INTRODUCTION

What is economy?
An economy is an area of the generation, appropriation, or exchange, and
utilization of products and administrations by various agents in a given
topographical area. Comprehended in its broadest sense, 'The monetary is
characterized as a social area that accentuates the practices, talks, and material
expressions connected with the generation, use and administration of resources.
Economic specialists can be people, organizations, associations, or governments.
Financial exchanges happen when two gatherings consent to the worth or cost of
the executed great or administration, ordinarily communicated in a specific cash,
yet money related exchanges are just a little part of the monetary space.
Financial movement is prodded by generation which utilizes common assets,
work, and capital. It has changed after some time because of innovations ,
advancement , extends markets, expansion of business sectors, specialty markets,
builds income capacities, for example, that which produces licensed innovation and
changes in modern relations (for instance, kid work being supplanted in a few
sections of the world with general access to training).
A given economy is the result of a set of processes that involves its culture,
values, education, technological evolution, history, social organization, political
structure and legal systems, as well as its geography, natural resource endowment,
and ecology, as main factors. These factors give context, content, and set the
conditions and parameters in which an economy functions. In other words, the
economic domain is a social domain of human practices and transactions.

What is Malaysia Economy?

Malaysia has a recently industrialized business sector economy, which is
generally open and state-arranged. The economy of Malaysia is the fourth biggest in
Southeast Asia, after the significantly more crowded Indonesia, Thailand and the
Philippines, and 35th biggest on the planet. Malaysia is additionally the third
wealthiest in Southeast Asia by GDP per capita values, after the city-conditions of
Singapore and Brunei. Malaysia's economy is a standout amongst the most
aggressive on the planet, positioning fourteenth in the Ease of Doing Business Index
for 2015. Malaysian economy is profoundly hearty and broadened with fare
estimation of innovative items in 2014 remained at 63.3 billion USD, the second
most elevated after Singapore in ASEAN. Malaysia sends out the second biggest
volume and estimation of palm oil items all inclusive after Indonesia.
In spite of government strategies to expand pay per capita with a specific end
goal to rush the advancement towards high salary nation by 2020, Malaysia
development in labor profitability and wages has been moderate, falling behind by
the OECD standard. Scholastic examination paper from IMF and World Bank more
than once called for auxiliary change and indigenous development to move the
nation up the worth chain of assembling to permit Malaysia get away from the
present center wage trap. Because of substantial dependence on oil sends out for
focal government income, the money vacillations has been exceptionally
unpredictable noticeable amid the supply excess and oil value breakdown in 2015.
However government had venture up measures to expand income by presenting the
broadly disliked Government Service Tax at 6% rate to diminish shortfalls and meet
elected obligation commitments.

An Outline Of Malaysia Economic Growth

After declining strongly under the influence of the global crisis, the growth
rate recovered as early as 2010 (7.2%), driven by dynamic household consumption
and improvements in domestic investment. In 2015, growth was dynamic with an
estimated rate of 4.7%, thanks to the deepening of regional integration, economic
diversification and fiscal reforms. The drop in oil and commodity (palm oil) export
prices led to a downward revision of the growth predictions for 2016, which is now
expected to reach 4.5% of the GDP. Malaysia has one of the highest standards of
living in Southeast Asia and a very low unemployment rate (3%).

DESCRIPTION OF THE SITUATION

Due to the fall of the oil prices at the international market and the declining
of Ringgit values give negative impact towards Malaysias economy growth and
most of the Malaysian has lost their job for the past year especially the Bumiputera.
Boboi aged 26 years and working with the oil and gas industry over the past
three years. Six months ago, he was laid off because the company wants to save
operating costs. Up to now he is still unemployed and depend on his wife's salary as
a teacher.
Amira also has a year end of employment in the field of physiotherapy but is
still unemployed. He has applied many times but there is no vacancy even applied
in the process of reducing staff.
That's an example of some of the stories of Malaysians who are struggling to
find employment due to the economic climate in Malaysia is increasingly daunting.
Their situation is different but their problem is the same - there are no jobs.
While the government often says the economy is good and under control, but
the actual situation is the opposite. Everywhere, many factories and companies
involved in oil and gas industry has stopped their operation.
In the industrial area in the Kemaman, for instance, many companies and
factories have stopped their operation over the past year and are becoming more
common , because there are no new projects under Petronas.
Should we be worried by the economic climate of the country now? Yes, we
are entitled to feel anxious about the economic situation now as oil prices continue
to decline. Now the price of oil on world markets is USD30 per barrel. Most of the
country depends on oil revenues. In the same time, the value of the ringgit
remained depressed.
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If this situation is not serious, how come the government had to revise
cuisine Budget 2016 due to the fall off oil prices. Bank Negara Malaysia (BNM)
reported that at least 8,690 people have been laid off during January to September
2015 through various schemes as a result of worsening economic conditions.
Malaysia Workers Federation (MEF) also said 20,000 lost their job for the past
year doubled compared to 2014. The trend shows it will continue until 2017, with
more workers are laid off and the company folded.
Other statistics show that as of September 2016, a total of 461,000 people
have been forced unemployed, an increase of 22 per cent or 84,000 people
compared to the number of unemployed in September 2015.
In 2017, the Malaysian economy is expected to be more challenging. In fact,
expect more workers will be laid off as well as strengthen the reasons why we need
to worry.
Randstad Workmonitor survey found 13 per cent of Malaysian workers
worried about their job security in 2016, nearly double compared to 6 percent in the
previous year.
This is not the right time to change jobs or choose work. Always practice
thrifty and saving. Avoid wasteful and spend according to the needs not wants.
Prime Minister Datuk Seri Najib Tun Razak said that the government can not
be blamed for the country's economic problems are due to the effects of the global
economic slowdown and Malaysia can not control the world economy.
Most companies now are lost their interest to start their investment on
Malaysia market due to this economic crisis. The government should planned
something great for bringing back the Malaysia economy to its lane and become
one of the most competitive and profitable country before 2020.

SOLUTION
The political crisis, the low oil and commodity export prices and the slowdown
in China has deeply impacted Malaysias economy, putting pressure on finances.
Malaysia has the highest debt levels in the region, with spending increasing faster
than GDP. Following the Governments previous measures to reduce expenditure,
the fiscal deficit is projected to fall from 3.4% in 2014 to 3.2% in 2015 and 3.1% this
year. A new and largely unpopular VAT of 6% was introduced in April 2015. Prime
Minister Najib Razak unveiled in October his proposed 2016 budget, the first of the
country's 11th Malaysia Plan, a five-year plan aiming at transforming Malaysia from
an emerging economy into a developed economy by 2020. The budget aims at
providing for the welfare of the people, while supporting growth and controlling the
fiscal deficit. Budget measures include increased cash support for low-income
families, extra funds for affordable housing projects, civil servant salary increases
and higher development spending on education, rural infrastructure and agriculture.
The Government faces various challenges, including the weakening of the Malaysian
currency, the drop in oil prices (since oil revenues account for 30% of state
revenue), the fall in commodity export prices and rising inflation, as well as the
scandal over the 1Malaysia Development Berhad Fund in which Prime Minister
Razak is implicated.
Malaysian Prime Minister Najib Razak laid out his strategies to boost growth
through 2020, seeking to re-instill confidence in his management of the economy.
The government will focus on creating a larger pool of high-skilled workers
and improve productivity to increase investment, according to a development plan
presented by Najib in Parliament Thursday. It will allocate 260 billion ringgit ($72
billion) for development expenditure from 2016 to 2020, including funds to increase
power capacity, the report known as the 11th Malaysia Plan showed.
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The plan is Malaysias final five-year strategy before its target to become a
high-income nation by 2020, a vision conceptualized more than two decades ago
when Mahathir was premier. Najib has seen his approval rating slide to about 40
percent as he undertakes unpopular economic measures to plug a budget gap, and
as rising debt at a state investment company threatens the nations credit rating.
The plan provides a crucial platform to ensure that Malaysia completes the
transition to an advanced economy and inclusive nation, Najib said. The
government has set out strategies to break the country out of business as usual
practices and set Malaysia on an accelerated growth trajectory, he said.
During the 10th Malaysia Plan, the government embarked on further
liberalization of the services sector, and started on projects such as a new mass
transit system and financial district in Kuala Lumpur. The country has risen to 18th
position in the World Banks index of ease of doing business.
The Eleventh Plan emphasizes on re-engineering economic growth to
enhance socio-economic development, the report said. The continued focus on
knowledge-intensive sectors and high value-added activities will allow Malaysia to
further capture growth opportunities and attract quality investments.
The Malaysian economy is forecast to grow 4.5 percent to 5.5 percent this
year, down from an earlier projection of as much as 6 percent. The government
trimmed expectations as it cut expenditure amid lower than expected revenue from
oil.
The administration is targeting 5 percent to 6 percent growth annually from
2016 to 2020, it said Thursday. It projects gross domestic product of 1.4 trillion
ringgit in 2020 and 2.6 trillion ringgit in 2030.
Malaysia is getting closer to its goal of becoming a high-income nation as
gross national income per capita climbed to $10,426 in 2014. A nation is considered
high income that measure meets or exceeds $12,746, according to the World Bank.
Mahathir, who was prime minister from 1981 to 2003, was reported as saying
last month he doubts Malaysia will be a developed country in just over five years.
He said he should have been clearer on what it means to be developed when he set
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out the 30-year economic plan known as Vision 2020 instead of just achieving the
required per capita levels.
Najib, 61, has brushed off calls from Mahathir for him to step down over
alleged mismanagement of the economy and the performance of 1Malaysia
Development Bhd., whose advisory board he chairs. The state investment company
borrowings had reached 41.9 billion ringgit through March 2014 and flirted with
default early this year.
Malaysias fundamental picture remains clouded in part by the build up of
contingent liabilities for the government related to 1MDB, Andrew Colquhoun,
Fitchs head of Asia Pacific sovereign ratings, said in an interview May 7.
Najib seeks a balanced budget by 2020 from a deficit target of 3.2 percent
this year. His administration started a 6 percent goods and services tax in April, and
has abolished subsidies on sugar and petrol to rein in spending. Government debt
as a percentage of GDP is estimated to fall to 43.5 percent in 2020 from 53.3
percent in 2015, the report showed.
The introduction of the GST will generate about an average 31.4 billion ringgit
in revenue annually between 2016 and 2020, according to the report. The
government will review dividends received from government-linked companies and
take measures to reduce leakages at its tax and customs departments to improve
its fiscal position.
A plunge in crude oil prices has contributed to the ringgits slump of about 11
percent against the U.S. dollar in the past year. Officials have sought to downplay
the importance of energy exports to the economy, and the government said
Thursday it targets to reduce dependence on oil-related revenue to 15.5 percent by
2020 from 21.5 percent this year.
The 11th Malaysia Plan targets increasing the share of skilled workers to 35
percent of the labor force in 2020 from 28 percent now. It seeks a female labor
participation rate of 59 percent from 54.5 percent in 2015.
Najib has offered tax incentives to companies that establish nurseries and
allow flexible work arrangements to encourage more women to resume their
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careers after leaving to raise their families. Malaysias female workforce

participation rate is among Southeast Asias lowest.

CONCLUSION
Malaysia is a highly open, upper-middle income economy. Malaysia was one
of 13 countries identified by the Commission on Growth and Development in its
2008 Growth Report to have recorded average growth of more than 7 percent per
year for 25 years or more. Economic growth was inclusive, as Malaysia also
succeeded in nearly eradicating poverty.
From an economy dominated by the production of raw natural resource
materials, such as tin and rubber, even as recently as the 1970s, Malaysia today
has a diversified economy and has become a leading exporter of electrical
appliances, electronic parts and components, palm oil, and natural gas. After the
Asian financial crisis of 1997-1998, Malaysia continued to post solid growth rates,
averaging 5.5 percent per year from 2000-2008. Malaysia was hit by the Global
Financial Crisis in 2009 but recovered rapidly, posting growth rates averaging 5.7
percent since 2010.
Though extreme poverty is less than 1 percent, pockets of poverty remain
and income inequality remains high relative to other developed countries:
Malaysias coefficient of income inequality stood at 0.41 in 2014, compared with
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0.31 and 0.33 in the Republic of Korea and Japan (both as of 2010), for example.
Real income of the bottom 40 percent of households increased by an average 6.3
percent per year between 2009 and 2012, compared to 5.2 percent for the average
household, suggesting the benefits from growth were being shared.
Malaysias near-term economic outlook remains broadly favorable, reflecting
a well-diversified economy, despite some risks. The Government has taken steps to
broaden the revenue base, in particular by introducing a Goods and Services Tax in
2015 and by removing fuel subsidies in 2014. Recent increases in the minimum
wage and public sector salaries to support households income may prove
challenging to sustain as fiscal consolidation continues, which raises the importance
of boosting labor productivity and increasing the efficiency of the social protection.
Introducing unemployment benefits may also help to improve matching in the labor
market and provide support as the labor market softens. Other risks are related to
the volatility in capital flows from the normalization of US monetary policy. The longterm sustainability of this favorable outlook hinges on structural reforms to
strengthen medium-term fiscal planning, and to boost capabilities and competition
within the economy.

Last but not least, we cannot 100% blame the government on the economical
crisis that happen to our country. This is because, it one of the effect of the world
economical crisis and the declining of the oil prices per barrel at the global market.
The government always work on and planning something to sustain the economical
growth and become the most competitive and profitable country.

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REFERRENCES
1. http://www.worldbank.org/en/country/malaysia/overview
2. http://www.bloomberg.com/news/articles/2015-05-21/najib-outlines-malaysias-growth-path-amid-mahathir-s-attacks
3. http://www.straitstimes.com/business/economy/malaysias-economy-grows-4in-q2-slowest-pace-in-nearly-7-years
4. http://www.focus-economics.com/countries/malaysia
5. https://en.portal.santandertrade.com/analyse-markets/malaysia/economicpolitical-outline?actualiser_id_banque=oui&id_banque=7

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APPENDICES

Ringgit values drop down

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Oil price declining at the global market

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Government debt increases

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