Minimum wages in Malaysia: concept and application

Whether to adopt a statutory minimum wage has been debated in Malaysia for a number of years, even after the enactment of the National Wages Consultative Act 2011. Despite the fact that the real labour productivity of Malaysia grew faster at 6.7 per cent between 2000 and 2008 compared to a mere 2.6 per cent increase in average wages, many employers still object to its implementation. This paper shed more light to the concept behind a statutory minimum wage policy and its application in the case of Malaysia. Its rationale and justification are reviewed and analysed. The dimensions considered determined the objectives, coverage and criteria for setting the minimum wages. The objectives of a minimum wages policy include addressing efficiency issues in labour markets, promoting productivity growth and reducing poverty or inequality. While the Malaysian government’s concern to improve the living standards of the poor and vulnerable is valid and merit serious attention, it is not the most appropriate instrument to address poverty and inequality. Besides that, many of the poor people are unemployed or employed in the informal sector where wages are not binding. Hence, the main justification for introducing and implementing a minimum wage policy in Malaysia would be to address inefficiencies in the labour markets that preclude competition, which can lead to the suppression of wages, especially the low-skilled and low-income workers. Comparisons are made among countries that have implemented the statutory minimum wages policy. This will help many to understand the common and different features that Malaysia has with them

Determinants of FDI inflow in Asia / Anita Hasli, Catherine S F Ho and Nurhani Aba Ibrahim.

The research analyses the determinants of FDI inflow in Asia for the period 1993-2013 and is based on the fixed effect model. The macroeconomic factors included are lending rate, GDP per capita, trade openness, debt, exchange rate, money supply and unemployment rate. The country specific factors included are adult literacy rate, gross fixed capital formation, domestic credit provided by the financial sector, environmental pollution and natural resources rents. The study applies panel unit root tests, panel cointegration analysis and panel regression analysis based on the fixed effect model to ascertain the significance of macroeconomic and country specific factors on FDI inflow in Asia. The study found that lending rate, trade openness and money supply have a positive significance to FDI per capita whereas debt, unemployment rate and environmental pollution have a negative significance to FDI per capita

Repayment behaviour of development financial institution borrowers / Chong Fen Nee, Rosita Haji Suhaimi and Nurhani Aba Ibrahim

This study investigates the repayment pattern of Development Financial Institutions borrowers in Sabah and Sarawak. Additionally, factors such as demographic profile, loan characteristics and borrower-lender distance are examined to determine their relationships with repayment performance. A total of two hundred and forty-two queationnaires were collected during the study period and used for the analysis. Findings showed that 43% of the respondents default their credit obligations while the remaining take between one to six months to settle their monthly arrears. When the cross-tabulation analysis was used to identify the common demographic characteristics of the defaulters, it was found that most of the defaults are male, attain a lower level of education, have a higher total number of dependents and self employed. An empirical analysis on the impact of the factors affecting repayment performance of Development Financial Institutions using logistic regression analysis suggested that Development Financial Institutions should manage the borrower-lender distance actively and impose a collateral requirement in order to mitigate default peoblems

The Effect of Financial Crisis and Macroeconomic Factors on FDI in Developing Countries

Developing countries needs FDI to be at par with the progress of developed countries. The dearth of study on the effects of financial crisis on FDI justifies the objective which is to examine the potential effect of financial crisis inclusive of macroeconomic factors as control variables on FDI in dataset 23 developing countries for the period 1993-2013. This study includes descriptive analysis, correlation test, stationary test and regression analysis. The random effects generalized least square (GLS) estimator is used in the regression to examine the potential effect of financial crisis and macroeconomic factors on the inflow of FDI. Foremost, the US financial crisis has a positive significance to the inflow of FDI which validates Krugman's theory on fire-sale FDI. However, country specific economic recession, lending rates and natural resources discourage inflow of FDI. Nonetheless, trade openness, domestic currency, money supply and domestic fixed investment encourage FDI in developing countries. Keywords: Foreign Direct Investment; financial crisis; REM; developing countries JEL Classifications: C33; F21; G01; P5

Repayment behavior of development financial Institution borrowers/ Chong Fen Nee… [et al.]

This study investigates the repayment pattern of Development Financial Institutions borrowers in Sabah and Sarawak. Additionally, factors such as demographic profile, loan characteristics and borrower-lender distance are examined to determine their relationships with repayment performance. A total of two hundred and forty-two questionnaires were collected during the study period and used for the analysis. Findings showed that 43% of the respondents default their credit obligations while the remaining take between one to six months to settle their monthly arrears. When the cross-tabulation analysis was used to identify the common demographic characteristics of the defaulters, it was found that most of the defaults are male, attain a lower level of education, have a higher total number of dependents and self employed. An empirical analysis on the impact of the factors affecting repayment performance of Development Financial Institutions using logistic regression analysis suggested that Development Financial Institutions should manage the borrower-lender distance actively and impose a collateral requirement in order to mitigate default problem's

The significance of R&D investment and ICT usage in generating high income economy: an analysis on selected ASEAN countries / Chong Fen Nee ... [et al.]

The main purpose of this study is to explore the impact of R&D investment on the proxies of income or wealth among ASEAN countries. Gross national income (GNI) per capital will be used as proxy of wealth in this study. This study is of significant because in order to cope with the globalization and transforming into knowledge based economy both the government and industries have beefed up efforts in R & D. Nevertheless, prior research only examined the significance of R&D investment at the firm rather than country level. Some believe that it enhances corporate growth while other found it generates higher income much later. In terms of methodology, multi-factor model will be employed as it is a better alternative comparing to the CAPM and APT in explaining variations in stock returns. Relevant data will be extracted from secondary resources. Furthermore, time series econometrics will be used to analyze and provide results to the objectives proposed in this study. Apart from providing additional information to the practitioners to facilitate better decision making in the future and enriching the existing literature to pave ways for more researchers to the academics, this study also intends to contribute useful input for future policy formulation

Does size matter in determining the performance of manufacturing industries?

This paper examines the effect of size on the performance of industries within the economy. In a panel setting, it applies the augmented Cobb-Douglas model used by Mankiw et al. (1992) on 73 manufacturing industries in Malaysia for the period 1981-1999. Fixed effect is applied to levels and first difference data. Different proxies for size are used to see if it makes a significant difference to the results. Results show that: (1) annual sales turnover is a better measure for size because it is not biased to capital intensive and labour intensive industries, (2) only the medium and large industries are found to have cyclical pattern, and (3) the change in the size of the large industries seems to be able to explain more of the variations in output per labour compared to the medium and small ones

The dynamics of productivity of the manufacturing sector

This dissertation examines various determinants of productivity. First, it examines the effect of size on the performance of industries in Malaysia. Different proxies for size are used to see if it makes a significant difference to the results. Results show that: annual sales turnover is a better measure for size because it is not biased to capital intensive and labour intensive industries; the change in size of large industries seems to be able to explain more of the variations in output per labour compared to the medium and small ones. Second, it examines whether research and development has a long run relationship with total factor productivity of the manufacturing industries in the UK. R&D are decomposed into R&D capital by the industry's own enterprises, other industries' enterprises, and foreign R&D capital. Panel unit root and panel cointegration tests are performed on a panel of 20 industries during 1980--2002. I find R&D and productivity to be cointegrated in the long run. The elasticities of productivity with respect to these R&D variables show that the industries significantly benefit from other domestic industries and foreign R&D but not their own. Third, it re-examines the direction of the causality between exports and productivity for Malaysian industries by using the error-correction and Granger causality models. By including other variables like size and capital intensity in my models, I have captured the indirect effects besides the direct effects between exports and productivity. I find that these industries support the export-led growth hypotheses, not the growth-driven export hypothesis. However, a further look into the results indicates that there is a possibility of an indirect causality from productivity growth to export through size, as productivity causes size, and size in turn causes exports

CAUSALITY BETWEEN EXPORTS AND PRODUCTIVITY IN THE MALAYSIAN ECONOMY

Empirical evidence linking exports and productivity growth has been mixed and inconclusive. This study re-examines the direction of the causality between them for Malaysian industries by using the error-correction mechanism and Granger causality models. In a panel of 63 manufacturing industries, for the period of 1981 to 1999, it is found that these industries support the export-led growth and the growth-driven export hypotheses. A further look into the results indicates that there are possibilities of indirect causalities between productivity growth and export through size and capital intensity, as both exports and labor productivity have bidirectional causality with size and capital intensity.Exports, productivity growth, causality, panel data, manufacturing industries, C33, D24, L60, O40