Understanding Malaysian State Governments Fiscal Behavior: The Role of Intergovernmental Transfers

As of late, several state governments in Malaysia have been identified as having serious difficulty in meeting their financial needs, to the extent of the government being qualified as on the verge of bankruptcy. One of the explanations put forward is that state governments have been acting irresponsibly in managing finances. Thus, the question that ensues is: why do state governments behave in such irresponsible manner fiscally and financially in the first place? In this paper, we relate the financial difficulties faced by these governments within the confines of the institutional and political environment currently in place within the country. We will examine one of the institutional features of the intergovernmental system in Malaysia – the intergovernmental grants systems. More precisely, there are two hypotheses that will be tested in this research.. First, federal transfers may stimulate more spending by state governments which leads them to increase spending beyond the means available to them. Second, financial problems may be the consequence of a state governments’ incapacity to utilize tax capacities to the fullest, which in turn may be explained by the disincentives effects that are embedded (whether intended or not) within the transfer system.State Governments, Fiscal Behavior, Intergovernmental Relations

Learning from Taiwan's experience in industrial development

Taiwan's rapid economic growth and spectacular achievements is the result of the country’s long-term economic planning that began in the 1950s. During the period, Taiwan was only a small-scale agricultural economy. In 1952, agriculture's share of gross domestic product (GDP) in Taiwan was 32.2 percent, while industry’s share was 16.7 percent. However, in 1961, the agriculture's share fell to 25 percent, while the industrial sector's share rose to 23.7 percent. In 1962, industrial production contributed larger share of the GDP. Taiwan’s industrial development can be divided into four phases: primary import substitution (1952-57), transition and export promotion (1958-72), secondary import substitution (1973-80) and promotion of strategic and high-tech industries (1981-present). In this paper, the significance of capital, labour productivity and R&D for industrial development is also estimated by using a regression method

Malaysia-EU trade relationship and EU foreign direct investment in the Malaysian manufacturing sector

The European Union (EU) is a major trading partner of Malaysia.The EU is the third largest export market for Malaysia after the Association of South East Asian Nations (ASEAN) and the United States ((US).Regarding foreign direct investment (FDI), the EU has been the biggest foreign investor in the manufacturing sector in Malaysia for the past seven years.This paper focuses on the importance of trade in promoting FDI flows from the EU member countries into the manufacturing sector in Malaysia. The FDI panel data cover a period from 1980 to 2005.A log-linear model of trade-EU FDI is selected in which the explanatory variables are total trade and trade openness of the host country.The empirical results from regression suggest that the EU FDI in the manufacturing sector is significantly influenced by Malaysia’s trade with the EU member countries and the level of the host country’s trade openness.Positive relationships between the two variables and the EU FDI indicate that the EU FDI is a complement to Malaysia’s trade

Assessing the socio-economic benefits of public R&D activities in Malaysia

As an open economy, Malaysia needs to constantly generate and establish new sources of economic growth in order to remain competitive in the long run. This objective can be achieved if Malaysia is capable of increasing its capacity in the use as well as in the development of science, technology and innovation (STI) through research and development (R&D) programmes. Therefore, the Government of Malaysia has introduced various science and technology programmes for the purpose of encouraging R&D and technological innovation to acquire and to advance technological capability. The existence of such programmes shows that the Government is aware of the importance of R&D towards achieving a more prosperous economy and as such, it has played an active role in promoting R&D in the country. The Government-funded R&D programmes are established for the purpose of generating knowledge, creating wealth, and upgrading societal well-being. The involvement of the Malaysian Government in promoting R&D activities has started since the Fifth Malaysia Plan, 1986-1990 with the introduction of the Intensification of Research in Priority Areas (IRPA) grant. This study used econometric analysis in order to examine the extent to which R&D activities contributed towards social and economic development in Malaysia. Our findings suggest that R&D public investments are important to promote economic growth in a long-term period

ASEAN trade effect on Pakistan's economic development

Pakistan began to increase its focus on trade relations with ASEAN member countries in 1990s. The first ASEAN-Pakistan Joint Business Council Meeting held in Karachi in 2000 was an effort to seek measures to enhance trade between Pakistan and ASEAN. This paper examines the possibility that Pakistan’s bilateral trade relationships with ASEAN countries help contribute to its economic development. The analysis covers a period from 1976 to 2005. It uses a panel data on Pakistan’s gross domestic product (GDP) indices (in relative terms) and total trade with each founding member country of ASEAN: namely, Indonesia, Malaysia, Philippines, Singapore and Thailand. Results indicate a positive relationship between the bilateral trade relationships and Pakistan’s economic development. The significance of ASEAN trade effect is better seen in a long-term perspective. It should be realized indirectly through increasing national market size, technology improvements, increase in productivity in economic sectors, growth and expansion of local firms and other economic progresses in Pakistan

Foreign Direct Investment in Manufacturing Sector in Malaysia

This paper analyses the determinants of foreign direct investment (FDI) in the manufacturing sector in Malaysia from eleven countries during the period 1988 to 2000. The empirical results indicate that gross domestic product, lending interest rate, labour productivity, exports to home country and imports from home country significantly influenced the level of FDI inflows into Malaysia. However, exchange rate, exchange rate variation, wage and openness index were not important in influencing FDI.foreign direct investment, manufacturing sector, International Relations/Trade,

Awareness of private sector of the IMT-GT concept: Benefits and problems

This paper focuses on the private sector awareness of the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT)concept, the benefits that can be gained as well as the problems encountered in the economic cooperation of the area. Analysis was done using data collected from a survey of 157 private companies located in the three countries sub-regions. The survey was conducted in 1997. The results of the study show that 78.9 percent of the total respondents are aware of the existence of the IMT-GT concept. However, out of the total respondents who are aware, 29 percent are still unclear about its purpose. In terms of the companies' participation in the form of business venture in the subregions, the survey found that only 10.2 percent of the respondents are involved. Of those companies which formed this type of business after the establishment of the IMT-GT, the finding reveals that they faced problems of wage rate and regulation, each with 43.8 percent; language and culture as well as market potential, each with 31.2 percent; and bureaucratic and intra-structural problems, each with 18.8 percent. In fact, there are many potential opportunities available within the IMT-GT sub-regions that are in line with the Asian Development Bank (ADB) report. The trade and tourism projects are among those opportunities that have great potential in the triangle cooperation. This study, shows that the existing problems and constraints faced by private companies involved in the IMT-GT area have to be tackled seriously if the objectives of the regional cooperation is to be fulfilled

Regional distribution of foreign direct investment inflows in the manufacturing sector in Malaysia

This paper analyzes the regional distribution of foreign direct investment (FDI) inflows into the manufacturing sector across 13 states and one federal territory using data for the years 1990, 1995 and 2000. The empirical results indicate that expanding market demand for output, higher labor productivity, more socioeconomic development and increasing the area of industrial estates in the host state are significant determinants of FDI inflows in the sector. Of the four explanatory variables, FDI inflows are most sensitive to labor productivity. They are highly insensitive to the level of social and economic development of a state

Impak Program Bina Rumah (PBR) terhadap pembangunan sumber manusia: Satu tinjauan awal

Tujuan kajian ini adalah untuk meninjau impak Program Bina Rumah (PBR) terhadap Pembangunan Sumber Manusia (PSM) di Negeri Perak.PBR merupakan progam penyediaan rumah yang lebih selamat dan selesa bagi menggantikan rumah yang sedia ada atau daif kepada golongan miskin dan miskin tegar. Ia adalah satu usaha untuk meningkatkan kemandirian untuk memastikan mereka dapat bersama-sama menyumbang kepada pembangunan sumber manusia (PSM) Negara. Kajian mengunakan rekabentuk gabungan kualitatif dan kuantitatif.Responden yang akan terlibat adalah seramai 217 orang yang terdiri daripada penerima PBR bagi tahun 2012. Pendekatan kualitatif dilakukan untuk tinjauan awal dibuat dengan menggunakan kaedah temubual. Temubual separa struktur tersebut dijalankan terhadap Pegawai di Pejabat Daerah & Tanah, Ketua Penolong Pegawai Daerah (Pembangunan), Penolong Pegawai Daerah (Pembangunan), Pengurus Projek, Penghulu Kanan dan Penghulu Mukim.Protokol temubual yang telah disediakan bagi mengenal pasti isu dan persoalan kajian. Data-data temubual dianalisa dengan mengeluarkan tema-tema tertentu di dalam proses menyediakan soal selidik kepada penerima PBR.Dapatan awal tinjauan kajian menunjukkan pelaksanaan PBR amat memberangsangkan terutama dalam meningkatkan PSM dan kesejahteraan hidup golongan ini.Selain dari itu memperlihatkan pembentukan kemandirian yang baik dalam kalangan golongan ini untuk lebih berdaya saing, kompetitif dan berupaya memberikan sumbangan kepada pembangunan Negara.Implikasi kajian menunjukkan bahawa pelaksanaan PBR adalah satu usaha untuk meningkatkan PSM, mengeluarkan golongan ini daripada lingkaran kemiskinan dan mencipta masa depan yang lebih cerah bagi penerima PBR ini

Pull and Push Factors of Students' Enrolment in the TVET Programme at Community College in Malaysia

Malaysia aims to achieve a high-income economy by 2020. Hence, a highly skilled workforce is essential to achieving this goal through enhancement of its TVET graduates. This study is aimed at identifying the pull and push factors affecting student enrolment in the TVET programme at community colleges in Malaysia. This study employed a questionnaire to collect data. A total of 377 students from 11 community colleges in peninsular Malaysia were randomly selected as study sample. In this study, the mean score was used to determine the tendency of factors that influence student enrolment, while the Mann-Whitney U test was used to measure the difference in the mean score of the main factor. The findings show that all push and pull factors significantly influence student enrolment in TVET institutions. The study highlighted career prospect as the main pull factor, while the main push factors comprise students’ interest. The findings also show that there is a significant difference in the mean score of these two factors based on ethnicity. Therefore, students’ interest and awareness about the prospect of the TVET programme should be nurtured, especially among non-Bumiputeras, by the relevant parties such as government, teachers, parents, and the community so as to enhance students’ participation in the TVET programme