Research

Amir Lebdioui ·Review of International Political Economy ·2022 ·JEL: B5; L7; O11; O13; O14; O53; Q17

This article investigates the role of industrial policy in promoting upgrading in commodity sectors by examining the case of the petroleum, rubber, and palm oil industries in Malaysia. By doing so, it aims to contribute to an emerging scholarship that bridges the developmental state and the global value chains literature. Several findings emerge from this study. First, linkages do not unfold through market forces alone. Commodity value addition processes can be hindered by a range of barriers, including power dynamics alongside global commodity chains. The existence of high barriers for linkage development in developing nations justifies the need of state interventions. Second, successful government interventions for commodity value addition in Malaysia have gone far beyond fixing market failures and a ‘facilitative’ role of the state. Instead, the productive capabilities necessary for value addition were accumulated through coherent industrial policies and the strategic orientation of rents towards achieving productivity gains and learning. Third, political considerations, such the base of the ruling coalition, the regime type (marked by both executive dominance and political competition), and the influence of the regional intellectual climate, are essential to understanding both the policy will and ability to pursue a developmental approach towards commodity value addition.

Fazelina Sahul Hamid · Muhamed Zulkhibri ·Institutions and Economies ·2019 ·JEL: E44; E52

This paper examines the effectiveness of bank lending channels in ASEAN countries. The main objective of this paper is to identify whether the effectiveness of bank lending channels in ASEAN differs based on the countries’ financial structure, banks’ fundamentals and ownership type. The study makes use of unbalanced panel data of 214 commercial banks in nine ASEAN countries for the period from 2001 to 2015. Analysis using dynamic GMM estimators finds that the bank lending channel is more effective in CLMV countrieswhich have a less-developed financial sector compared to ASEAN-5 countries which have a moredeveloped financial sector. Particularly, we find that smaller banks with less liquidity have a broader scope to expand their financing portfolios when interest rates rise. We also find that foreign banks in ASEAN-5 countries andstate-owned banks in ASEAN countries weaken the effect of monetary policy transmissions. However, local banks are vulnerable to changes in monetary policy. Further analyses confirm that the influence of ownership structure on credit growth is partly driven by the differences in the banks’ specific characteristics.Our findings suggest that theeffectiveness of bank lending channel depends on financial structure, bank fundamentals and ownership structure. The regulators need to take this into account to ensure that the changes in monetary policy achieve the desired objectives.

Siti Marsila Mhd Ruslan · Gairuzazmi M. Ghani · Haniza Khalid ·Institutions and Economies ·2019 ·JEL: R49; L91; L98

The Malaysian government introduced a cabotage policy in 1980 to protect and enhance the competitiveness of the Malaysian shipping industry. The policy requires all foreign vessels to unload at Port Klang, the designated national port, after which only Malaysian-flagged vessels can carry cargo to other ports in Malaysia. The policy was criticised for creating additional freight costs to importers and for allowing domestic shippers to monopolise the market. Critics claimed that the higher rates for transhipment services were subsequently passed on to the consumers resulting in higher prices of goods and services. This study examines the influence of Malaysia’s cabotage policy on prices and competitiveness of the shipping industry in the state of Sabah. This study used stakeholders and force-field analysis to examine the influence of the cabotage policy. The stakeholder analysis identified four different stakeholder groups, examined their positions, and rate their positions on the influence of cabotage policy using force-field analysis technique. The analyses show that the cabotage policy was not the only factor causing high prices. Port conditions, efficiency, level of infrastructure, trade imbalance, and political will must also be addressed to remedy the issue.

Noor Zahirah Mohd Sidek · Bhuk Kiranantawat · Martusorn Khaengkhan ·Economies ·2022

In the present paper, we show how uncertainty emanating from fluctuations in economic uncertainty, news-based uncertainty, and geopolitical risks affect the number of containers exported from Thailand via Penang Port, Malaysia. Our sample extends from January 2009 to May 2020 from three main entry points in the Northern Peninsular Malaysia–Thailand Border: Padang Besar, Surat Thani, and Bukit Kayu Hitam. Two modes of transportation of containers are mainly used for export purposes, namely, road and rai. This study examines the nonlinear effect of uncertainty on trade by employing a two-regime Markov regime-switching approach. The empirical results show that, overall, uncertainty significantly affects the movement of containers in the high-uncertainty regime. Therefore, small ports must continue to diversify their client base to cushion the impact of fluctuations in global trade due to uncertainty

Zhi-Cheng Voon · Chee-Wooi Hooy · Chin-Hong Puah ·Malaysian Journal of Economic Studies ·2020 ·JEL: C43, E64, R21, R31

Malaysia’s property market has been going through a difficult phase as the supply of property stocks are excessive with the demand unable to catch up, and hence, many unsold units remaining on the market. The primary aim of this paper is to develop an index-based housing affordability indicator known as the housing affordability leading index (HALI), which is based on the indicator compilation approach founded by the National Bureau of Economic Research (NBER). The time-varying Markov switching (TVMS) model is then employed to assess the transition probabilities of the constructed housing affordability indicator. The transition probabilities estimate the prospects of the housing affordability condition and how long it will stay in that particular condition before having any major turnover. As the data employed was monthly data from year 2000 to year 2015, the constructed HALI successfully reflects the prior movements of the non-index housing affordability indicator price to income ratios (PIR). The empirical results show that the HALI has an average leading period of 9.5 months when taking the PIR as a benchmark of coincidence indicator for housing affordability movement.

M.S.M Khair-Afham · Anitha Rosland ·International Journal of Economics and Management ·2022 ·JEL: E44, E51

This study has examined the impacts of credit supply shocks and other common economic shocks (aggregate demand & supply and monetary shocks) on Malaysia's macroeconomic variables, using the Bayesian structural vector autoregressive (SVAR) model and employing sign restrictions. The results showed that an expansionary credit supply shock positively affected the Malaysian economy, consistent with the existing literature. Based on the variance decomposition finding, credit supply shocks explained a significant portion of the anticipated variation in the GDP growth, inflation, and, most importantly, credit growth in Malaysia. This study further decomposed total private non-financial corporate loans into two components: households and non-financial firms. Unlike other economies that have extensively researched this subject matter (US, UK, Euro Area), the growth rate of households and non-financial firms differed greatly in Malaysia. The empirical findings revealed considerable distinctions between these two components, indicating that different treatments or policy formulations are required rather than employing the same policy to boost or govern Malaysia's credit market

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.

Chee-Hong Law ·Applied Economics Letters ·2018 ·JEL: F21; F31; F40

Some observations have suggested that international reserves contribute to trilemma policy convergence in emerging countries. Nonetheless, this hypothesis needs more solid empirical evidence to determine its validity. This article tests this hypothesis by examining the relationships among the index of policy dispersion, international reserves and trade openness in a threshold model in Malaysia. As a small open economy, Malaysia has accumulated a relatively large amount of international reserves since the mid-1990s. The results indicate that the positive impact of international reserves on reducing policy dispersion or achieving policy convergence is found only if the international reserves are above a threshold. Hence, this conclusion supports the need to hold a relatively high level of international reserves in Malaysia.

Syed Shahzad Hasan · Chia Siang Kow · Dalia Dawoud · Omneya Mohamed · Darrin Baines · Zaheer-Ud-Din Babar ·Value in Health Regional Issues ·2018

Medicine price directly affects affordability and access to medicines particularly in countries where a major portion of pharmaceutical spending is through out-of-pocket payment, such as in the Asia Pacific region. We have undertaken a detailed appraisal of the pharmaceutical policy reforms to regulate drug prices in 3 developed (Australia, New Zealand, and South Korea) and 3 emerging (China, India, and Malaysia) economies of the Asia Pacific region. Despite continuous efforts by the authorities in adopting a wide range of reformatory pharmaceutical pricing policies to ensure affordability of medicines, these policies may not be optimal where drug prices were not lowered as expected (eg, in Korea). On the contrary, considerable price reductions of various pharmaceuticals have been observed in New Zealand and India because of the reform in pharmaceutical pricing policy. This review of pharmaceutical pricing reforms reinforces the need for constant monitoring by policy makers in Asia Pacific countries to regulate drug prices and to undertake reform in pharmaceutical pricing policies when necessary to ensure affordability and access to medicines.

Abdelkader O.El Alaoui · Hashim Bin Jusoh · Sheila Ainon Yussof · Mohamed Hisham Hanifa ·Quarterly Review of Economics and Finance ·2019

This paper, for the best of our knowledge, is the first attempt to assess the role of money in the Malaysian economy using wavelet techniques. To do so, a macroeconomic model-based policy rules has been formulated. In relation with the recurring financial crises, we analyse the relationship between the quantity of money, interest rate, inflation, exchange rate, index of industrial production and equity indices, in the case of Malaysia. In this analysis, UK economy aggregates are taken as benchmark. Therefore, the relationships between monetary policy variables and macroeconomic variables are evolving with time and have non-homogeneous trends across different time scales. Some strong correlations have been found in regard to Malaysian Monetary Policy using, major monetary aggregates; the quantity of Money, the interest rate and the exchange rate inducing some lead-lag interactions between those key variables. In addition, we analyse the effect of LIBOR on Malaysian interest rate (KLIBOR). We found that the KLIBOR is lagging behind the LIBOR in most of the time. In the end, some lessons will be drawn for the monetary policy in Malaysia, in terms of the high impact of the role of money and the expected implications regarding an effective Islamic monetary policy.

Lee Hwok Aun ·Asian Economic Policy Review ·2021 ·JEL: D30, D63, I30, J15

The New Economic Policy (NEP) which focused on poverty reduction and social restructuring has transformed Malaysia since 1971. Pro-Bumiputera affirmative action was intensively pursued and has continuously faced pushback, with heightened debate at key junctures. The NEP was marred by gaps and omissions, notably its ambiguity on policy mechanisms and longterm implications, and inordinate emphasis on Bumiputera equity ownership. Broader discourses have imbibed these elements and tend to be more selective than systematic in policy critique. During the late 1980s, rousing deliberations on the successor to the NEP settled on a growth-oriented strategy that basically retained the NEP framework and extended ethnicitydriven compromises. Since 2010, notions of reform and alternatives to the NEP’s affirmative action programme have been propagated, which despite bold proclamations, again amount to partial and selective – not comprehensive – change. Affirmative action presently drifts along, with minor modifications and incoherent reform rhetoric stemming from conflation of the NEP’s two prongs.

Chai-Thing Tan · Azali Mohamed · Muzafar Shah Habibullah · Lee Chin ·South Asian Journal of Macroeconomics and Public Finance ·2020 ·JEL: E52, E58, E62, C01

This article analyses the impact of monetary and fiscal policies on economic growth in Malaysia, Singapore and Thailand from 1980:Q1 to 2017:Q1. Autoregressive distributed lag (ARDL) approach is employed to determine the long-run relationship. Further, a range of econometric models, such as fully modified least squares method (FMOLS), canonical cointegration regression (CCR) and dynamic ordinary least squares method (DOLS), are applied to check the robustness. The results are stable and robust as all the models yield consistency result. The main findings in this study demonstrate that: (a) interest rate had a negative impact on economic growth in three selected countries.

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.