Malaysian Exports Research Articles

Competitiveness of Malaysia: A Comparative Study

The objective of this paper was to study the competitiveness of Malaysia in comparison with some countries like Indonesia, the Philippines, Singapore, Thailand, and Vietnam. The study analysed the competitiveness of Malaysia in terms of four parameters viz. Global competitive index ranking; Total, labour and capital productivity; Foreign direct investment inflows, and Trade competitiveness in terms of the cost of production. It is found that the domestic cost of production of exports of Malaysia has become competitive in 2007 and 2009. The study shows that Malaysia’s competitiveness has improved especially in the later part of 2000. There is a need to improve the competitiveness of Malaysia by focusing on research and innovation which can be achieved through collaboration of research institutions and industry. Keywords: Malaysia, competitiveness, productivity, mergers and acquisition, price index. JEL classifi cations: F10, F13

Value vs Magnitude: Distinguishing Information Sources That Contribute to Malaysian Exporters’ Promotion Competency

Firms venturing abroad understand and rarely deny the significant role that information plays in export promotion. Nevertheless, the common misconception that can potentially threaten the business judgment of most exporters is that ‘the more information you know, the better it is for your firm’. Unbeknownst to them, it is the value (and not magnitude) of information that will contribute to the success of a firm’s ventures. In this paper, the authors attempt to illuminate if not identify the specific information sources providing valuable information that can successfully distinguish between high and low competency exporters. Data was derived from 104 Malaysian firms exporting to emerging markets in the Asia Pacific region. Results from the discriminant analysis revealed 9 information sources which can determine the competency level of an exporting firm. The findings are further elaborated in this paper.

Causal Links between Foreign Direct Investment and Exports: Evidence from Malaysia

Malaysia has encouraged foreign investment not only for its role in technology transfer but also for its contribution to Malaysian exports. Therefore, the aim of this study is to investigate empirically the causal relationship between FDI inflows and exports in Malaysia. The methodologies of stationarity of time series and the multivariate Granger concept of causality were employed to carry out the investigation. The finding that time series variables are cointegrated implies that there is a long term relationship between them. The results appear to support the effectiveness of the outward looking orientation policy deployed in this country.

On the stalling of the Malaysian industrialization project

In a recent article in this journal, Henderson and Phillips (2007) argue that Malaysian industrialization is ‘stalling’ because it is locked into low- to medium-technology operations. They attribute this to an affirmative policy that sidelined the development of small and medium-sized enterprises (SMEs) capable of benefiting from linkages with transnational corporations (TNCs) and an immigration policy that provided cheap foreign labour and weakened the pressure on firms to upgrade themselves. While not disputing these explanations, this paper shows that the evidence they provide is unconvincing and, sometimes, undermines their case. Their argument is further weakened because they fail to explain why the proportion of high-tech exports in total Malaysian manufacturing exports is surprisingly high, unlike that of an economy concentrating on low- or medium-tech production.

Revealed Comparative Advantage of Malaysian Exports: The Case for Changing Export Composition

Since 2000, Malaysian-manufactured exports performance has been declining. The downturn of the global electronic industry and the rise of China's economy are the two major causes of this decline. To improve export performance, Malaysia participates in multilateral, regional, and bilateral trade liberalization. The competitiveness of Malaysian manufactured exports can be improved by examining the pattern of revealed comparative advantage (RCA). Within the non-resource-based manufactured exports, Malaysia still has comparative advantage for electrical and electronic goods and machinery (its largest export item), even though it has been on a decline. Malaysia's export strength has also gradually shifted from non-resource-based to resource-based manufactured exports. The RCA estimates also suggest that trade liberalization must not only lower or eliminate tariffs on final products, but also reduce import duties if exports were to increase their competitiveness.

Summary of General Discussion on “Revealed Comparative Advantage of Malaysian Exports: The Case for Changing Export Composition”

Summary of General Discussion on “Revealed Comparative Advantage of Malaysian Exports: The Case for Changing Export Composition”

Comment on “Income Inequality in Malaysia”

Comment on “Income Inequality in Malaysia”

Skilled Labor Immigration and External Trade in Malaysia: A Pooled Data Analysis

AbstractThis paper attempts to further the immigrant-link literature by applying, for the first time, gravity models to Malaysia. Specifically the paper seeks to quantify the impact upon Malaysia's bilateral trade flows of ASEAN and non-ASEAN skilled immigration, and to identify the underlying mechanisms underpinning this relationship. The results indicate that skilled immigration positively affects both the imports and exports of Malaysia. Immigrant-link is stronger between Malaysia and ASEAN countries than to non-ASEAN countries. The magnitude of the elasticity with respect to trade is larger for imports than for exports. Skilled immigrants' demand for native products outweighs the business-links formed between Malaysian trading partners.

Is the Yen/Dollar Exchange Rate Really Responsible for East Asia's Export and Business Cycles? A Commentary on McKinnon and Schnabl (2003)

In a paper published in The World Economy, Ronald McKinnon and Gunther Schnabl claim that fluctuations in the nominal yen/dollar exchange rate are the principal causal factor behind the export and business cycles in East Asian countries (McKinnon and Schnabl, 2003). Their econometric work, however, suffers from at least two important difficulties. First, while McKinnon and Schnabl preclude industry shocks as an explanation for the East Asian countries’ macroeconomic fluctuations, cyclical fluctuations in the global electronics industry have a significant impact on their short-run export and output dynamics. Second, although McKinnon and Schnabl assume that the relative industrial competitiveness of Japan and other East Asian countries moves in tandem with fluctuations in the nominal yen/dollar exchange rate, the empirical validity of this assumption is not indisputable. Once these two issues are taken into account properly, it becomes very difficult to make a convincing case for the yen/dollar exchange rate being the main driver of East Asia's macroeconomic instability. A brief critique will also be made of another paper that has appeared recently in The World Economy (Doraisami, 2004), which models Malaysia's pre-crisis export dynamics using the nominal yen/dollar exchange rate as a proxy for the country's export competitiveness.

L’huile de palme dans le marché mondial : productions et échanges

World palm oil market had a huge development during the last 30 years. The most spectacular phenomenon is the very quick growth of areas, productions and exports of Malaysia and Indonesia. At the world level, this oil has supplanted soybean oil in the supply of many developed and developing countries to satisfy their needs of fats and oils for food and industrial uses. In many countries, specifically in Africa, this crop showed an important progression with the aim of supplying local needs. Being the crop that provides more oil by hectare that any other seed, in spite of remaining low yields, this production is in the logic of sustainable development, contributing to economic development of rural areas and limiting dependence on imports and price fluctuations of fats and oils world markets.

Export growth slowdown and currency crisis: the Malaysian experience

A slowdown in export growth occurred in all East Asian economies that were affected by the Asian currency crisis. Misaligned exchange rates have been widely cited as a cause of the slowdown. In the Malaysian context at least a vulnerability to the downturn in the electronic cycle could also be a major factor leading to poor export performance. Using the US/yen dollar rate as a proxy for exchange rate misalignment and US total new orders for electronics as a proxy for global electronics demand, cointegration analysis was used to establish the likely causes of a slowdown in Malaysia's export performance. Empirical results suggest that a unique long-run relationship exists between all three variables. The policy implications of these results including exchange rate monitoring and export diversification are discussed in the conclusion.

The influence of market orientation on marketing competency and the effect of internet‐marketing integration

The Internet technology has been recognised as a key business resource and is increasingly being used and integrated into firm’s marketing activities. This study explored the relationship between market orientation and marketing competency and investigated the role of the Internet marketing integration in the market orientation‐marketing competency linkage. From an analysis of a survey data from 47 manufacturing firms involved in exporting and 33 travel agencies, four dimensions – Providing Customer Value, Competitor Orientation, Management Commitment and Customer Retention were extracted from factor analysis result of market orientation. However, this study found that Competitor Orientation and Management Commitment influenced marketing competency of the firm. Compared to the previous study, the integration of the Internet marketing did not seem to moderate the influence of market orientation on marketing competency. In addition, the Internet‐oriented profiles of the Malaysian exporters and travel agencies were constructed using characteristics in terms of its size, age in operations, the importance of different regional market to the firm, level of market orientation, and market area responded, which can be used for future research.

Trade Causes of the Asian Crisis: The Malaysian Experience

Prior to the onset of the Asian financial crisis there was a deterioration in the external trade position of most countries that were affected by the Asian currency crisis. However, little is known about why this occurred. This paper aims to identify the causes of a slowdown in export growth in Malaysia. While misaligned exchange rates have been widely cited as a cause of the slowdown in East Asia; in the Malaysian context at least a vulnerability to the downturn in the electronic cycle could also be a major factor leading to poor export performance. Using the US/yen dollar rate as a proxy for exchange rate misalignment and US total new orders for electronics as a proxy for global electronics demand, cointegration analysis was used to establish the likely causes of a slowdown in Malaysia's export performance. The empirical evidence suggests that the coincidence of exchange rate misalignment with a downturn in the global electronics demand cycle was responsible for the sharp deterioration in export performance.

Malaysian financial system and the Asian financial crisis

The last decade has witnessed three distinct crises: 1992-93 European crisis, 1994-95 Mexican crisis and 1997-98 Asian crisis. The Asian financial crisis raised serious concerns about the vulnerability of the Malaysian financial system. Although the Malaysian economy as responded well to capital controls and other measures adopted by the government and Bank Negara Malaysia, concerns remain regarding their long-term viability. This paper attempts to explain the reasons for the success of the restructuring of the Malaysian financial system. In addition, the paper argues that, given the high level of competition faced by Malaysia's export oriented industries, especially from China, long term economic growth will require Malaysia becoming a regional financial centre. This would require Malaysia to remove all capital controls and allow its currency to fluctuate freely. Instead of relying on capital controls, the rate of accumulation of short-term foreign debt on be better controlled by a tax on short-term capital inflows.

Shocks to Malaysia's Exports: Temporary or Permanent?

ABSTRACT The export sector has been the primary source of growth and development in the Malaysian economy. However, a high degree of openness as well as dependence on a few product categories have rendered Malaysia vulnerable to external export shocks. In this paper, we use unit root testing to demonstrate that exogenous export shocks can have either a temporary or a permanent effect on the Malaysian domestic economy depending on their country of origin. The resulting merits of country-specific export policies are discussed.

The Stabilization of an Open Economy with Capital Controls: An Analysis Using Malaysian Data

The purpose of this paper is to analyze the effectiveness of capital controls and fixed exchange rates in improving economic welfare. We apply Malaysian data to our theoretical model and derive the following results for the period of our estimation. High exchange rate volatility negatively affects Malaysian net exports and real GDP. By stabilizing the exchange rate and recovering monetary policy autonomy, capital controls and fixed exchange rates can lead to lower values of loss functions. This beneficial effect is stronger, the more open the Malaysian economy.

SHIFTING EXPORT SPECIALIZATION AND THE COMPETITIVENESS OF THE MALAYSIAN MANUFACTURING: Trends and Analysis

This study provides an in-depth analysis of shifting export specialization at the Standard International Trade Classification (SITC) three-digit product category level and links this analysis to Malaysian export potential. The research uses the revealed comparative advantage framework to analyze the extent of export competition between Malaysia and other Association of Southeast Asian Nations (ASEAN) economies. It argues that the degree of competition among ASEAN countries will intensify with the implementation of the ASEAN Free Trade Area (AFTA) and the emergence of other low-cost producers in the region. It aims to explore how AFTA will in uence Malaysian manufacturing. In the presence of growing trade liberalization, competitive pressures, and the changing structure of world demand, this study calls for a reassessment of the factors that in uence Malaysia's export competitiveness. * * * * *

SHIFTING EXPORT SPECIALIZATION AND THE COMPETITIVENESS OF THE MALAYSIAN MANUFACTURING: Trends and Analysis

This study provides an in-depth analysis of shifting export specialization at the Standard International Trade Classification (SITC) three-digit product category level and links this analysis to Malaysian export potential. The research uses the revealed comparative advantage framework to analyze the extent of export competition between Malaysia and other Association of Southeast Asian Nations (ASEAN) economies. It argues that the degree of competition among ASEAN countries will intensify with the implementation of the ASEAN Free Trade Area (AFTA) and the emergence of other low-cost producers in the region. It aims to explore how AFTA will in uence Malaysian manufacturing. In the presence of growing trade liberalization, competitive pressures, and the changing structure of world demand, this study calls for a reassessment of the factors that in uence Malaysia's export competitiveness. * * * * *

Chapter 3 Toward Continuous Competitiveness: Targeting Malaysian Information Technology (IT) Output ‐ Macro Perspective

In the Theory of Continuous Competitiveness (CC) developed in Chapter 1, we specified two sufficient conditions, one of which, PSPG Ratio, is found to integrate IMP2 [Industrial Master Plan 2] strategic thrusts 1 and 2. Customized hitech products (PS: Performance‐Specific products) are first demanded in small quantities in Country XYZ. In a few months, as demand increases, the PS products will be offered as PG (Performance‐ General) products of mass manufacture in Countries LMN, PQR, etc. The PSPG Ratio calibrates CC. To achieve CC, Malaysia has to decide whether, emulating the experience of developed countries, the share of manufacturing in GDP should be 30%, instead of the 38.4% projected for the year 2005. Similarly, Malaysia has to decide whether the Services Sector should be 48.4% of GDP as it is projected to be in the year 2005. Even Don Tapscott who swears by the inexorable convergence of what we have called 3C (computer, communication, content) industries, says that Services are not the source of income: “The planet, and even the Western World, still relies on agricultural and industrial production for the creation of wealth and the meeting of basic human needs. You can't eat or live on information.” If nearly half of Malaysian GDP is going to be not the means of production, but the means of consumption, it behooves us to find a viable means of production. We examine Information Technology (IT) as a candidate means of production. IT Industry is half Products and half Services. What should be the nature and magnitude of Malaysian IT products? If we keep the manufacturing share of GDP at the norm of 30% experienced by developed countries, that would release 8.4 percentage points of GDP from the current projection for the year 2005. Similarly, if we reduce the GDP share of Malaysian Services Sector to 40%, that would release another 8.4 percentage points. If we assign the former to IT Products, and the latter to IT Services, each should have a value of RM 36.2076 million in current prices in the year 2005. The RM 36.207 million in IT Products should generate RM 128.4 billion in IT exports in the year 2005, or each RM worth of IT products should generate RM 3.55 in exports. If domestic consumption is to be a third as much as the exports, each RM of IT products should generate RM 1.18 for domestic consumption. Each RM of IT should thus produce (3.55 + 1.18=) RM 4.73 for exports and domestic consumption. IT is also expected to be the engine of development. Based on the growth of GDP between 1995 and 2005 in the IMP2, the IT Sector should generate 50 sens in the rest of the economy for each RM of IT. Thus, each RM in IT Products should generate (4.73 + 0.50=( RM 5.23 (rounded to RM 5.00) in the year 2005. We are talking of new machine‐producing (cloning) IT machines worth 60% of 1995 Malaysian exports of semi‐conductors, computers/peripherals, and consumer electronics as the necessary stock of IT capital in the year 2005, each unit of which is to produce five times its value in output in the year, for a start.

Who Pays for Protection in Malaysia?: A New General Equilibrium Approach

This paper uses a simple general equilibrium model to isolate the transfer effects resulting from protection in Malaysia. Ignoring the deadweight losses associated with protection, the model uses the concept of true protection to con struct a transfer matrix which shows how income is transferred among various sectors of the economy. The evidence suggests that it is only the exporters who pay for protection. The cost to Malaysian exporters was about 2.56 percent of GDP in 1989.