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STUDENT ID : 2014680456
CLASS : EH241 5A




The word economy comes form the Greek word oikonomos, which
means one who manages a household (Mankiw, 2008). There are 2 sub
section in economy which are Microeconomics - dealing with individual
human behavior in making rationale decisions and Macroeconomics looking at the economy as a whole (aggregate) and bringing in
government as a main layer in making economic policies to develop the
economy of a nation.
Malaysia is renowned throughout the world as one of the largest
economy power in South East Asia just behind the populous Indonesia,
Thailand and Philippines. In recent years, albeit the scandalous economy
Malaysia faced, it is still one of the largest power in South East Asia.
Malaysias economy is the 35th largest economy in the world which shows
how developed Malaysias economy is. Malaysia's economy is one of the
most competitive in the world, ranking 14th in the Ease of Doing Business
Index for 2015. Malaysian economy is highly robust and diversified with
export value of high-tech products in 2014 stood at 63.3 billion USD, the
second highest after Singapore in ASEAN. Malaysia exports the second
largest volume and value of palm oil products globally after Indonesia.
From here we could see that Malaysia is a prosperous country with
good economy and good people. A diversity in the races of Malaysia have
largely contributed to this. Malays, Chinese, Indian and even foreign
workers did a fine job in raising this country economy.


It is said that Malaysias economy is steadily decreasing albeit the
success in economy. This is generally cause by the fall in commodity
prices, a strong dollar and the deterioration of balance sheets in both the
private and public sectors. According to IMD World Competitiveness
Center, Malaysia slipped to 19th places in 2016 from 14 th place in 2015 in
the World Competitiveness ranking. Although Malaysia is still in the top 20
ranking, with its current course right now, Malaysias economy will
probably steadily drop throughout the years. To prevent this to happen,
every people and organization have their own role to fulfill.
Heightened volatility in the financial markets, declining commodity
prices, strengthening of the US dollar and the slowdown in China are
anticipated to have direct and indirect impacts on the economy primarily
through trade and financial channels.
However, is Malay crucial in developing this country? Due to a large
amount of foreign worker and the success of the Chinese and Indian,
Malay people success have been largely overshadowed. If that is not
enough, most people in Malaysia largely underestimate Malay success and
looks only toward the failure Malay people shows. The best example came
from our own leader of Malaysia.
Opinions comes in many form. Some says that Malay contribute
nothing and some says Malay contribution is always there, only it is
overshadowed by a larger success by different people. Most people have a
steady view of having rational opinion in Malay contribution to economy.
A research is done based on the contribution to economy based on
races in Malaysia which is Malays, Chinese, and Indians. The results?
Malay leads by almost half of Chineses contribution whereas Indians
contribute lower than that (Figure 2). From here we can see that Malay are

crucial in Malaysia economy but of course this research was done in 2014.
How would the data would have been now we may not know. However
there are people starting to say Chinese have been better.

In the present, Malaysia relies too heavily on foreign workers. Although
it does affect the countrys economy positively, relying too much on them
will destroy our identity. Malaysia initially set 15% of Malaysias population
as the maximum amount of foreign workers in the country which is
roughly equal to 2.1 million people. However, a recent research proves
that the amount of foreign worker in Malaysia roughly estimated to 43% of
the people in the working industry which is a dangerously high amount of
number to the locals of Malaysia. This shows how desperate the
Malaysian government currently is in increasing the Malaysias economy.
When the government froze the import of new foreign workers, some local
furniture factories had to wind up, owing to the labour crunch. It is
advisable to people in the working industry to reduce the amount of
foreign worker to further develop the countrys local.However, we cannot
deny the positive contributions of these workers to the country's economy,
but the unpredictable government policies have made it very difficult for
employers to map out their long-term hiring policies. This, coupled with lax
enforcement and the absence of an effective mechanism to manage
migrant workers, has resulted in millions of foreigners outstaying their
employment contracts.

In recent months, Malaysias country leader is hugely involved in a

scandalous amount of money which relates to the countrys economy.
Although it seemed that it may no be directly related to it, however, recent
researches shows that tourists and companies avoid Malaysia because of
its ridiculous scandal that has been going around which results in the
business and tourism industry to deteriorate. News of it also has been
going on in United States of America and South Korea which brings bad
name to Malaysia. Investors have been pulling funds, the stock market
sliding and the currency at its lowest point against the dollar since 1998.
Those pressures have pushed key foreign policy issues, including major

trade negotiations and migrant policy, to the sidelines. Although this may
seemed pretty rude or unwise, my opinion stands toward the people who
wants to change the current country leader. Although the problem may
still remain, at least the amount of scandal Malaysia face in its economy
sector is reduced albeit a bit.

Government Service Tax (GST) largely affect the economy. The 6% GST
decision few years ago has caused an uproar toward the people of
Malaysia especially among the students and the poor people. After the
GST is implemented, the current economy shows no difference when
compared to before the GST is implemented. Therefore it is wise to undo
the GST rate back to zero. The global market is stuck in an unsustainable
situation, i.e. depended on the US economy as the sole and final consumer
destination. There will only be limited growth the export, if there is any.
Malaysia needs to quickly arrest the economic slide by ensuring that there
is sufficient domestic consumption at the bottom. With the ringgit sliding
rapidly, imported inflation is going to result in higher prices soon. One
intervention to ensure that domestic consumption would not collapse is to
abolish GST or at the least set it at zero rate for a period of a year before
further review.

There have been a few cases of crony projects that have been
circulating in the country with few of them has been proven directly
related to the government. These projects has been reported to rob
people of their houses and their money while giving out unreasonable
excuse. These projects must be put to a halt as soon as possible if not
immediately. The governments past responses to a crisis would be to
inject more cash into the hands of the cronies for more construction
projects. government-driven construction projects usually hire mostly
unskilled foreign labourers with very little spillovers to the wider economy.
There are other ways to boost the economy.

Malaysia has faced significant issues before and pundits who predicted
doom and gloom were proven wrong. We continue to be optimistic about
the long-term outlook, but hope the government will take a firmer position
regarding any tendency to move away from being a moderate Muslim
country and will work hard to ensure it retains its positive image as an
inclusive, multiracial, multicultural society.

All in all, Malaysia is a great country with a good economy. Most of its
world rating is among top 50 in the world with some in the top 20.
Although in recent month shows the decline in the currency of ringgit,
Malaysia remains strong among the powerhouse of other country
economy. Boosting income of the lower income group to boost domestic
consumption when export will be limited would be an important strategy
to survive the current crisis. Boosting income at the bottom level is so
important because Malaysias household debt ratio is already very high
and domestic consumption must be pushed without more debts being
accumulated. We are in uncharted waters. Malaysia needs competent
political and economic leaders with integrity to sail through the tough