Urban, Rural and Regional Economics

Sotheeswari Somasundram · Murali Sambasivan · Ratneswary Rasiah · Tee Pei-Leng ·Institutions and Economies ·2018 ·JEL: 053; R11; C43; J130; 018

The urban community in Malaysia is facing rapid urbanisation and have been the beneficiary of urban development policies. The key purpose of these policies has been to enhance and improve the well-being of the urban community. However, given the diverse nature of urban planning, literature has highlighted the possibility of a mismatch between policy directions and the outcomes desired by society. The aim of this study is therefore, to determine whether urban policy measures currently implemented in Malaysia are in sync with the needs of society. This study applied the relative importance index (RII) method tounderstand the challenges faced by urban residents in Kuala Lumpur, Selangor, Malacca and Penang. The results revealed five challenges which are of concern to the urban community: prevalence of crime, rising cost of living, lack of employment opportunities, air pollutionandtraffic congestion. The findings indicate Government policies are addressing these concerns. However, for a more effective outcome, the study recommends designing urban policies in consultation with civil society.

Ramasamy Thillainathan ·Malaysian Journal of Economic Studies ·2021 ·JEL: R42, O17

The focus of the paper is on toll road privatisation. An overview of the choice of privatisation and the form it took, in promoting the entry of Malays into business, is followed by a review of other studies on privatisation in Malaysia. Given the highly confidential nature of the privatised concessions, data on ownership and likely terms have been gleaned from rating of the bonds issued, as the bond market has been the key source of infrastructure financing. From such data, the dominance of the Malay managerial class over its business class is readily evident, especially after the Asian financial crisis (AFC). The likely impact of toll road privatisation on the stance of distribution is also examined. As concessions are still awarded on a negotiated basis, the issue of rent-seeking is also explored. Uncertainty and variability in the financial performance of the concessionaires can be seen from the spread and deterioration in credit of the issuers, attesting to the greenfield nature of the projects undertaken or due to differences in gearing or in the support and subsidy enjoyed from the government. The separation in ownership and control, either due to continued ownership by state-owned enterprises (SOEs) or widely held public listed companies (PLCs), has increased the risk of expropriation by those who exercise management control.

Mahirah Kamaludin · Kuna Sandran · A.A. Azlina ·Jurnal Ekonomi Malaysia ·2018

Water supply is an expensive investment and it is inevitable that the people have to prepare themselves for a universal hike in water prices in order to secure uninterrupted supply in the future. Inexpensive water prices cause the consumers to take water supply for granted and hence, lack of water conservation initiatives prevail. Sufficient funding is needed to implement various programs to improve water services. The costs of these programs should not be incurred by the water companies which are already burdened by the small revenue resulting from low water price. As the collection of revenue is inadequate to cover operating costs, the services rendered to the consumers are often unsatisfactory and the operational efficiency is below par. The last review of water tariff in Terengganu was done in the last two decades. Hence, with the increase in income within the last two decades, a study is needed to assess consumers’ willingness to pay for improved water services. This study employs Double Bounded Contingent Valuation Method (CVM) to estimate households’ willingness to pay (WTP) for improvements in water services in Terengganu. Monetary benefits of improved water services for the consumers in Terengganu were determined based on the value of WTP. The findings of this study will be used in identifying the frequent problems and issues faced by the government owned water supplier in Terengganu. Efficient water prices will facilitate efforts in delivering better water services and promoting greater efficiency in the financial and operational management of operators to attain financial sustainability

Tamat Sarmidi · Nurul Aishah Khairuddin · Muhamad Rias K V Zainuddin ·Malaysian Journal of Economic Studies ·2021 ·JEL: D67, L93, R41

In 2019, the US Federal Aviation Administration (FAA) downgraded the Civil Aviation Authority of Malaysia (CAAM) from tier one to tier two. Existing research has revealed that downgrading air safety ratings has a detrimental effect on the aviation sector. Although extensive research has been carried out on air safety downgrading, limited studies have delved into the backward and forward linkages and inter-industries framework. By employing a difference-in-differences (DID) panel data econometric and input-output (I-O) analysis to a modified sectoral aggregation of Malaysia’s I-O Table 2015, this study is able to simulate the impact of air safety downgrading. The findings show that, apart from being a “key” industry, air safety downgrades could result in a RM722.5 million loss to Malaysia’s GDP. A more in-depth inspection of the results indicates that the reduction in GDP mainly results from the air transport industry (RM252.0 million), other transportation services (RM107.0 million), and wholesale and retail trade (RM66.2 million). The findings complement earlier related studies that air safety rating downgrades could be a severe threat to sustainable economic growth.

Nur Syuhada Che Ibrahim · Mahirah Kamaludin · Nur Fatihah Shaari ·Jurnal Ekonomi Malaysia ·2019

Water service is usually taken for granted as important amenities with required levels needed, however little is known about how much consumers are willing to pay for particular water service levels. Improved water services should be based on the understanding built upon consumers’ choice and preferences. Thus, this study aims to estimate willingness to pay (WTP) of consumers in Terengganu, Malaysia for improvement in domestic water services. A choice experiment method was conducted to assess consumer preferences for water service attributes: i.e. water quality, water disruption, water pressure and water price. Primary data were collected using face-to-face interviews of structured questionnaire from a sample of residents in eight districts in Terengganu. A conditional logit model was carried out for data regression. The results showed signifcant willingness to pay (WTP) and the contribution of the level of education, age and income in supporting the specifc attributes of water services improvements. Identifying the attributes and their prices based on consumers’ preferences would help water provider to recognize and deliver preferred water service attributes, effective water tariff policy for cost recovery and water service sustainability to consumers.

Gabriel Hoh Teck Ling ·Institutions and Economies ·2019 ·JEL: P48; D23; D02; D62; H4; K11

Within a housing estate, neighbourhood public open spaces (NPOS) are typically governed and managed under the state property regime. However, issues of NPOS overexploitation, mismanagement, and underinvestment persist, which consequently compromise community neighbourhood sustainability. Underpinned by Lin Ostrom’s self-organising-and-governing collective action as a third alternative to addressing theneighbourhoodcommonsissues, this paper examines the applicability and feasibility of the modified Ostromeight design principles (DPs) to the institutional-social-physical system of local public open spaces (POS) andshowcaseshowthecurrentlocalstate-owned common-pool-resource (CPR) can potentially be shifted to a polycentric common property club good NPOS. The residential Country Lease (CL) NPOS and Native Title (NT) NPOS of two districts, namely Kota Kinabalu and Penampang in Sabah, Malaysia, were chosen. The local institutional-social-NPOS performanceis validated and assessed, using a systematic coding system that expresses the extent of absence and presence of DPs. The modified DPs are valid in curbing the existing local NPOS dilemmas as the former may minimise the enforcement costsand perverse incentives (opportunism) of the social-NPOS system, and they are likely to be feasibly adapted into the local NPOS system since the spatial and institutional attributes of some NPOS (especially CL NPOS) highly resemble and adhere to the modified DPs.Thisstudy provides awareness and insights to policymakers that the integrated, adaptive self-governing and organising collective action system is a potential solution, creating a liveable, resilient and sustainable community neighbourhood

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.

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.

Edward B. Barbier ·Economic Analysis and Policy ·2022

Rural transformation is a process of comprehensive societal change whereby countries diversify their economies and reduce their reliance on agriculture and other primary product industries. “Greening” rural transformation implies making this process of structural change and economic diversification less environmentally damaging, including reducing dependency on fossil fuels and carbon emissions. To be successful in Asia-Pacific emerging and economies, such a transformation must be compatible with the most important development goal, which is poverty alleviation. This includes reducing poverty levels as well as related objectives, such as increasing access to energy, safe water and basic sanitation. An additional policy challenge is that many developing and emerging economies in the region remain highly dependent on primary products for exports, GDP and employment, and these activities are accompanied by significant land use change, especially for tropical countries. In a post-COVID world, emerging and developing countries will need to find cost-effective and innovative policy mechanisms to achieve sustainability and rural transformation aims in the absence of significant infusions of additional financing from major economies and international organizations. This article identifies affordable policies that can yield progress towards several development goals together, rather than sacrificing some goals to achieve others. Three policies meet these criteria: a fossil fuel subsidy swap to fund clean energy investments and dissemination of renewable energy in rural areas; reallocating water subsidies to expand water supply and sanitation services for the rural poor; and using proceeds from a carbon tax to fund natural climate solutions.

Saizal Pinjaman · Mori Kogid ·Jurnal Ekonomi Malaysia ·2020

House prices in Malaysia are considered to be seriously unaffordable as the median all-house price is relatively higher than the annual median income. Although the issue of house prices is prevalent in the country, few studies have been done to determine factors that influence its movement. The current paper, therefore, attempts to investigate the causal relationship between macroeconomic variables and house prices in Malaysia by accounting for the existence of a structural break for the variables. It is identified that in the long run, macroeconomic variables are collectively significant in influencing house price movement while the individual impact of macroeconomic variables is varied. The rise in the level of interest rates, housing supply, and inflation will result in the decline in house prices while gross domestic product and local currency appreciation cause the price to increase. It was found that stock prices do not significantly influence house prices. Of all the macroeconomic factors analyzed, exchange rate fluctuations appear to be most significant in explaining the movement of house prices. In the short-run, all macroeconomic factors are individually significant in influencing house prices and it is also identified that house prices tend to move back into their long-run state after temporary macroeconomic shocks with the speed of adjustment around 5.2 percent quarterly. It is advised for the policymakers to constantly monitor the movement of macroeconomic factors and take necessary actions to cushion the adverse impact of the movement of house prices in the country.

Rusli Latimaha · Zakaria Bahari · Nor Asmat Ismail ·Jurnal Ekonomi Malaysia ·2018

This paper investigated the main factors influencing the basic needs budget in three major cities with a high cost of living in Malaysia. The analysis of variance tests result indicated that the Federal Territory of Kuala Lumpur, the state of Penang and Johor are places with high cost of living. The result also revealed that the middle income group are those who earn an income between RM2,992.50 to RM8,999 a month and the salaries of teachers were used as a proxy for the middle income groups. The Ordinary Least Squares (OLS) regression analysis indicated that there is a difference between the basic needs budget for single-adults and one-working parent families and furthermore, the basic needs budget in the cities of Kuala Lumpur, Johor Baharu and George Town is slightly different in each town. By and large, there is a difference in the basic needs budget between single-adults in Kuala Lumpur and Johor Bahru, and between two-working parent families among the three major cities. It is however interesting to note that there is no difference in the basic needs budgets among one-working parent families in these cities. The results also revealed that the total household income, family size, age of head of household, sex ratio, number of rooms, electrical appliances usage cost, broadband subscribers and number of privately owned cars all significantly influenced the basic needs budget regardless of which cities the respondents live.

Ahmad Fahme Mohd Ali · Naziatul Aziah Mohd Radzi · Ruzanifah Kosnin · Suchi Hassan · Siti Salina Saidin ·Jurnal Ekonomi Malaysia ·2021 ·JEL: B10, D15, D31, E21

The purpose of this paper is to investigate the consumption function among households in Kelantan Malaysia based on the Permanent Income Hypothesis (PIH). This study used secondary data obtained from annual reports, as well as from published and non-published data between 2000 and 2016. The ARDL bound testing approach to deal with cointegration was applied to estimate the long run correlation between the variables. Meanwhile, the error correction method (ECM) was used to determine any short run correlation. This study found a large disparity between the elasticity to consume from current income and the elasticity to consume from permanent income among households in Kelantan. Therefore, it can be concluded that in the case of Kelantan, the PIH is valid.

Nor Azimah Chew Abdullah (Universiti Utara Malaysia (UUM)) · Nazlina Zakaria (Universiti Utara Malaysia (UUM)) ·International Journal of Supply Chain Management ·2018

This study aims to investigate factors like driving anger, support for counter measures and situational factors affect drivers’ driving behavior. One important reason for studying driver’s aggression is that it has been cited as a frequent contributing factor in traffic collisions. The sample size was collected using convenience sampling as the actual number of driver who drove to work around all the targeted area cannot be identified by the Road Transport Department. The questionnaires were given to the driver who passed the targeted area during normal day. Further sample was taken from participants from commuting accidents and safety and health seminars. The data analysis was done using statistical analysis from the Statistical Package for Social Science (SPSS) version 20.0. Analysis of data was done using correlation and multiple regressions to test the hypotheses. The results revealed a positive relationship between driving anger, situational factors and driving behavior. Results of regression showed that driving anger, support for counter measure and situational factors influenced driving behavior. Thus, it is suggested for future research to identify more factors that will affect driving behavior. Thus, the study contributes by providing other potentials antecedents for aggressive driving which includes attitudes, styles and habits of driving.

Ahmad Fakrul Ramli · Zarina Ab Muis · Wai Shin Ho · Ahmad Muzammil Idris · Aminullah Mohtar ·Clean Technologies and Environmental Policy ·2019

The energy sector has grown significantly over the years, causing an increase in carbon emission that has led to serious global warming problems. Consequently, electric vehicles (EVs) have become a favourable solution in the transportation sector due to their green technology attributes. This paper aims to apply the Carbon Emission Pinch Analysis (CEPA) method to the transportation sector in Iskandar Malaysia. The modified CEPA method is applied by constructing a composite curve for transportation modes and the total carbon emission was plotted in order to study the minimum electricity requirement that needs to be generated to implement the use of EVs. Road and rail transportation were considered in the transport composite curve based on the current policies available and to achieve the new carbon emission target by the year 2025. The alternatives available to reduce carbon emission in Iskandar Malaysia include increasing public transport modal share; fuel switching from petrol and diesel to natural gas and biofuels; and increasing transport efficiency via plug-in hybrid and EVs. Four scenarios were established and evaluated based on economic and environmental aspects. As a result, Scenario 4 which considered all policies available (transport management, fuel switching and fuel efficiency) have showed the most promising fuel mix for future transportation demands. An estimated total amount of 0.25 TJ of electricity is needed for EV implementation with a total estimated cost of RM 1.3 billion. The total carbon emission for this scenario is 1101.96 kt-CO2. This research can benefit the Government, town planners, or policy makers, for preliminary energy planning.

Gabriel Hoh Teck Ling · Pau Chung Leng and Chin Siong Ho ·Economies ·2019 ·JEL: D01; D02; D23; D62; K11; O21; P25; Q24; Q26

There are severe issues of public open space (POS) underinvestment and overexploitation. However, few studies have been conducted on the property rights structure and its impacts on rural commons governance, specifically concerning local neighbourhood residential POS quality and sustainability. The social-ecological system framework and the new institutional economics theory were employed to examine the local diverse property rights system and its e_x000B_ects on the emergence of POS dilemmas. Rural commons covering neighbourhood residential Country Lease (CL) and Native Title (NT) POS from the districts of Kota Kinabalu and Penampang, Sabah Malaysia were selected. A mixed-method phenomenological case study, involving multi-stakeholders’ perspectives across public-private-user sectors, was employed. This study revealed four main interconnected property rights issues, including attenuated rights, incomplete rights, maladaptive rights, and security-based de facto perceptive rights, under the complex state-private regime, which incentivise the opportunistic behaviour of individuals in externalising POS commons dilemmas. The findings further inferred that the local diverse property rights issues and POS dilemmas caused, and are associated with, other rights issues and dilemmas, forming a rights-dilemmas nexus. Not only do the institutional failures actuate POS dilemmas, but the former also engender other forms of property rights failures, while the latter cause other POS dilemmas. This paper suggests policy and management insights to public o_x000E_cials, in which the importance of the institutional-social-POS behavioural factor and the re-engineering of POS governance via adaptive property rights realignment are emphasised.