BACHELOR IN BUSINESS ADMINISTRATION

CT9

MALAYSIAN ECONOMY
(BBCE 3013)
ASSIGNMENT 2

PREPARED FOR
AIN FARHA BINTI SALAHUDDIN

PREPARED BY
SITI FADILAH BINTI MOHD PAHIZUL
202001040083

SUBMISSION DATE
10 APRIL 2022
Answer all question.

Chapter 1

1. Discuss the differences between economic growth and economic development

Economic Growth is the positive change in the indicators of economy. Economic

Growth refers to the increment in amount of goods and services produced by an
economy. Economic growth means an increase in real national income / national
output. It refers to an increase over time in a country’s real output of goods and
services (GNP) or real output per capita income. Economic growth is single
dimensional in nature as it only focuses on income of the people. Earlier,
economic growth was only measured in terms of Gross Domestic Product (GDP).
At present, it is measured in terms of GDP, Gross National Income (GNI) and Per
Capita Income. Economic Growth is the precursor and prerequisite for economic
development. Indicators of economic growth are GDP, GNI and per capita
income. Economic growth relates a gradual increase in one of the components of
GDP; consumption, government spending, investment or net exports.

Economic development is the quantitative and qualitative change in an economy.

Economic development refers to the reduction and elimination of poverty,
unemployment and inequality with the context of growing economy. Economic
development means an improvement in the quality of life and living standards,
e.g. measures of literacy, life-expectancy and health care. Economic
development includes process and policies by which a country improves the
social, economic and political well-being of its people. Economic development is
multi-dimensional in nature as it focuses on both income and improvement of
living standards of the people. Economic development is concerned with the
happiness of public life. Economic development comes after economic growth. It
is a positive impact of economic growth.

(6 marks)
2. In your opinion, why the combination of economic growth and economic
development is essential to the economy. Explain

In my opinion, the economic growth is one of the good ways in making the
economy develop. If there are none of the economic growth is doing well, there is
nothing will happened to the development of the economic. In other words, the
economic growth is a process where you can do such economic activities such
as planting, farming, fishing and many more. These economic activities actually
will help the development of economy and as the result, the economic will
become better and better as many activities to help the economic growth
happened.

Besides, the economic growth will make sure one country become poor or better
depending on the economic activities, if they economic activities is not good and
the people living in the country is poor, then the economic development is not
there. Meaning to said that the development of economic will never happened if
there is no economic growth happened at the place or country.

(5 marks)
3. Briefly explain the THREE (3) sectors of the economic structure of Malaysia.
Discuss the importance of analyzing economic structure.

Economic structures determine the rate of structural learning, affect institutional

performance, influence the distribution of income and establish the direction of
political transitions, thereby, economic performance.

According to Samuelson and Nordhaus neatly sum up the importance of the

national accounts and GDP in their seminal textbook “Economics.” They liken the
ability of GDP to give an overall picture of the state of the economy to that of a
satellite in space that can survey the weather across an entire continent.
 GDP enables policymakers and central banks to judge whether the economy is
contracting or expanding, whether it needs a boost or needs to be restrained,
and if threats such as a recession or rampant inflation loom on the horizon.

In Malaysia, there are three major sectors that help to improve the economic
such as agriculture, manufacturing and fishing. All these sectos are important
and we as Malaysia need all these three sectors to survive.
(6 marks)
4. Why is it important for the government to tackle the issue of unemployment?
Discuss.

The unemployment issues should be tackled by the government because I can

make the country become worse if the unemployment people try to do
demonstration and try to take down the government. Besides, the government as
the ruler needs to provide job for people, so just do the task and help the
unemployment people to get job.
(3 marks)
Chapter 2

1. Briefly explain the overriding objectives of the New Economic Policy (NEP) and
its two-pronged strategies.

The 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. The key
element of the second prong was the creation of the Bumiputera Commercial and
Industrial Community (BCIC) to ensure a viable participation of Bumiputera
individuals in the modern sectors of the economy. The target was that
Bumiputeras would own and manage at least 30 per cent of the total commercial
and industrial activities of the economy by 1990. The 30 per cent target was a
means to an end, namely to achieve better distribution of assets and income.
Despite the NEP and other efforts, the threat of disintegration of the carefully crafted
unity of the nation would however continue. This was primarily because of
dissatisfaction over growing economic disparity and perceived inequalities in various
sectors such as education, as well as between urban and rural areas.

(5 marks)
2. List FIVE (5) benefits of privatization with its corresponding examples.

Privatization for example Perbadanan Bekalan Air Pulau Pinang will bring
benefits as below:

1. Save taxpayers' money – people don’t have to pay much taxes for the service.

2. Increase flexibility- service will become more flexible and people will easy to
get service.

3. Improve service quality – when the company was privatize, the service will
become better as what the customers want.

4. Increase efficiency and innovation – the company will need to use high and
very good machines in providing services.

5. Allow policymakers to steer, rather than row – when the company was stand
alone, the policy maker will easy to control them.

(10 marks)
3. Compare and contrast the objectives of NEP, NDP and NVP

New Economic Policy (NEP) had introduced and under the Principles of OPP1 in
1970. New Economic Policy (NEP) was introduced because Malaysia faced two
problems in 1969 which are poverty and imbalance racial socio-economic. The
objective of the New Economic Policy (NEP) is to bring a more equitable distribution
of wealth between the different races and groups in the various strata of community
in Malaysia. That means NEP is to remove the identification of race with economic
 function and should be a good mix of the ethnic groups that make up the Malaysian
nation.

The new policy called New Development Policy (NDP). This new policy will maintain
the basic strategies of the NEP and to correct social and economic imbalances,
promotes social and political stability as well as sustained development. New
Development Policy (NDP) also is one of the steps to enable Malaysia to become a
fully developed country by the year 2020. In 1992, the Second Outline Perspective
Plan (OPP2) was introduced and it was formulated based on the New Development
Policy (NDP). This plan is covered the period from 1991 to 2000. It includes Sixth
Malaysia Plan and Seventh Malaysia Plan towards vision 2020.

The New Vision Policy (NVP) was launched in 2001 and under Malaysia Eighth Plan
while the Economic Transformation Program (ETP) is under Malaysia Tenth Plan in
2010. All of these planning are toward to Vision 2020.The purpose of National Vision
Policy is establishing a progressive and prosperous “Bangsa” Malaysia that lives in
harmony. Besides this, economic growth will be reducing poverty, social, economic,
and regional imbalances and restructuring of society.

(10 marks)

Chapter 3

1. Explain why socio-economic issues the people’s top concern in an economy are.
There are two reasons why the socio-economic is concern. Firstly, when people
are coming from high class which are the average salary between 10,000 to
20,000 will behave like the high class people and they are not like the lower class
people. For example the high class people such as datuk and datin, they like to
go and shopping at luxury places. However, the lower class people which salary
between RM1000 to RM3000, they are the medium class people which are likely
to be categorized in the lower class at the current situation now. This makes the
lower class and upper class separated.
(3 marks)
2. List two reasons why the level of Poverty Line Income (PLI) is revised
periodically.

There are many reasons why poverty in Malaysia raises. Here are the reasons.
1. Less job and people jobless
2. Low paid for the common job and less money to buy things
3. Price raise for all products and this makes people become poor.

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

The ultimate objective of public policy is to totally eradicate poverty and improve
the lives and well-being of all. At the operational level, the immediate objective
has been to progressively reduce the incidence of poverty. In line with that
objective, the target during the NEP period was to reduce the incidence of
poverty in Peninsular Malaysia from 49.3 per cent in 1970 to 16.7 per cent in
1990. Subsequently, under NDP, the target was to reduce the incidence of
poverty to 7.2 per cent by the year 2000. In addition, a target was also set for
reducing the incidence of hardcore poverty, defined as those below half of the
poverty line income, to 0.3 per cent by 2000. Under the current Eight Malaysia
Plan, 2001-2005,the target is to reduce the incidence of poverty to 0.5 per cent
by 2005.

1. Giving the poor people place to stay

2. Provide the jobs for poor people
3. Give subsidy to poor people
4. Give incentive for poor people to survive.
(8 marks)
4. Explain THREE (3) strategies to overcome hardcore poverty in Malaysia.

1. "Malaysia's fiscal policy has been expansionary in the past two years. We will
continue to be so to ensure the well-being of Keluarga Malaysia."
2. Setting up a Poverty Unit under the Economic Planning Unit to coordinate
policy matters on poverty alleviation at the national level.
3. The government would cooperate with the state government, civil society
organisations, and the private sector.
(6 marks)
5. What are THREE (3) effects of income inequality? Explain briefly.
1. Inequality Stifles Growth - A variety of explanations have been proposed to
explain how inequality can work to stifle growth. A high level of economic
inequality means a higher level of poverty. Poverty is associated with
increased crime and poor public health, which places burdens on the
economy. In the face of increasing food prices and lower incomes, support for
pro-growth government policies declines. Wealthy citizens maintain
disproportionate political power compared to poorer citizens, which
encourages the development of inefficient tax structures skewed in favor of
the wealthy. Unequal income distribution increases political instability, which
threatens property rights, increases the risk of state repudiated contracts, and
discourages capital accumulation. A widening rich-poor gap tends to increase
the rate of rent-seeking and predatory market behaviors that hinder economic
growth.
2. Inequality Increases Crime - Researchers propose several possible
explanations for the inequality-crime correlation. First, disadvantaged
members of a society may be more likely to suffer from resentment and
hostility as a result of their economic position or competition over scarce jobs
or resources, resulting in a higher propensity for criminal behavior. Second,
inequality increases the incentive to commit crimes. Fewer methods of
lawfully obtaining resources are available for the increasing number of poor
who live in an unequal society. Even when risks of punishments are taken
into account, illegal methods of gaining assets may provide better returns
than legal means of obtaining resources.
 3. Inequality Decreases Health - The impoverished members of society are
subject to disproportionate occurrence rates of certain kinds of illnesses.
Access to quality health care and healthy food is sometimes limited or
unavailable for poor individuals. The result of a substantial poor population, a
defining feature of economic inequality, is a less effective lower-income work
force, higher disease and mortality rates, higher health care costs, and
progressively deepening poverty for afflicted groups. Food deserts are a
unique characteristic of economically unequal societies, characterized by the
lack of readily accessible healthy and affordable food. Food deserts occur in
several heavily industrialized Western nations, including the United Kingdom,
Canada, Australia and New Zealand.[39] The term “food desert” originated in
Scotland during the early 1990s in the context of a public sector housing
report.Although the term originated in Scotland, its prevalence steadily
increased since the 1990s in the United Kingdom, eventually becoming a
common topic of research affecting public policy internationally. In 2009, 2.2
percent of all households in the United States were located in food deserts.In
the United States and other industrialized Western nations, the lack of access
to fresh foods is associated with disproportionate obesity and diet-related
disease rates among low-income households.
(6 marks)
6. Define income distribution.
Income distribution refers to several different topics in economics. It is difficult to
talk about the distribution of income without triggering strong feelings about
wanting to help those less fortunate than you. It is equally hard to talk about the
distribution of income without feeling some envy for those who are more
fortunate than you. Economists recognize both of these feelings. Economists
also recognize that not all happiness derives from being financially well off. We
call these questions about fairness, the economics of well-being, or welfare
economics. Is the difference in income because some people are just born into
wealthy families or are just born with exceptional natural talents? Is it because
some cultures or countries have social or government laws or institutions that
encourage education, savings, social mobility, etc.
(3 marks)
Chapter 4

1. What types of crops were planted during the pre-independence period of the
British colonization in Malaya?

During the pre-independence, the agricultural policies were formulated by and for
the interest of the British colonial. The emphasis was on plantation crops such as
rubber, oil palm and cocoa.
(5 marks)
2. Discuss the importance of agricultural development to Malaysian Economy?
Discuss.

Agriculture is an important sector in Malaysia. For many years, this sector has
been the backbone of Malaysian economy by producing agricultural products for
domestic consumption, as the earner of foreign exchange. Agriculture also
contributes to the national Gross Domestic Products (GDP).
(5 marks)
3. Elaborate the problems of agriculture sector and way to overcome it.

Current challenges facing the global food system

Let’s start with the most obvious one. The global food system is expected to
provide safe and nutritious food to a population that will likely grow from 7.5
billion people today, to nearly 10 billion by 2050. Not only will there be more
mouths to feed, but as incomes grow in emerging and developing economies, so
too will the demand for meat, fish, and dairy. However, food production is only
one aspect of the food system. The agro-food sector also provides a livelihood
for millions of people. Globally, most of the people living in extreme poverty are in
rural areas where food production is often the most important economic activity.
There are an estimated 570 million farms worldwide today, and millions of other
people work in food-related jobs.
The global food system also has a large environmental footprint. In fact,
agriculture occupies nearly 40% of the earth’s surface, far more than any other
human activity. In addition, irrigation of agricultural crops comprises 70% of
global water use, and agriculture directly contributes to around 11% of global
greenhouse gas (GHG) emissions (mostly through cattle). Expanding agricultural
land can also lead to deforestation, additional GHG emissions, and a loss of
biodiversity.

Setting the table to address the triple challenge

These three challenges – feeding a growing population, providing a livelihood for
farmers, and protecting the environment – must be tackled together if we are to
make sustainable progress in any of them. But making progress on this “triple
challenge” is difficult, as initiatives in one domain can have unintended
consequences in another. Sometimes, the consequences are positive. For
instance, raising farm productivity can generate income growth in agriculture,
make more food available for consumers at lower prices, and – in some cases –
reduce pressure on the environment. But sometimes the consequences are
negative and require balancing trade-offs. For example, policies to increase the
environmental sustainability of agriculture could impose increased costs on
farmers and lead to higher prices for consumers. In other words, policies that
address one part of the triple challenge often end up creating synergies (positive
effects) or trade-offs (negative effects) with respect to other objectives—and a
single-issue perspective on any objective can lead to unintended impacts on
other objectives. Competing objectives and complex interactions, along with
multiple stakeholders with a range of concerns, should make us cautious when
specific ideas are proposed as “silver bullets” to fix the food system. So what can
policy makers do to address these important challenges, taking into account their
interconnectedness? How should they find out if and when there is a conflict
between two or more objectives? How should they deal with stakeholders who
may resist an initiative they fear could harm their interests? And how should they
co-ordinate with policy makers in other agencies or ministries, and with
counterparts in other countries?
 To begin the process of answering these difficult questions, the OECD organised
a Global Forum on Agriculture in May 2019 to exchange ideas about the most
important challenges facing the global food system today (the triple challenge),
and the obstacles that stand in the way of overcoming them. Importantly, the
conversation included views from a range of stakeholders affected by agro-food
policy decisions – including farmers, traders, food manufacturers, consumer
representatives, agricultural input suppliers, researchers, environmental NGOs,
and policy makers. The OECD will build on this discussion to assess the main
obstacles to achieving better policies for the global food system, and to identify
good practices to help overcome them.

Future policies may require new recipes

Just like a good meal is a balanced meal, good policies will need to strike a
balance between the different objectives of the triple challenge facing the global
food system today. And just like a good meal depends not only on the chef, but
also on the quality of the ingredients – so too will good policies depend not only
on the policy maker, but also on the input from many stakeholders. Given the
scale and complexity of these challenges, policy makers may need to experiment
with new recipes to cook up a set of policy solutions that are to everyone’s taste.

(10 marks)

Chapter 5

1. Elaborate Industrial Master Plan 1 (IMP 1)

IMP1 (1986-95) laid the foundation for manufacturing to become the leading sector
of the economy. Its main objectives were (i) accelerated growth of manufacturing; (ii)
efficient utilization (i.e., domestic processing) of the nation’s natural resources; and
(iii) development of indigenous technological capability. The plan overlapped with a
period of high growth driven by increased FDI inflows. Export growth, the share of
manufacturing in GDP, and the growth of value-added in manufacturing all exceeded
plan targets.
Manufacturing plus expresses a two dimensional desire to (i) expand along the value
chain to encompass higher value-added activities; and (ii) uplift the whole value
chain to raise productivity. Since Malaysia started as a conventional assembler,
which was the lowest point in the value chain, it wanted to master R&D, design,
product development, distribution, marketing, etc. horizontally, and also improve
skills vertically. Cluster-based industrial development broadens the concept of
industry. A cluster is defined to be “an agglomeration of inter-linked or related
activities comprising industries, suppliers, critical supporting business services,
requisite infrastructure and institutions”. Eight clusters were identified and analyzed.
E&E, textiles and apparel, chemicals, resource-based industries, food processing,
transportation equipment, materials, and machinery and equipment.

(15 marks)