EC0 WRITTEN ASSIGNMENT

WRITTEN ASSIGNMENT

KOLEJ PROFESSIONAL MARA BANDAR MELAKA

ECO 2023

TOPIC; MALAYSIA TRADE AND FINANCE

PREPAPRED FOR:PUAN HADRAH HANUM BINTI RAMLI

PREPARED BY: BMF2007078

MUHAMMAD SUHAYL BMF2007092
AIMAN BIN MOHAMED BMF2007007
SUHAIMI @ZUKI

ADAM MUKMIN BIN MOHD
AZMAN

MUHD HELMY BIN
HABIBULLAH

QUESTION 1

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

Based on my research about trade performance from June 2019, Malaysia recorded a
trade surplus of RM10.26 billion in June 2019, the 260th continuous month of trade surplus
since November 1997. Exports amounted to RM76.17 billion, contracted by 3.1% compared
with June 2018. Imports decreased by 9.2% to RM65.91 billion. Trade in June 2019 contracted
by 6% to RM142.08 billion compared to June 2018.

For export performance of major sectors, the exports of manufactured goods in June
2019 is declined by 5% to RM63.79 billion from 83.7% of total exports. The main factor of why
it was decreased because of the lower exports of electrical and electronic (E&E) products,
manufactures of metal,machinery,equipment and parts, rubber products and wood products.
Then, Exports of mining goods (9.1% share) increased by 15.4% to RM6.96 billion, attributed
to higher exports of crude petroleum and liquefied natural gas (LNG). The expansion in
exports of crude petroleum was due to higher volume and Average Unit Value (AUV) while
LNG was attributed to higher volume. Next, exports of agriculture goods (6.3% share) reduced
by 0.8% to RM4.82 billion. Exports of palm oil and palm oil-based agriculture products
increased, primarily palm oil which rose by 7.9% to RM2.83 billion following higher volume.In
first half 2019, exports of manufactured goods increased by 0.3% to RM403.99 billion
compared to the same period of 2018, driven by higher exports of E&E products, iron and
steel products, chemicals and chemical products, processed food, optical and scientific
equipment, jewellery as well as paper and pulp products. Exports of mining goods rose by
2.1% to RM41.9 billion as a result of higher exports of LNG. Exports of agriculture goods were
lower by 5.8% to RM32.14 billion on lower exports of palm oil and palm oil-based agriculture
products.

After that,for the import performance, Total imports in June 2019 contracted by 9.2%
to RM65.91 billion from RM72.61 billion in June 2018. The three main categories of imports
by end use which accounted for 77.7% of total imports were:

 Intermediate goods, valued at RM38.39 billion or 58.3% share of total
imports,decreased by 2.5%, following lower imports of processed industrial
supplies,particularly iron and steel;

 Capital goods, valued at RM7.21 billion or 10.9% of total imports, down by23.6%, due
mainly to lower imports of capital good (except transport equipment) particularly
parts of machinery and mechanical appliances; and

 Consumption goods, valued at RM5.58 billion or 8.5% of total imports,declined by
5.4%, as a result of lower imports of semi-durables particularly apparel and clothing
accessories.

In first half 2019, imports amounted to RM414.42 billion, a decline of 1.8% from the
same period of 2018. Intermediate goods totalled RM229.13 billion, increased by 3.8%,
capital goods (RM49.2 billion, decrease 9.1%) and consumption goods (RM35.8 billion,
increase 4.6%).

Move to year 2020 trade analysis, this year was very challenging not only for
Malaysia,but to the global because the spreading of Covid 19. Majority of countries closed
their boarders to prevent Covid19 infection. This directly caused major disruptions to global
supply chains, especially movement of goods and services, and severely affected
manufacturing activities.

Despite this unexpected scenario, Malaysia’s external trade performed fairly well with
exports rebounding in the second half of 2020 as compared to the negative growth recorded
in the first half of the year. This could be attributed to the progressive opening of the economy
and gradual recovery of external demand. In fact, exports in December was the highest
monthly value recorded for 2020. Total trade which was valued at RM133.3 billion decreased
RM26.2 billion or 16.4% compared to April 2019. It also posted a decrease of RM14.6 billion
or 9.9% when compared to March 2020. The trade deficit in April 2020 was valued at RM3.5
billion. This was the first month of trade deficit since October 1997.

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

Malaysia’s top four (4) trading partners;

1. China: US$37.8 billion (16.1% of Malaysia’s total exports)
2. Singapore: $33.9 billion (14.5%)
3. United States: $26 billion (11.1%)
4. Hong Kong: $16.2 billion (6.9%)

• In 2019, Malaysia’s exports amounted to RM986.4 billion with a decline of 1.7% as
compared to last year, while imports worth RM849.0 billion (-3.5%) resulting in a total trade
of RM1.8 trillion (-2.5%).
• The decrease in exports were attributed to lower exports to Hong Kong (-RM8.3
billion), Japan (-RM5.1 billion), Australia (-5.1 billion), Singapore (-RM3.4 billion) and the
European Union (-RM2.9 billion).
• Imports were down mainly from Singapore (-RM13.5 billion),Taiwan (-RM6.5 billion),
the European Union (-RM5.9billion), Thailand (-RM4.5 billion) and Switzerland (-
RM4.1billion).

QUESTION 3
Identify and provide data on top four (4) sectors that contribute for Malaysia’s exports in
2020.
Top four (4) sectors that contribute for Malaysia’s exports in 2020.

1. Electrical machinery, equipment: US$86.6 billion (37% of total exports)
2. Mineral fuels including oil: $26.5 billion (11.3%)
3. Machinery including computers: $20.2 billion (8.6%)
4. Animal/vegetable fats, oils, waxes: $13.5 billion (5.8%)

QUESTION 4
Identify and provide data on top four (4) sectors that contribute for Malaysia's imports in 2020.
Top four sectors that contribute for Malaysia's imports in 2020 are electrical machinery and
equipment, mineral fuels including oil, machinery including computers, and plastics, plastic articles.

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

The tourism industry in Malaysia has been severely impacted by the COVID-19 pandemic. It is
widely acknowledged that the tourism sector in Malaysia plays an important role in boosting
economic growth by promoting international spending on Malaysian goods and services. If
the number of tourists continues to fall, some businesses in the tourism industry will be forced
to close due to unsustainable losses and an inability to pay workers' salaries.

To fully contain the virus, Malaysia's Prime Minister announced four phases of Movement
Control Order (MCO) as the number of COVID-19 cases was expected to rise (Prime Minister's
Office, 2020). The prohibitions during the MCO will further contract Malaysia's tourism
industry. The Covid-19 pandemic brought the entire tourism industry to stop, and the rest of
the world took steps to stop the spread by closing borders, it resulted in huge job losses and
incomes. Many hotels closed, and several travel agencies and businesses went bankrupt as
their funds ran out. When government declines the international tourist, it will affect
Malaysia's economy. The nation income became decrease due to MCO that prevent the
tourist from abroad from entering Malaysia.

QUESTION 6

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

There are a lot of incentive provide by the government in helping the tourism and culture
sector. Among the government's incentives for the tourism sector is to allocate funding of
RM1 billion in the PENJANA Tourism Financing Scheme. The provision of this incentive is to
increase the competitiveness of small and medium enterprises (SMEs) in the tourism and
cultural sector. Apart from that, the government is also focusing on efforts to rehabilitate the
tourism industry through the implementation of the Tourism and Culture Rehabilitation Plan
which has been drafted by the Ministry of Tourism, Arts and Culture (MOTAC). Meanwhile,
the Minister of Tourism, Arts and Culture, YB Dato 'Sri Hajah Nancy Shukri also said the
decision to implement the Visit Malaysia Year in the future will depend on the current global
situation and take into account the appropriate time period for preparation for the
implementation of any campaign. large scale.

In addition, the government also provides leeway in terms of tax payments for the tourism
industry. Among them, the tax deferral for three months starting from October 1, 2020 until
December 31, 2020. The Government provides a deferment of instalment payments on the
estimated tax payable for the period April 1, 2020 until September 30, 2020. Second, tourism
tax exemption from July 1, 2020 until 30 June 2021. Third, service tax exemption on
accommodation services from 1 September 2020 until 30 June 2021. Also given individual
income tax relief up to RM1000 which has been given on travel expenses in the country until
31 December 2021.

QUESTION 7

Give suggestions on how Malaysians can help improve the country’s overall Gross Domestic
Product (GDP)?

Gross Domestic Product (GDP) is the final value of the goods and services produced within
the geographic boundaries of a country during a specified period of time, normally a
year. GDP growth rate is an important indicator of the economic performance of a country.
Malaysia needs to implement strong reforms by investing in human capital, increasing female
labour force participation and implementing policy changes that improve productivity growth
to boost the country's economic growth in the long run. These are the three factors where
Malaysia is fall behind others and requires reforms to mitigate its declining growth rates.
Based on the current scenario, Malaysia's gross domestic product (GDP) growth rate is
expected to fall to 2.9% by 2050. The higher growth impact of the reform scenario clearly
benefits from stronger contributions from growth in human capital, total factor productivity
and female labour force participation rate. Malaysia’s GDP growth rate is expected to
decrease from 4.5% to 2% over the next 30 years, which is similar to the fall in growth.
Malaysia’s growth initially declines more quickly than the baseline mostly due to lower private
and public investments, but recovers due to higher human capital growth and female labour
force participation. Of the components of human capital, the World Bank said the quantity
and quality of education provide the biggest boost to economic growth in the long run. As for
Malaysia’s female labour force participation, which currently stands below the 25th
percentile of high-income nations, the World Bank has recommended improving it by
reducing or eliminating barriers to economic opportunities for women through legal reforms,
introducing more economic and societal support for parents. To increase total factor
productivity growth, the bank said this could be done through enabling environment
measures that would boost innovation, infrastructure, skills, and institutional quality.

QUESTION 8

Provide data on Malaysia’s Trade Performance in January 2021? Comment on Malaysia’s
performance.

Malaysia’s trading performance in January 2021 maintaining its positive growth for
directly five consecutive months from September 2020 in exporting goods, thus showing
an increase of 6.6% to RM 89.6 billion compared to January 2020. This trading scale also
showing that it has marked as the highest export value for the month of January by far.
The expansion was supported by increase in global demand notably for electrical and
electronic (E&E) and rubber products as well as front-loading activities prior to the festive
season. The higher exporting trade was seen to China, United State (US), Viet Nam,
Singapore and Hong Kong SAR.

Imports in January 2021 expanded by 1.3% to RM73.02 billion. Total trade rise by 4.1% to
RM162.65 billion, the highest value registered for the month of January. Trade surplus
surged by 38% to RM16.6 billion, sustaining a double-digit growth for eight consecutive
months.

Compared to December 2020, total trade, exports, imports and trade surplus decreased
by 4.8%, 6.4%, 2.7% and 19.8%, respectively.

QUESTION 9

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

In my opinion, the prospect Malaysia’s international trade will be consecutively increases
with exports projected to rebound by 2.7% until the end of 2021. Malaysia’s international
trade is expected to be better as the World Bank and International Monetary Fund (IMF)
forecast that global growth will rebound by 4.0% and 5.5%, respectively. With the
improvement in global growth and international trade, Malaysia’s gross domestic product
(GDP) is expected to rebound by 6.5% to 7.5%, higher than the forecast growth for ASEAN-5,
which is 5.2%. Malaysia’s exports had been showing signs of recovery since September 2020
with positive year-on-year growth. Based on the research have been done, the international
export trading is increasing due to strategy taken by major of Malaysian business to do
online business during the pandemic Covid-19. There is not a problem to produce a good
result in trading even though in this hard situation. Therefore, I believe that the prospect
Malaysia’s international trade would be stable and mostly giving benefit to our country.

REFERENCE

https://www.matrade.gov.my/en/malaysian-exporters/services-for-exporters/trade-market-
information/trade-statistics

https://www.theedgemarkets.com/article/malaysia-needs-strong-reforms-boost-longterm-
growth-%E2%80%94-world-bank

https://www.matrade.gov.my/en/187-malaysian-exporters/trade-performance-2021/5248-
trade-performance-january-2021

https://www.theedgemarkets.com/article/malaysias-external-trade-remain-modest-
exports-rebound-27-%E2%80%94-miti

https://think.ing.com/articles/malaysias-trade-ends-2019-on-firmer-note

https://www.miti.gov.my/miti/resources/Media%20Release/Malaysia_External_Trade_Stati
stics_Trade_Performance_For_June_2019_And_The_Period_Of_January_-_June_2019.pdf