CRITICAL FACTORS OF THE NATURAL RUBBER PRICE INSTABILITY IN THE WORLD MARKET

Purpose:  Natural rubber (NR) production has a long history and has been contributing as one of the most important economic sectors in Malaysia recently. In enhancing the Malaysian rubber economy, it is crucial to find a balance between supply-side and demand-side considerations in order to stabilize the NR price in the worldwide market.  This has raised the motivation and objectives of this research is to investigate the critical factors affecting the NR price instability in the world market, and to estimate and predict the NR price instability and to examine the most related factors that influence the price model by using ex-post and ex-ante forecast analysis.  Methodology:  Number of profound research methods Vector Error Correction Method (VECM) by Gujarati and Porter; cointegration rank test by Dwyer; and ex-post forecast method by Pindyck and Rubinfeld have been utilized in this study. The data used from 2008 January to 2016 December: monthly time series data.  Results: The results show that the explanatory variables of NR production, total NR consumption, crude oil price, and Shanghai NR price indicate a significant relationship with Malaysian NR price (SMR20), on the contrary, the exchange rate is not significant.  Implications: The outcome of the study is closely related to the current situation of the exchange rate appreciation in the late of 2017 that may benefit the decision-making process of economic planning for the NR production stability, and price in the worldwide NR market as well

Examining between Exchange Rate Volatility and Natural Rubber Prices: Engle-Granger Causality Test

There are two objectives of this study, first, it is to determine the impact of exchange rate volatility on Malaysian natural rubber (NR) prices of (SMR20 and RSS4); second, it is to forecast a short-term exchange rate (ERP) of Malaysian Ringgit (RM per USD) and NR prices strongly represented in the Malaysian NR market. The granger causality test is first analyzed using the vector error correction model (VECM) with the more efficient Engle-Granger causality procedure. Both short-term ERP and NR prices ex-ante forecasts are tested using Pindyck and Rubinfeld's procedures. The result shows the RSS4 NR price Granger-causes the SMR20 NR price and also ERP with unidirectional causality relationship. Both ERP and NR prices forecasts would be on a slightly increasing trend from January to June 2016. It was due to government and traders changing their behaviour by increasing domestic consumptions for the stabilization of the NR supply-demand balance. Keywords: Exchange Rate Volatility, Forecasting, Malaysian Natural Rubber Price JEL Classifications: C1, C2, D4, F31, F3

Board Mechanisms and Performance of Government-Linked Companies on Bursa Malaysia

AbstractAs the major shareholder in the Government-Linked Companies (GLCs), the Malaysian Government embarked on the transformational initiative of the GLCs. One of the main initiatives was to enhance board effectiveness through its Green Book which initially launched in 2006. Hence, this takes an interest in research to explore whether the listed GLCs’ performance are enhanced through different board mechanisms. Our aim is to probe the relationship between board mechanisms and performance (as measured by Share Price Returns and Cash Flows) of 16 GLCs listed on the Bursa Malaysia from 2007 till 2012. Both cross-sectional and panel data analyses have been carried out for this purpose. However, the results revealed that only the firm size has significant positive impact on the Cash Flows over the 6 years basis. None of the board mechanisms variables have significant relationship with the performance measurement over the 6 years analysis