Public Economics

Chia-Guan Keh · Yan-Teng Tan ·Jurnal Ekonomi Malaysia ·2021 ·JEL: G10, G12, G18, H51, I18, O40

The exponential spread of the coronavirus in Malaysia has caused a significant majority of the economic activities to cease, resulting in poor stock market performance. This pandemic situation has in turn prompted the government to introduce policies to restart and improve economic activity and stock market performance. Hence, does the government’s interference in attempting to control the outbreak of COVID-19 disease, play an important part in affecting the level of economic activity and stock market performance? To resolve this doubt, the impact of government policy responses to COVID-19 in the case of Malaysia was investigated. The sample period of the study was from 28 January 2020 till 29 May 2020, amounting to a total of 84 observations. The findings reveal that the responses taken by the government, such as staying at home requirements, closure of workplaces and debt or contract relief for households, significantly affected both economic activity and stock market performance in the country. Based on the results, these responses appear to have significant policy implications, particularly in displaying that debt or contract relief for households have negative impacts on the economic activities, but a positive impact on the stock market.

Judhiana A. Ghani · Mohamad Khair Afham · Muhamad Senan · Asna Atqa Abdullah · Norashidah Mohd Noor ·International Journal of Economics and Management ·2021 ·JEL: H72, H77, E62, F34

The link between fiscal decentralisation and state-level economic growth has often been overlooked, particularly in Malaysia, with its highly centralised federal fiscal system. Thus, using data from all 13 Malaysian states from 2006 to 2018, this study evaluated the degree of fiscal decentralisation and examined its effects on state economic growth. This study employed a new proxy for fiscal decentralisation (FD), a composite variable FD comprising two components: fiscal autonomy (FA) and fiscal importance (FI). The model was examined using the fixed effects technique with robust standard error panel analysis. The empirical results demonstrated that FI and FD were significant and positively impacted economic growth across states. The results also showed the significant and negative impact of budget balances resulting from persistent fiscal deficits on state economic growth, signalling states' heavy reliance on intergovernmental grants and borrowings (soft budget constraints). Thus, fiscal decentralisation has enabled the state governments to alleviate the soft budget constraint problem and reduce the negative impact of deficits on local economic growth. Overall, the results supported prior findings that fiscal decentralisation had a significant positive effect on state economic growth.

Wong Sing Yun · Remali Yusoff ·Jurnal Ekonomi Malaysia ·2018

The aim of this paper is to investigate the determinants of the public education expenditure in Malaysia during the period of 35 years from 1982 to 2016. This study intends to address the existing research gaps within Malaysia context that failed to receive much attention in the past. The determinants of education expenditure will be modeled using time series data within the autoregressive distributed lag (ARDL) Bound Testing approach and Error Correction Model (ECM) method. The empirical findings from this study identified the real gross domestic product growth rate (GDP), unemployment rate (UNEM), inflation rate (INF) and working age population (POP2) as the long run determinants of public education expenditure. Findings from the ARDL Bound Testing result further supported the Keynesian CounterCyclical theory as implied by the negative relationship between economic growth and public education expenditure in the long run. The short run analysis through ECM demonstrated that fluctuations in education expenditure was sensitive to the real gross domestic product growth rate (D(GDP)), unemployment rate (D(UNEM)), population of age less than 15 (D(LNPOP1)), and population of age greater than 64 (D(LNPOP3)). This study further recommends that the policy makers to play the role in responding to the economic conditions and demands of the society in their decision-making of the future allocation.

Judhiana Abd. Ghani · Bhajan Grewal · Abdullahi D. Ahmed · Norashidah Mohamed Nor ·Jurnal Ekonomi Malaysia ·2019

By using fiscal datasets from 1990 to 2010 in Malaysia, a panel Dynamic-OLS (DOLS) is employed to investigate the extent to which fiscal decentralisation can support state level economic growth as proposed in the Market preserving federalism (MPF) theory. Despite having a more centralised federalism system, the result strongly shows that a fiscal decentralisation variable, (i.e. a composite ratio of decentralisation) has significant coefficient and positive relationship with state economic growth. This implies that a certain degree of fiscal decentralisation in Malaysia is able to contribute to states’ economic performance by adopting fiscal decentralisation simultaneously on both dimensions of revenue and expenditure. This validates the view that decentralisation is a multi dimentional measure. The study shows that Malaysia also would be able to benefit from a system of federalism which empowers state governments to make policies for their jurisdictions and to compete with one another for better services and higher investment. Hence, competition is the mechanism that creates incentives that result from satisfying the MPF conditions and subsequently leading to the achievement of higher state economic performance.

Siew Yee Lau · Ai Lian Tan · Chung Yee Liew ·Malaysian Journal of Economic Studies ·2019

This paper intends to examine the existence of asymmetric effect of public debt on private investment in Malaysia. As Malaysia's public debt has been rising in recent years the question has been raised on whether the persistently high debt level can negatively affect private investment or otherwise. This study, which uses non-linear autoregressive distributed lags (NARDL) estimation with data from 1980 to 2016, shows some evidence of asymmetrical effect in private investment-public debt nexus in both the long- and short-run. There are evidences of long-run asymmetry between private investment and total public debt, external debt, and federal government debt. In the short run, asymmetric relationship exists between private investment and domestic debt, external debt, and federal government debt. The findings also conclude that, in both long-run and short-run, higher public debt crowds out private investment, which is in line with the crowding-out effect hypothesis. Hence, policy-makers are advised to maintain public debt at a healthy level to ensure private investment is not being crowded-out.

Rosnani Mohamad · Suhaiza Ismail · Julia Mohd Said ·Journal of Asia Business Studies ·2018

Purpose The objectives of this present study are twofold. First, it aims to investigate the performance objectives of PPP implementation in Malaysia. Second, it aims to examine the differences in the perceptions of two PPP key players – the public and private sectors – pertaining to the performance objectives. Design/methodology/approach A questionnaire survey was used to elicit the perceptions of the public and private sectors concerning the performance objectives of PPP projects in Malaysia; 237 usable responses were obtained and analysed using SPSS to rank the importance of the performance objectives and to examine the differences in the perceptions between the government and private sectors. Findings The results reveal that the five most important performance objectives for PPP implementation in Malaysia based on overall respondents’ perceptions are “High-quality public service”, “Provide convenient service for society”, “Within or under budget”, “On-time or earlier” and “Satisfy the need for more public facilities”. As for differences in the perceptions of the two key players, only one objective was perceived as statistically more important by the public sector respondents than by their private sector counterparts. Originality/value The contribution of this paper is that it not only provides empirical evidence for the performance objectives for PPP implementation in Malaysia, but also offers evidence concerning the differences in the perceptions of the public and private sectors pertaining to the performance objectives.

Norfaiezah Sawandi · Norazita Marina Abdul Aziz · Ram Al Jafri Saad ·International Journal of Supply Chain Management ·2019

The objective of the study is to explore and examine the forms and means employed by one zakat institution in Malaysia in discharging its accountability to the stakeholders. Case study approach was used in the study involving the use of both of primary and secondary data. The primary data was gathered via the face to face in-depth interviews that were conducted with the representatives of the zakat institution. The secondary data was gathered from different sources such as the zakat collection and distributions reports of the zakat institution. The interview data was analysed using a manual coding and the secondary data was content analysed using a thematic analysis. The study finds that the zakat institution studied has been discharging two categories of accountability that are financial or formal and social or informal form of accountability. The financial/formal form of accountability has been discharged mainly via the zakat collection and distribution reports. Meanwhile, it is observed that the latter category of accountability has been discharged through both of means that are account- and action-based mechanisms, which include zakat collection and distribution reports and various non-zakat society/community programs respectively.

Saeed Solaymani ·Journal of Economic Studies ·2020 ·JEL: H2, H24, H25, O15

This study is the first attempt to analyze the effectiveness of recent two major tax policies, the reductions in personal and corporate income taxes and a rise in indirect tax and their combine, under both balanced and unbalanced budget conditions, on the economy and social aspects of Malaysia. This study uses a computable general equilibrium model to investigate the impacts of all simulation scenarios on the key macro and micro indicators. Further, based on the 2012 Malaysia Household Income and Expenditure Survey, it uses a micro-data with a significant number of households (over 56,000 individuals) to analyze the impacts of tax policies on poverty and income inequality of Malaysian. Simulation results show that, under the balanced budget condition, personal and corporate income tax reductions increase economic growth, household consumption, and investment, while the rise in indirect tax has adverse impacts on these variables. However, in the unbalanced budget condition, all tax policies, except indirect tax policy, reduce real GDP and investment in the economy and the indirect tax policy has insignificant impacts on all indicators. All policy reforms reallocate resources, especially labor, in the economy. In both budget conditions, the reductions in corporate and personal income taxes, particularly the corporate income tax, decrease poverty level of Malaysian households. Results also indicate that both tax policies are unable to influence income inequality in Malaysia.

Muhammad Adli Amirullah · Mario Arturo Ruiz Estrada · Mohamed Aslam ·Journal of Interdisciplinary Economics ·2020 ·JEL: C00, E60, H53

This article models the interconnection between the public transfer payment policy in Malaysia and the overall Malaysian economy using an inter-linkage coordinate space. This space is represented graphically, with the public transfer payment distribution in the centre and the number of periods plotted along rays (axes) that are drawn from the centre, each of which can have as many windows as required at the predetermined perimeter levels. Using this model, this article evaluates whether and how the implementation of public transfer payment policy in Malaysia can simultaneously affect the overall Malaysian economy through selected macroeconomic indicators. Finally, this article proposes the use of computer graphical animation when sufficient data are available to provide a more accurate measurement and visual representation of the economic ripple effect in the same graphical space.

Shaikh Hamzah Abdul Razak ·International Journal of Sociology and Social Policy ·2020

Purpose Zakat has a strong humanitarian and social-political value. Zakat occupies a central role in Islamic fiscal policy and operations. At the same time, it does not preclude the use of modern tools and techniques in raising the state revenues. Islam provides its own comprehensive approach how the state can raise its revenue and how the revenue should be spend. Zakat is collected from those who are qualified and distributed to the eight recipients as identified in the Quran. Waqf instrument plays an important role in Muslim societies as its support the aged, the poor, the orphans through provision of education, training and business activities. The creation of waqf is strongly advocated, especially the creation of cash waqf in view of the expensiveness of land as waqf. There are collaboration efforts for cash waqf and zakat collection being done through Islamic banks and takaful. The paper aims to discuss these issues. Design/methodology/approach The data were source from the inland revenue, government agencies and state religious authorities, interviews, articles and conference reviews, as well as economic reports and later transcribe into charts and figures. Findings Its shows the efficiency of wealth distribution according to the Islamic principles and application of the financial inclusion in the Islamic society. Research limitations/implications The limitation is in verifying the accuracy of data gathering from the government agencies. Social implications The study can be used in financial inclusion through the application of zakah and waqf being applied to alleviate poverty. Originality/value The research is an extended work done on zakah and waqf in Islamic wealth distribution.

Sitraselvi Chandren · Ayoib Che Ahmad · Santhirasegaran Nadarajan ·International Journal of Supply Chain Management ·2018

The implementation of Goods Service Tax (GST) in business processes requires firm to revise their business policies and practices particularly on price setting and cash flow operation that may possibly influence the operating performance. Thus, the purpose of this study is to investigate the impact of GST on operating performance. This study investigated 265 Malaysian listed firms operating performance (profitability: sales growth –SG, profit after tax-PAT, return on asset (ROA), liquidity: operating cash flows (OCF) and current ratio –CR) from year 2014 (before), 2015 (during) and 2016 (after) GST implementation period using the paired t-test. The SG have shown decreased during the GST implementation period, subsequently improved after the GST implementation period. The CR has exhibited a remarkable improvement during and after GST implementation period. The SG and CR results validate the firms are able to maintain the operating performance even with minimal reduction is witnessed for PAT, ROA and OCF during and after GST implementation. This study contributes to all stakeholders that GST do not necessarily influence the firms negatively, but allows the management of the firm in making effective decision for the operating business processes and supply chain for sustaining the firm value. In sum, this study finds that GST is a business friendly tax system for firms with effective operating performance to support the country economic development.