Leveraging trade opportunities with non-traditional partners: the Malaysia–GCC perspective

This paper examines the impact of economic factors on bilateral trade flows between Malaysia and the GCC through estimations of panel data using a gravity model. In particular, the paper compares the determinants of bilateral trade and trade potentials between Malaysia and two regions, the non-traditional Gulf alliance and the traditional ASEAN counterpart, to provide insights for leveraging opportunities through trade with the former. The gravity estimates imply the importance of size effects, similarities in GDP and differences in factor endowments as drivers of trade flows between Malaysia and the GCC, underlying the fact that inter-industry trade dominates these flows. The opposite holds in the case for the Malaysia–ASEAN trade. Though export potentials for industrial products per se appear exhausted in trade with both regions, the Gulf region provides opportunities for Malaysia to export quantity-based final (end-use) products and to diversify its exporting strategy away from quality-based parts and components

Types of foreign capital inflows and economic growth: new evidence on role of financial markets

This paper presents evidences on differential growth effects for three types of foreign capital inflows (foreign direct investment, portfolio equity and debt inflows). Two major results emerged from the application of threshold regression. First, we find strong evidence that the relationship between private foreign capital inflows and growth is characterised by a nonlinear relationship based on financial development. Second, the positive benefits of the three types of capital inflows are only found in countries having a level of financial market development beyond a threshold level. A deeper and more active financial sector is crucial for economic progress

Determinants of Infant Mortality in Older ASEAN Economies

Infant mortality in the Association of Southeast Asian Nations (ASEAN) has been declining, yet disparities remain between the nations. This paper therefore explores the determinants of infant mortality in the older ASEAN-4 economies, Malaysia, Thailand, Indonesia and the Philippines using an Autoregressive Distributed Lag (ARDL) Error Correction Model framework. The key findings of the study are: First, there is evidence of long-run relationships among infant mortality, education, female fertility, income and access to healthcare. Second, the determinants of infant mortality vary between countries. Female fertility emerged as the main determinant of infant mortality in Malaysia, while access to healthcare matter for infant mortality in Indonesia, and to a lesser extent for the Philippines. The income effect is significant for reducing infant mortality in Malaysia, while female education is important for Indonesia and Thailand. Third, the speed of adjustment of infant mortality rate is comparatively low in ASEAN-4

Regulatory incoherence in nutrition labelling of prepackaged food in ASEAN: What next?

Regulatory heterogeneity (Pettman, 2013; USAID, 2013; Noraini, 2014) is identified as a challenge for increasing trade, harmonizing standards, and ultimately creating a single integrated Association of Southeast Asian Nations (ASEAN) market, which was a major objective in the formation of the ASEAN Economic Community (AEC) in 2015. One diverse technical regulation that governs the prepackaged food and beverage (PPF) industry is nutrition labelling. The labelling regulations across the AMS rest on the different International Guidelines followed by Member countries when preparing national regulations. Kasapila and Sharifudin (2011) point out that for nutrition labelling, Singapore, Malaysia, Brunei, Laos, Vietnam and Cambodia have followed the Codex1 guidelines in preparing their regulations. Conversely, Thailand and the Philippines, to some extent have adapted the United States (US) nutrition labelling guidelines. Even within those Member countries that adopt Codex, there are differences in the regulatory regime. Malaysia made nutrition labelling mandatory for energy, protein, carbohydrate, fat and total sugars for foods that are commonly consumed, and for various types of beverages in 2005 (AFBA, 2014; Kasapila and Sharifudin, 2011; see also Pettman, 2013). Nutrition labelling is also mandatory in the Philippines and Thailand, for certain food items. For other ASEAN countries that follow the Codex guidelines, nutrition labelling is voluntary; if nutrition and/or health claims are made on food packaging or if the food is for a special purpose (diabetic and fortified foods), nutrition labelling would then be mandatory

Harmonization of food trade standards and regulations in ASEAN: the case of Malaysia's food imports

Regulatory heterogeneity continues to be identified as a challenge for food trade in the Association of Southeast Asian Nations (ASEAN) as the progress of harmonization of food standards among member states remains slow. Using a new and comprehensive database on nontariff measures (NTMs), this article examines the coverage, frequency, and diversity of NTMs for the food sector in Malaysia, and then estimates their impact on food imports from ASEAN. The food sector in Malaysia is found to be highly regulated, dominated by technical measures, namely, labeling for sanitary and phytosanitary and technical barriers to trade reasons, product quality, and restricted substances. The empirical results subsequently verify that, overall, technical measures are import restrictive. This article therefore contends that harmonization of food standards and regulations at the regional level is important for enhancing trade. However, building common ground for food safety regulations should be NTM- and sector-specific, to realize progress in terms of regulatory convergence. This is particularly true for the food sector, since complete harmonization is not practical and not politically feasible

Measuring technical efficiency of insurance companies using dynamic network dea: An intermediation approach

This study measures technical efficiency of the Malaysian insurance companies using a new framework for performance efficiency, built on the intermediation approach, by decomposing the complex service processes of insurance companies into two functional divisions, premium accumulation and investment capability. The study employs a dynamic network data envelopment analysis for performance evaluation of insurer (life, general and composite insurers) and ownership (local and foreign) types, spanning the period 2007–2014. The findings reveal a lack of efficiency in the investment capability function among local insurers as compared to their foreign counterparts. While the composite or non-specialized segment performs better in the investment capability function, the general segment achieves better efficiency in the premium accumulation function. The results suggest the high usage of input quantities and lack of total investment as key reasons for low efficiency, particularly among the local insurers. Implications for business excellence for insurance companies are further discussed

Defining potentials and barriers to trade in the Malaysia–Chile partnership

Purpose: The purpose of this paper is to investigate the potentials and barriers to trade in the Malaysia–Chile partnership. Design/methodology/approach: This paper estimates two-way export potentials from an augmented three-dimensional panel gravity model of bilateral trade between Malaysia and the Latin America and the Caribbean (LAC) region, spanning the 1990–2014 period. Utilizing interviews with government officials and industry experts in Malaysia and Chile, this paper also provides insights into market access issues. Findings: The empirical findings of this study suggest that Malaysia has trade potential in Chile, but Chile is “overtrading” with Malaysia. By major products traded, both countries are found to be “overtrading,” as the export basket remains concentrated in this partnership. Through the interviews, fewer restrictions are reported by the various stakeholders, as the extent of trade engagement remains somewhat low. The main challenge identified within specific sectors in both the countries relates mainly to procedures established to secure compliance with labeling regulations for food products. Research limitations/implications: The sectoral findings reveal that there is indeed scope for expanding exports beyond the current major products traded, particularly in base metal and scientific and measuring equipment from the Malaysia and Chile perspectives, respectively. Thus, product diversification matters to intensify trade cooperation between the two countries. Non-tariff measures need to be streamlined by both parties to ensure further product diversification to food trade, particularly for Chile. Originality/value: The limited literature on cross-regional trade within the broader framework of Southeast Asia and LAC only support the fact that potentials do exist but do not appear to provide much research evidence. Empirically, this paper will add to the existing literature on the potentials that hold in the Malaysia–Chile partnership. Further, a lack of adequate information remains on market access and other barriers in both the nations to facilitate decisions on trade opportunities. The findings of the study fill that vacuum of information pertaining to market access and trade facilitation through interviews with various stakeholders in Malaysia and Chile

Environmental goods and services sector in Malaysia: Regulatory shortcomings and policy constraints

Environmental regulation is a key driver for the growth of environmental goods and services (EGS), while trade facilitates the diffusion of these goods and services. There has been no shortage of initiatives to develop the EGS sector in Malaysia. However, some policy (non-market) failures are already observed in the governance of this sector. This paper identifies the inadequacies in the regulatory framework (environmental institutions and laws) for creating an enabling environment for the EGS sector. The paper also reviews the trade direction for EGS and delineates concerns related to the sectoral approach of policy making for the sector. The findings from the documentary analyses suggest that the laws and policies related to the EGS are fragmented as they come under the purview of different agencies. As a result of this regulatory incoherence, the coordination and enforcement are weak leading to low uptake of EGS. The absence of a national policy for EGS also obscures the trade direction for this sector. The policy priority and generous support accorded to the renewable energy segment, more specifically, are also a concern given the limited and uncertain role that this segment is expected to play in global energy use. © 2019, Faculty of Economics and Administration. All rights reserved

Measuring Human Capital in Small and Medium Manufacturing Enterprises: What Matters?

This study proposes a framework that quantifies and integrates both the tangible and intangible aspects of HC to comprehensively measure the overall level of human capital index (HCI) in small and medium manufacturing enterprises (SMEs). Data were collected from 100 SME experts through the use of questionnaires in two stages. The data collected were first, used for selection purpose, and second, for the prioritization of relevant dimensions and sub-dimensions of HC. The analytic hierarchy process was adopted to prioritize and assign dimension and sub-dimension weights to HC to derive the HCI. The results indicate that not all dimensions and sub-dimensions of HC are important for the HCI. Namely, the HCI can be best represented by 9 dimensions and 35 sub-dimensions of HC. The core dimensions are experience, skills, education, abilities and training. Indeed, within experience, the main sub-dimensions are work-related experience and organizational tenure. The results suggest the importance of experience relative to skills and education. The proposed framework can also be applied to derive industry specific HCI