be like
in 2021

Conclusion

Reference 28 & 29

INTRODUCTION

We want to express our deepest from the bottom of our hearts to all
those who help us complete this assignment, especially Mr. Syaiful, who taught
and guide us to do this report from the beginning until the end of this
assignment.

We want to thank all group members: Putri Nur Zarith Sufea, Nur
Syafiqah, Nurul Ain, Siti Nadiah Wadihah, and Fatin Munirah, for giving the best
cooperation on doing this assignment. All group members do their work very
well and efficiently. We went through several problems initially but got better
until we reached the end of the project. We try to find a time that suitable for
all group members to discuss together. It will hard if our group members did
not cooperate.

This group consists of five people: Putri Nur Zarith Sufea, Nur Syafiqah,
Nurul Ain, Siti Nadiah Wadihah and Fatin Munirah. We are delighted to sit in
this group because we give the best cooperation and do our work efficiently.
We divide the job equally per person. We have tried to give our best to do this
Macroeconomics assignment, and we manage to complete this assignment on
time.

2

ARTICLE

MALAYSIA'S EXPORTS FALL 23.8% AMID COVID-19

Source: Xinhua| 2020-06-04 14:12:28|Editor: huaxia

KUALA LUMPUR, 4 June (Xinhua) -- Malaysia's exports drop 23.8 percent year-
on-year to 64.92-billion-ringgit (about 15.17 billion US dollars) April amid
COVID-19 epidemic, official data appeared Thursday.

Malaysia's Ministry of International Trade and Industry (MITI) said Malaysia's
trade fell 16.4 percent year-on-year to 133.34 billion Ringgit in April due to the
COVID-19 pandemic caused significant disruptions to the global supply chain.

The country's imports also reduced by 8 percent to 68.42 billion ringgits, and a
trade shortfall of 3.5 billion ringgit was documented in April. International Trade
and Industry Minister Mohamed Azmin Ali said the deteriorations in both
exports and imports are expected provided that most countries across the world
were under some form of lockdown to control the spread of COVID-19.

"This has caused most important disruptions to the manufacturing events and
movement of goods globally. Nevertheless, exports of some manufactured
goods such as iron and steel, rubber gloves, and refined palm oil recorded
increases," he added.

He expected Malaysian exports to improve in the coming months as the
government authorized more industries to resume businesses and at total
operating capacity since 4 May.

"Similarly, companies in other countries are also storming up their business
operations. This will boost trade activities between Malaysia and other
countries," he added.

For the first four months, Malaysia's trade fell by 3.5 percent to 573.75 billion
ringgits than the corresponding period of 2019.

3

Meanwhile, Malaysia's exports to China increased by 0.2 percent for the first
four months. In April, export to China rebounded by 4.2 percent to 12.07 billion
ringgits on more significant shipments for iron and steel products, electrical and
electronic products, and crude petroleum.
The Socio-Economic Research Centre's executive director Lee Heng Guie told
Xinhua that the more considerable than expected reduction in exports indicates
the impact of government restrictions on combat COVID-19 which disrupted
demand-supply chains.

4

1) Provide data on Malaysia's trade from 2019 - 2020. Comment
on your findings, namely exports, imports, and trade balance.

There are some data collected on Malaysia's trade from 2019 to 2020:

Diagram 1.1 Diagram 1.2
Total imports of 2019 Total exports of 2020

Diagram 1.3 Diagram 1.4
Major import products Major import sources

Diagram 1.5
Total export of 2020

5

Diagram 1.6
Trade performance for 2020

In the second half of 2020, exports have been recovered, increasing by
4.8%. This was a significant improvement from a 7.9% contraction in the first
six months of 2020 because the economy increasingly reopened and
international demand gradually recovered. Thailand, India, Bangladesh,
Vietnam, and Japan recorded lower exports, while more significant exports
were registered to China, the US, Singapore, and Hong Kong Chinese Special
Administrative Region (SAR). Total trade in 2020 calculated to RM1.777 trillion,
reduced by 3.6% compared to 2019, while imports calculated RM796.19 billion,
a decline of 6.3%. Malaysia's trade performance was being along with countries
in the region, especially Indonesia, Singapore, Republic of Korea, and Thailand.

6

According to the Ministry of International Trade and Industry (MITI), In
2020, Malaysia's total import has been declined by 6.3% to RM796.19 billion
compared to RM849.41 billion in 2019. Since 2011, China has remained the
most significant import source, followed by Singapore, the US, Japan, and
Taiwan. These countries have covered 54.4% of total imports. Besides, ASEAN
amounted to RM174.48 billion or 21.9% share of Malaysia's total imports, while
the European Union (EU) reported for 7.4% share, with a value of RM58.78
billion.

2020 has become the 23rd consecutive year of trade surplus in Malaysia's
trade performance. Compared to 2019, Malaysia's trade surplus in 2020
recorded the 4th following year of double-digit growth, with an increase of
26.9% to RM184.79 billion. This was also the most significant trade surplus so
far, representing Malaysia's achievement in maintaining trade surplus for 23
consecutive years since 1998. In 2020, Malaysia's exports valued at RM980.99
billion declined marginally by 1.4% compared to the previous year and the
unfavourable external environment due to the impact of the COVID-19
pandemic.

Trade performance for December 2020 become the highest monthly export
value in 2020. It registered a double-figure growth of 10.8% to RM95.74 billion,
year-on-year (y-o-y), making it the highest monthly export recorded. The
second highest export value ever registered is on 11 October 2018 with
RM97.12 billion. Singapore, the US, China, India, and Hong Kong SAR have
shown enlargement in exports. In December 2020, total trade was expanded
by 6.5% to RM170.78 billion compared to December 2019, while imports have
risen by 1.6% to RM75.04 billion. Trade surplus increased by 64.9% to RM20.7
billion and was the highest trade surplus ever recorded for December. On a
month-on-month (m-o-m) basis, overall trade, exports, imports, and trade
surplus documented a double-figure growth of 12.2%, 13.1%, 11%, and
21.4%.

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According to all the data provided, it has shown that Malaysia's export,
import, and trade performance during 2020 has improved compared to 2019.
Also, we can see that Malaysia has decreased imports and increased the activity
of exports. This is a good sign for Malaysia because the more a country exports,
the more domestic economic activities occur. Besides, exports help improve
citizens' living standards, give more job opportunities, and increase the
exporting nation's GDP. Therefore, Malaysia has improved a lot in exports,
imports, and trade performance, and we can say that Malaysia is a developing
country.

8

2) Identify Malaysia's top four (4) trading partners and the
respective trade volumes in 2020.

It corresponds to the Ministry of International Trade and Industry (MITI)
Media Statement Malaysia External Trade Statistics, Malaysia's top four trading
partners, and the respective trade volumes in 2020.

1. China
With exports increasing by 12.5% to RM158.6 billion, the highest value

so far, China remained as Malaysia's largest export destination. The growth was
pushed by higher exports of metal iron and steel products, other manufactures
(SSD), electrical and electronics (E&E) products, manufactures of metal, palm
oil, palm oil-based agriculture, rubber products alongside paper and pulp
products. Exports to China provided 16.2% to Malaysia's total exports in 2020.
Malaysia's largest trading partner for 12 sequential years, trade with China in
2020, was described for a more significant share at 18.6% of total trade
contrasted to 17.2% a year ago. Trade with China extended by 4.2% to
RM329.77 billion. China was also Malaysia's largest import source in 2020,
accounting for 21.5% of total imports in 2020 or RM171.18 billion, reduced by
2.6% compared to 2019. The main imports to China were E&E products,
machinery, equipment, parts, chemicals, and chemical products.

9

2. The European Union (EU)

Trade by the European Union (EU) in 2020 was estimated at RM142.84
billion, 8% of Malaysia's total trade. It shows a decrease of 10.4% compared
to 2019. Exports to the EU were RM84.06 billion, decreased by 4.3% mainly
due to lower exports of E&E products. The contraction was aided by higher
exports of rubber products and palm oil and palm oil-based agriculture goods.
Shipment of 6 rubber manufactured goods to the EU doubled up to RM9.33
billion from last year. Not only that, but exports of palm oil and palm oil-based
agriculture products rose by 36.4% to RM7.11 billion. Among the top 10 EU
markets that accounted for 90.6% of Malaysia's total exports to the EU, four
countries recorded expansion: Italy, the Czech Republic, Poland, and Slovenia,
with increases by 7.9%, 26%, 30.9%, and 37.6% respectively. Imports from
the EU in 2020 were RM58.78 billion, fell by 17.8% compared to 2019 with the
main products of E&E products, chemicals, chemical products, machinery,
equipment, and parts.

3. The United States

Trade with Malaysia's third-largest trading collaborator, the US, grew up
by 7.8% to RM178.18 billion and made up 10% of Malaysia's total trade in
2020. Exports to the US recorded double-digit growth, the highest export value
in the last decade, 12.7% in 2020 to RM108.81 billion. The expansion was lifted
mainly by manufactured goods which improved by 13.1% to RM106.15 billion
and accounted for 97.6% of Malaysia's total exports to the US. Higher exports
were supported by rubber products, wood products, other manufactures (SSD),
E&E products, including machinery, equipment, and parts. These products
signified 78.2% of Malaysia's exports to the US. The US's imports grew by 1%
to RM69.36 billion, and the leading imports were E&E products, chemicals,
chemical products, machinery, equipment, and parts.

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4. Japan
In 2020, Japan stayed as Malaysia's 4th largest trading partner for six

successive years since 2015. Trade with Japan was 6.9% or RM122.73 billion
of Malaysia's total trade, which decreased by 5.3%. Exports amounted to
RM61.69 billion, dropped by 6.5% from a year ago, due to lower Liquefied
Natural Gas exports (LNG). The contraction was controlled by higher exports of
broad-based products to Japan, particularly crude petroleum, scientific
equipment, rubber products, and optical, E&E products, along with palm oil and
palm oil-based agriculture products. Together, these products contributed
45.3% to total exports to Japan. Imports from Japan in 2020 were valued at
RM61.04 billion, a decrease of 4%, with E&E products, machinery, equipment,
and parts and chemicals and chemical products as the principal imports.

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3) Identify and provide data on the top four (4) sectors
contributing to Malaysia's exports in 2020.

Diagram 3.1
Top sector data
Malaysia's exports in 2020, estimated at RM980.99 billion, worsened
marginally by 1.4% compared to the previous year, in cycle with the poor
external environment due to the impact of the COVID-19 pandemic. Exports
improved in the second half of 2020, rising by 4.8%. This was a major
improvement from a 7.9% contraction in the first half of 2020 as the economy
more and more reopened and exterior demand progressively recovered. Lower
exports were documented to Thailand, India, Bangladesh, Vietnam, and Japan,
while higher exports were registered to China, the United States, Singapore,
and Hong Kong SAR.

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1. Electronics & Electrical (E&E)

In 2020, exports of manufactured goods were estimated at RM847.66
billion, making up a bigger share of total exports, consequently at 86.4%
compared to 84.5% in 2019. E&E products held the most significant share of
Malaysia's total exports in 2020 at 39.4% or RM386.11 billion, which rose by
3.5% compared to the previous year. Top exports of electronic integrated
circuits, apparatus for transmission or reception of voice, images, data, and
parts for electronic integrated circuits to support work-from-home norm were
the reason for the increases in exports of E&E products.

2. Manufacturing sector

Due to the COVID-19 crisis, global demand for personal protective
equipment (PPE) was rising. Malaysia's exports of manufactured rubber
products, especially rubber gloves, recorded solid growth in 2020. Exports of
rubber gloves doubled to RM35.26 billion from the previous year. The US,
China, the United Kingdom, Germany, and Spain were mainly recorded to
expand rubber products' exports. Additional manufactured products that
recorded significant growth in exports for 2020 were other manufactures (SSD),
which increased by 24.2% to RM38.78 billion, optical and scientific equipment,
increased by 4.1% to RM41.55 billion, rubber products, increased by 68.9% to
RM43.64 billion, iron and steel products, increased by 7.2% to RM23.55 billion,
and wood products, increased by 1.9% to RM16.08 billion.

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3. Agriculture

Exports of agriculture grew by 8.7% from the previous year to RM71.68
billion, make up 7.3% of total exports in 2020. The growth was attributed
mainly to an increase in exports of palm oil and palm oil-based agriculture
products by 18.4% to RM52.33 billion, maintained by higher palm oil exports.
Malaysian agricultural production consists of tree crops mainly for export, rice
and livestock for domestic consumption, and fruits and vegetables for both
export and domestic consumption. Some of our agricultural goods' exports are
oil palm, rubber, cocoa, pineapple, and pepper. The report of January 2020 by
the Ministry of International Trade and Industry (MITI) recorded a decrease of
4.2% to RM5.39 billion and accounted for 6.4% of total exports. Therefore,
agriculture remains an essential sector of Malaysia's economy, contributing to
the national GDP and providing more job opportunities to Malaysia's citizens,
decreasing the unemployment rate.

4. Mining

Exports of mining goods in 2020 made up a 5.9% share of total exports or
RM57.39 billion, trimmed down by 29.6% compared to 2019. All mining
products recorded decreases in exports, led by LNG, which slipped by 32.1%
to RM28.83 billion, followed by crude petroleum (↓28.4% to RM18.86 billion).
Malaysia also had substantial resources. For example, tin-associated minerals
as ilmenite, monazite, struvite (a columbium [niobium]/tantalum-bearing
mineral), and zircon. Malaysia also had valuable mineral resources of barite,
bauxite, carbonate rocks, clays, coal, copper, gold, iron ore, and silica. Other
metal minerals obtained included gold, columbite, monazite, kaolin, ilmenite,
zircon concentrate, and titanium dioxide from Terengganu. Malaysia was a
profit exporter of all its coal, copper concentrate, ilmenite, rare earth, zircon
concentrate, and most smelted tin.

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4) Identify and provide the data on the top four (4) sectors
contributing to Malaysia's imports in 2020.

According to the Ministry of International Trade and Industry (MITI),
Malaysia's total imports decreased by 6.3% to RM796.19 billion in 2020
compared to RM849.41 billion in 2019. China remained the largest import
source since 2011, followed by Singapore, the US, Japan, and Taiwan. Total
imports of these countries are 54.4% while from ASEAN amounted to RM174.48
billion or 21.9% share of Malaysia's total imports while the EU accounted for
7.4% share RM58.78 billion.

Diagram 4.1 Diagram 4.2
Total imports 2019 Total imports 2020

1) Electrical and Electronic (E&E) Industry
The imports of the electrical and electronics (E&E) industry in 2020 is 31.7%
which is RM252.78 billion, while in 2019 shows 28.9%, which was RM245.54
billion. This shows an increase in E&E imports within a year. The electrical and
electronics (E&E) industry is a crucial driver of Malaysia's industrial expansion
and contributes to exports income. E&E's major export destinations include
China, the US, Singapore, Hong Kong, and Japan. The E&E industry is targeted
under the National Key Economic Areas (NKEA) to gear the nation towards a
high-income economy by focusing on high-value and high-growth
manufacturing activities.

15

2) Chemicals Sector
The chemical sector is the second biggest contributor to Malaysia's total import
of manufactured goods. In 2019, the complete import for chemicals and
chemical products was RM81588.4 million, while in 2020, the total import was
decreased by RM73459.9 million. It shows a change of -10.0% from 2019 final
data to 2020 provisional data. The industry is related to almost every other
sector such as automotive, electrical and electronics (E&E), pharmaceutical,
and construction. The Malaysian plastics market is improved in nature due to
the limited presence of plastic resin manufacturers.

3) Mining
Petroleum products and crude petroleum are included in the mining sector. The
decline in imports was due to the lower imports of petroleum products, which
decreased by 22.6%, and crude petroleum, decreased by 26.6%. Totalled up
values were RM78502.3 million in 2020 and RM102725.1 million in 2019. It
shows a change of -22.6% for petroleum products and -26.6% for crude
petroleum compared to the final data of 2019.

4) Machinery and Equipment (M&E)
The Machinery and Equipment (M&E) sector has been identified as one of the
strategic value sub-sectors under the 11th Malaysia Plan due to its cross-cutting
connections with all economic sectors such as the primary, manufacturing, and
services sectors. Imports of Malaysia spent the most on 10 subgroups of
machinery which are computers, optical readers: US$2.5 billion (down -8.3%
from 2019), computer parts, accessories: $1.7 billion (decreased by 12.9%),
miscellaneous machinery: $1.3 billion (declined by 4.8%), machinery for
making semi-conductors: $978 million (decreased by 14.9%), centrifuges,
filters and purifiers: $817.2 million (decreased by 8.7%), turbo-jets: $802.2
million (decreased by 23.1%), printing machinery: $794.9 million (decreased
by 14%), taps, valves, similar appliances: $773.5 million (decreased by 12.1%),
air or vacuum pumps: $630.2 million (decreased by 16.9%) and last, machinery
parts: $532.6 million (decreased by 16.6%) from 2019 to 2020.

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5) Identify the sectors in Malaysia that are worst affected by Covid-
19? Why?

The year 2020 has been challenging to global trade because of the
stringent lockdown measures imposed worldwide due to the Covid-19
pandemic. This immediately caused major disruptions to global supply chains,
especially the movement of goods and services, and severely affected
manufacturing activities. The sectors that have been worst affected during the
pandemic are tourism and hospitality and the airline industry. Minister of
Tourism, Arts, and Culture (Datuk Seri Nancy Shukri, 2020) claimed that the
amount of employment had been decreased by one percent to 14.93 million
people over the same period last year. The ministry of tourism also added that
those in the services sector got the most affected during the pandemic.

Before the pandemic of Covid-19, tourism and hospitality had become
one of the most critical sectors in the world economy, especially for Malaysia.
This is because tourism can bring in a lot of foreign exchange and create many
job opportunities; therefore, it plays a vital role in Malaysia's economy.
According to the tourism Malaysia Official website, tourism and hospitality's
main objectives are to promote Malaysia as an outstanding tourist destination.
Other than that, tourism supposedly to show Malaysia's unique wonders,
attraction, and cultures. Malaysia is a multicultural country with various cultures
and religions such as Islam, Buddha, Hindu, and Christian.

Besides tourism and hospitality, during the introduction of the Movement
Control Order (MCO) airline industry face a significant fall in Malaysia's
economy. According to Transport Minister (Datuk Seri Wee Ka Siong, 2020),
Malaysia's aviation industry is projected to lose RM13 Million in 2020 as air
travel continues to face travel limitations. There are different ways of evaluating
air transport's impact on an economy. Air transport can be measured by the
jobs and spending generated by national airlines and their supply chain, the
flows of trade, tourism, investment causing by users of all airlines serving the

17

country, and the linking connections that make these flow possible. All provide
a different but informative perspective on the importance of air transport.

The increasing cases of Covid-19 have led to the cancellation of many
tours, which has already led to a large drop in the number of tourists to
Malaysia. This is because pandemic Covid-19 tends to keep social distancing as
the virus spreads through respiratory droplets when a person who was infected
coughs, sneezes, or speaks. People can also be infected by touching a
contaminated surface and their eyes, mouth, or nose. Besides, in the earlier
pandemic, many countries have been lockdown, and all the sectors that need
to shut down, including tourism and nationwide lockdowns, are just some of
the ways that countries are implementing to help contain the pandemic. Other
than that, everyone faces the same problem during the crisis, which is a
financial problem. Therefore, fewer people willing to travel as some of them
are losing their jobs.

The dramatic drop in demand for passenger air transport and freight, to
a lesser extent due to the COVID-19 pandemic and restraint measures, is
threatening many companies' capability in both the aviation industry and the
rest of the air transport sector, with many jobs at risk. Significant reductions in
passenger numbers have caused flights to be cancelled or planes flying empty
between airports, which turn out significantly reduced profits for airlines and
forced many airlines to dismiss employees or declare bankruptcy. Some airline
companies have attempted to prevent refunding cancelled trips to diminish
their losses. Therefore, foreign tourists cannot visit Malaysia, causing tourism
and hospitality, the airline industry, and the national economy to plunge.

18

5) Refer to question 5, identify and explain the incentives provided by
Malaysia's government in helping these sectors.

There have many incentives provided by the government of Malaysia in
helping the tourism and hospitality sectors. Tourism activities generate
multiplier effects on the ecosystem of hotel businesses, tourist projects, retail
businesses, restaurants, and transportation services.

First, the government has increased the wage subsidy from RM600 to
RM1,200 for six months and for discounts or rebates to be given for utilities,
together with special tax incentives. For a month, qualified employers will
receive a wage subsidy of RM600 for each employee who earns less than
RM4,000. Besides, the government will limit 200 employees for each employer
will be increased to 500 employees for a wage subsidy.

Second, Johor tourism, youth, and sports committee chairman Datuk
Onn Hafiz Ghazi said the government would give a one-off incentive of RM1,000
each to the 936 licensed tour guides in the state (The Star, 2020). The payment
exemption for tour companies and hotels involves an estimated RM894,211.
This will benefit 1,031 business license holders, while the exemption on
entertainment tax for theme parks and family entertainment centres applies
RM3 million. The state government was also structuring short-term and long-
term plans to help the tourism industry recover post-Covid-19.

Third, the government also provided strong economic incentives under
Penjana. The government allocated RM1 billion for the Penjana Tourism
Financing scheme to fund transformation initiatives by small and medium-sized
enterprises. Under Penjana, budget hotels, registered homestays, chalets,
resorts, travel agencies, and tour operators, MICE (Meetings, Incentives,
Conventions, Exhibitions) ecosystem, transportation providers for tourists,
tourism-related retail businesses, recreation and wellness sector had benefited
from the RM1 billion allocated for them to remain viable and competitive.

19

Fourth, the tour guides licensed by the ministry have also received one-
off assistance of RM600, with more than 7,000 tour guides benefiting, with a
total amount exceeding RM4 million. Additionally, programs like the Meet in
Malaysia campaign, which runs until December next year, has been launched
to help MICE industry players. A fee waiver for the renewal licenses was given
to 531 travel agencies until the year-end, contributing to the industry's growth.

Lastly, the Malaysian government announced an RM20 billion Economic
Stimulus Package to relieve the economic impact of the COVID-19 pandemic.
The Stimulus Package contains the following initiatives to contribute to the
Malaysian aviation services market, which are the temporary rescheduling of
monthly income tax instalment expenditures for businesses in the tourism and
hospitality sector for six months, the allocation of RM500 million to offer a brief
15% discount for six months on electricity bills to those in the tourism sector
and tourism-dependent trade industry, including hotels, travel agencies,
airlines, conventions and exhibition centres. The impermanent exception of
hotels and travel-related companies from Human Resource Development Fund
levies for six months, a financial break from all banks in the form of payment
moratorium including restructuring and rescheduling of loans for affected
individuals and businesses, discounts on rental of premises at airports as well
as landing and parking taxes to be given by Malaysia Airports Holdings Berhad
and individual income tax release of up to RM1,000 on expenses connected to
domestic tourism, and digital vouchers for local tourism of up to RM100 per
person for internal flights, rails and hotel accommodations for all Malaysians.

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7) Give suggestions on how Malaysian can help improve the country's
overall Gross Domestic Product (GDP)?

There are few suggestions that I would propose on what Malaysians can
do to help to improve the country's overall Gross Domestic Product (GDP).

The first one is to order take-out. Many stalls or restaurants are affected
due to this pandemic because of the government's limitations that only a certain
number of citizens can dine in. To help the country to improve GDP, we can
order foods from a restaurant. Especially those restaurants that just started
their small businesses. By doing so, we can support them, especially with the
difficulties due to this pandemic. Given the circumstances that eating at home
is much more hygienic, these sellers also went through inspections
standardized by the Ministry of Health. It is not necessary to order food every
day, but maybe once or two times a week, that will help to grow their
businesses hence increase the GDP. The flow of money will increase because
some sellers will price a little higher for takeaways to cover their hidden costs.
The circular of funds from buyers to sellers will help improve the money flow
to increase its GDP.

The second way to increase the GDP is by supporting local businesses.
We can buy goods and services from companies and firms that are produced
locally. Going local does not mean confining off the outside world. It means
nurturing locally owned business which used local resources sustainably,
employ local workers at decent wages and serve primarily local consumers. For
example, we can buy milk from Farm Fresh Bhd. or other local brands instead
of Dutch Lady Bhd. It keeps money in the community, more consumer choices,
reduces environmental impact, greater customer service, and promotes
entrepreneurship. Supporting local products helps employment levels to
become more stable and may even create more job opportunities for residents
to work in the community. Having low unemployment rates help GDP to grow.

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Next, paying taxes can help to increase GDP. This is because the taxes from
income tax, road tax, Sales and Services Tax (SST), and many more can increase
government revenue. The funds that the government collected from the taxes we paid
can improve and subsidize our local services such as education, medical care, defence,
and infrastructure. For example, the road tax we paid will be spent on repairing and
improving the infrastructure like transportation system and road. By paying taxes, it
helps the government to improve their services so that demand increases. Every
October year, the Minister of Finance will announce our nation's yearly budget. Paying
taxes can help the government to increase its budget on sectors needed. For instance,
the government can hire more professional doctors, teachers, and many more. Hence,
our country's GDP will grow larger.

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8) Provide data on Malaysia's Trade Performance in January 2021?
Comment on Malaysia's performance.

Diagram 8.1
Trade Performance January 2021
Malaysia's exports in January 2021 maintained their growth for five successive
months, displaying an increase of 6.6% to RM89.63 billion contrasted to January 2020.
This also showed the highest export amount for January thus far. The expansion was
supported by global need growth, notably for electrical and electronics (E & E) and
rubber products and front-loading activities before the festive season. Top exports
were spotted to China, the United States (US), Vietnam, Singapore, and Hong Kong
Special Administrative Region (SAR). Imports in January 2021 extended by 1.3% year
over year (y-o-y) to RM73.02 billion. Overall trade rose by 4.1% to RM162.65 billion,
the most outstanding value registered for January. Trade surplus increased by 38%
to RM16.6 billion, maintaining double-digit growth for eight consecutive months.

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In January 2021, trade with ASEAN represented 26.5%, increased by 7.4% to
RM43.03 billion, contrasted to January 2020. Based on Malaysia External Trade
Statistics January 2021 from MITI, exports grew for two months straight, recorded a
7.3% increase to RM25.73 billion in January 2021. It was lifted by higher exports of
E&E commodities. Imports from ASEAN picked up by 7.6% to RM17.29 billion
(MATRADE, 2021).

Trade with China in January 2021 poured by 13.3% y-o-y to RM29.9 billion,
accounting for 18.4% of Malaysia's total trade. Exports to China documented a double-
digit growth since November 2020, growing by 26% to RM13.11 billion in January
2021. Due to greater exports of Electrical & Electronics products, iron, steel goods,
and other manufactures exceptionally solid-state storage devices (SSD). Imports from
China increased by 5% to RM16.79 billion.

In January 2021, trade with the United States provided 9.8% to Malaysia's total
trade, documenting the growth of 3.4% y-o-y to RM15.94 billion. Exports to the United
States reported a double-digit increase for eight months in a row, poured by 18.4%
to RM10.31 billion in January 2021. More significant exports were recorded for rubber
products, wood products, and optical and scientific apparatus. However, imports from
the US fell by 16.1% to RM5.62 billion.

Overall trade with the European Union (EU), which reported 8.1% of Malaysia's
total trade in January 2021, accelerated by 3.3% y-o-y to RM13.22 billion. Exports
continued their upward momentum since September 2020, registering a double-digit
growth of 11.4% to RM8.02 billion, driven mainly by more major exports of rubber
products. Imports from the EU lowered down by 7.2% to RM5.19 billion.

It shows Malaysia's performance is not as bad as we think, but Malaysia does
excellent during the COVID-19 pandemic. COVID-19 pandemic affected Malaysia's
economy, but the government tried its best to maintain our economy from being fall.

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9) What do you think of the prospect Malaysia's international trade would
be like in 2021?

International trade is a crucial contributor to Malaysia's economic growth and
development. In my opinion, the prospect of Malaysia's international trade would be
increasing in 2021. Malaysia has become one of the world's major trading nations.
Moreover, Malaysia has shown a strong commitment towards building regional and
mutual trade bonds with individual regional groups and countries. This is because the
government gradually regenerates all the economic sources since the economy is at
risk during the Movement Control Order (MCO). The vaccine deliveries, fiscal and
monetary policies, and pent-up demand have help cushion the economic shock from
the pandemic and secure financial stability. Malaysia's Gross Domestic Product (GDP)
is expected to bounce back by 6.5% to 7.5%, together with improvement in global
growth & international trade, higher than the forecasted growth for ASEAN-5
countries, which is 5.2%.

MITI has stated that Malaysia's international trade for 2021 is expected to remain
modest, with export projected to recover by 2.7%. Senior Minister Datuk Seri
Mohamed Azmin Ali said the point of view for 2021 is expected to be improved as the
World Bank and International Monetary Funds (IMF) forecast that global growth will
bounce by 4% and 5.5%, respectively. He remarked that Malaysia's exports had been
displaying the sign of recovery since September 2020 with positive year-over-year
growth. Higher demand for commodity-based products and semiconductors is
anticipated to push exports as global economic activities recover. The trade surplus
recorded in 2020 showed the fourth following year of double-digit growth, with an
increase of 26.9% to RM184.79 billion compared to 2019. Thus far, it was also the
largest trade surplus, representing Malaysia's achievement in sustaining trade surplus
for 23 consecutive years since 1998.

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Despite this unpredicted scenario, Malaysia's international trade performed well,
with exports recovering in the second half of 2020 compared to the negative growth
recorded in the first half of the year. This could be recognized as the progressive
opening of the economy and gradual recovery of international demand. Exports in
December were the highest monthly value recorded for 2020. The Ministry of
International Trade and Industry (MITI) said today that Malaysia's exports hopped
17.6% year-on-year (y-o-y) to RM87.57 billion in February, the most vigorous y-o-y
growth since October 2018, supported by higher exports of rubber products, electrical
and electronic (E&E) products, and commodity-based products. From January to
February 2021, Malaysia's exports rose 11.7% to RM177.19 billion compared with the
same two months in 2020. The trade surplus climbed 39.8% to RM34.47 billion. This
shows that our exports were strong enough to grow larger in 2021 despite the
hardships that happened due to COVID-19 since 2019.

In 2020, Malaysia's total imports fell by 6.3% to RM796.19 billion. The three main
groupings of end-use substances accounted for 73.8% of total imports in 2020:
intermediate goods, capital goods, and consumer goods. Intermediate goods
estimated at RM422.91 billion or 53.1% share of total imports, decreased by 9.5%,
after lower imports of processed industrial supplies, particularly iron and steel.
Examples of intermediate goods are car engines and woods. Capital goods, which
amounted to RM90.38 billion or 11.4% of total imports, declined by 9.8%, mainly due
to reduced imports of industrial transport equipment and primary vehicles other than
railway or tramway. Examples of capital goods are buildings, machinery, and tools.
Lastly, consumption goods totalled RM73.91 billion or 9.3% of total imports,
contracted marginally by 0.3%, because of lower imports of semi-durables, especially
apparel and footwear.

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CONCLUSION

ECO2023 assignment has been successfully prepared by Putri Nur Zarith Sufea,
Nur Syafiqah, Nurul Ain, Fatin Munirah, and Siti Nadiah Wadihah as group members
from DBF3D.

During completing this assignment, we cooperated by dividing each of the
members to do the tasks. We must find the time to make a video call together. Now
that we are apart, we found it hard to gather everyone at one time as each of us has
our own time and work at home. This assignment taught us the importance of
managing time. We set the time so everyone will stick to it and free their schedule to
avoid any distractions, unlike when we are at the college. Above all, without the hard
work and determination from every group member, this assignment could not have to
be done.

When it comes to assignments, the main problem was time management. It
was tough for us to gather all five members. We find an alternative way to solve the
problem. It is by separate the work equally and everything went well since that. Even
with the problem that we faced; we would like to say that we are enjoying the struggle.
"No Pain No Gain" was the perfect idiom to fit in the situation. When we have done
this assignment, we felt significant relief. It is not because we felt a burden, but
because all the hard work has paid off. Finally, we would like to thank all our group
mates and not forget Mr. Syaiful, who helped us a lot while doing the assignment. The
last thing we can do is pray for good results.

To conclude, understanding and cooperating well is fundamental to gain
success in any kind we are doing. As the saying goes, "The strength of the team is
each member. The strength of each member is the team".

27

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