UNIVERSITY OF

TECHNOLOGY MARA
SEREMBAN 3

ECO 415 ECONOMICS

TITLE: INSTILLING ECONOMIC NATIONALISM

NAME

GROUP

1. KHAIRUL AMILLIN ROZMAN

2015896558

2. MUHAMAD NUR ARIF BIN AHMAD

2015239208

3. AHMAD THAWRIQUE BIN MOHD TAUFAN

2015859598

S3 CS 248 3B2

LECTURER :

AZIZAH MOHD AMIN

SUBMIT ON :

27 NOVEMBER 2015

INSTILLING ECONOMIC NATIONALISM

A moderating global economy and its implications on our economic performance, as well as the
depreciating ringgit, suggests that Malaysians need to take up the challenge to address the
implications of such developments seriously.
The declining ringgit is the effect of global market operations upon the United States dollar,
resulting in the strengthening of the latter, we may have to take this as a given, and the way
forward, it seems, is to adjust to this development, or even take advantage of it.
A depreciated currency should promote exports and curb imports. Depreciation makes exports
competitive or cheap, and imports more expensive. Thus, we must cut our imports of goods and
services and push our exports hard. I am not surprised that many of our exporters are happy with
the declining ringgit because their earnings in US dollars, when converted to ringgit, are
significantly more. The only setback is the prevailing low commodity prices, but this has nothing
to do with the ringgit.
Our tourism industry and its related supply chain must work hard to promote inbound tourism,
while at the same time, soft-pedal on out-bound tourism, for which we are all famous for. Rich
Malaysians must spend their money on local products and services, including visiting local
tourist destinations of which we have many good ones, such as Langkawi Island, Sipadan Island,
Mulu caves, Frasers Hill, the National Park, and the Royal Belum Forest. Indeed, some of these
sites are favourites of foreign tourists yet many of us have yet to visit them. I have even met
Americans making an annual pilgrimage to do bird watching in Frasers Hill.
For sure, even Muslims who are privileged and inclined to do the pilgrimage (haj and umrah)
frequently should have second thoughts doing them this year and the next, so as not to contribute
to the selling of the ringgit.
What I am suggesting is that we should have some economic nationalism in us rather than
politicise the falling ringgit, as the failure of the central bank to stop its further slide. There is so
much Bank Negara can do to intervene in the money market which, on a global scale, involves
trading of trillions worth of currencies. Involvement and intervention by the central bank means
selling our hard-earned foreign reserves (now worth over seven months of retained imports) to
support our ringgit.
Additional measures have been put in place in the past, such as cutting government procurements
involving large imports of goods and services. Let us do it again, even involving products for our
defence and security services. We are a peace-loving nation.
Source: http://www.nst.com.my/news/2015/09/instilling-economic-nationalism?m=1

1. Define inflation and name the economic indicator used to measure the inflation rate.
Inflation is a persistent increase in the general price level of goods and services in
the economy.
Inflation is measured using the CPI: an index that measures changes in the prices
of a consumer basket.
2. What is the way suggested by the article in order to take advantage of depreciated
economy? Explain why.
Promote exports and curb imports.
Because exports become cheaper and import become more expensive.
3. List the ways suggested in paragraph 4 to increase Malaysias economy.
Tourism industry must work hard to promote inbound tourism.
Rich Malaysians must spend their money on local products and services.
4. Briefly explain 2 types of inflation.
Demand-Pull inflation
Inflation that caused by increases in aggregate demand
Cots-Push inflation
Inflation that caused by continued decrease in aggregate supply
5. Depreciated currency is the effects the inflation rate. Suggest two (2) measures to reduce
inflation.
Using contractionary monetary policy. To reduce money supply.
Using Open Market Operation (OMO) by selling government bonds and security
in order to increase money supply to control inflation.
Increase the interest rate to discourage banks from excessive lending. This can
increase money supply to control inflation.