Task 1

Introduction

Malaysia is the 66th largest country in the world with a population estimated at
30.33 million and has a total of 13 states and three federal territories and third
largest economy in Southeast Asia, with an annual GDP of around $926 billion(2017
IMF/World Bank estimates). Since 1970 the Malaysia government has been
responsible for planning and managing the national economy.Open for foreign
investment in agriculture, technology industries, pharmaceuticals and
medical technology.Some of the main industries in Malaysia are electronics,
electrical products, chemicals, food and agriculture, metal and
machine products and apparel. Malaysian exports played key role in the country’s
economic growth. The 2018 Budget is the effort to protect the digital economy with
the implementation of the Malaysia Digital Policy to foster growth Under Ex Prime
Minister Datuk Seri Najib Razak, Malaysia is attempting to achieve high-income
status by 2020 attracting investments in Islamic finance, high technology industries,
biotechnology, and services In line with the emerging IR 4.0 and the era of the digital
economy.

A.Structure of Malaysian economy

The economic structure of Malaysia can be divided into three sectors Primary Sector
are natural resources in agriculture and Malaysia has revolved from one dominated by
agricultural sectors in the post independent period in the 1960s.According to
department of statistic Malaysia the growth of the agriculture sector is visible in its
15.5% contribution to the GDP in 2018. Some main products in the country
include ,Cocoa, Rice, Rubber, Tea, Palm and Oil.The new progress in Malaysia’s
agricultural program is the increasing use of emerging innovative technology, namely
the Internet of Things (IoT) and big data, to initiate smart agricultural practice.The
present global trend of automation technology in the latest industrial revolution, the
so-called “Industry 4.0”we called it Ecological agriculture or Farming the smart way
also it help to increase the quantity, quality, sustainability and cost-effective
production.

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Secondary Sector is manufacturing sector dominated Economy during the 1990s its
Malaysia’s economy backbone.According to department of statistic Malaysia the
growth of the manufacturing sector is visible in its 23% contribution to the GDP in
2018.The fourth industrial revolution is yet to hit Malaysian shores but more and
more industry expressed interest in using cyber-physical systems.IR 4.0 also goes one
step further and has technology that will be able to make decisions on its own in an
autonomous manner and therefore optimize production without the help of humans.
Hence, the Malaysian workforce needs to be trained to handle these new systems also
the IR 4.0 coming into industries, the increased automation would lead to lower
demand on human workers to do repetitive tasks, as these will be taken over by
machines. The Prime Minister’s Department mentioned that up to 65% of Malaysian
could lose their current jobs by 2027 as technological advancements .

Tertiary Sector is service sector playing the main role in the economy entering the
21st century. Its Islamic banking,finance,telecommunications and tourism. According
to department of statistic Malaysia The growth of the service sector is visible in its
56.0% contribution to the GDP in 2018.According to the 2017IMF and the World
Bank, Malaysia is ranked in the 26 economies in the world in terms of
competitiveness also Malaysia the 8-largest economy among Islamic countries
according to GDP.Malaysia's economic system is mainly a free economy with
government control for national interests and for realignment of national wealth,
focusing on trade, services, investment and manufacturing.Malaysia's economic
development some of main wealth of natural resources in agriculture and forestry.
Some major produces in the country include minerals, liquefied natural gas (LNG),
petroleum, and tin. On top of that, Malaysia also has abundant natural resources .That
the government has adopted have created a business environment and opportunities
for growth and profits that have made Malaysia an attractive manufacturing and
export

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B.Infrastructure development in Malaysia

Malaysia government’s 11th Plan, published in May 2015,highlight the importance of

infrastructure in achieving Malaysia’s transformation into a fully developed nation by
2020.The economical massive influx has clearly improved and strengthened
infrastructure in Malaysia as there has been safe improvement in poverty rates, a 55.3
percent reduction in those living below the poverty line as of 2014, also an increase in
the number of the population working and employed.Some of the main projects
increase infrastructure in Malaysia include Telecommunication,Highways and
Seaports, "The Fourth Industrial Revolution can address many issues concerning
businesses, including the environment, health and safety of workforce, waste
management, efficiency in managing supply chains, resources and delivery systems,"
said Dr Mahathir.There has been move on expanding mobile infrastructure in rural
areas as well. Telephone member in Malaysia can choose from five network service
providers for a full range of local, domestic and international services under the Equal
Access system of government.

C.Economic performance in Malaysia

The Malaysian economy progress 4.7 percent year-on-year in the fourth quarter of 2018
and Economic performance in Malaysia is the 4th largest in Southeast Asia also is the
40th largest economy in the world.Private expenditure went up by 8.5 percent, easing
from a 9.0 percent advance in the previous period, driven by consumption of food &
beverages, communication, and transport and restaurants & hotels. Also, gross fixed
capital formation rose 0.3 percent, slower than a 3.2 percent gain in the preceding
quarter, mainly due to a decline in machinery & equipment investment; and
government spending rose 4.0 percent, softer than a 5.2 percent increase in the prior

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three months. On the production side, growth slowed for services (6.9 percent vs 7.2
percent in Q3); manufacturing (4.7 percent vs 5.0 percent) and construction (2.6
percent vs 4.6 percent). On the other hand, agricultural activity shrank less (-0.4 percent
vs -1.4 percent) and mining & quarrying output rebounded (0.5 percent vs -4.6 percent).
(DEPARTMENT OF STATISTICS MALAYSIA)

Conclusion

IR 4.0 is about automation and data exchange. In a manufacturing context, this would
mean introducing robotics and sensors to replace human labour for tasks that could be
automated.The Fourth Industrial Revolution (IR 4.0) look for to the change how we
live, work, and communicate. Using Automation and artificial intelligence.

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Task 2

A. Evaluate the success of a government’s policies such as DFTZ in achieving

macroeconomic objectives.

Introduction

The Digital Free Trade Zone (DFTZ) is an initiative to capitalize on the

confluence and exponential growth of the internet economy and cross-border
eCommerce activities. The DFTZ is setup to facilitate seamless cross-border trade and
enable local businesses to export their goods with a priority for eCommerce. DFTZ will

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provide physical and virtual zones to facilitate SMEs to capitalise on the convergence
of exponential growth of the internet economy and cross-border eCommerce
activities.(Malaysia External Trade Development Corporation).The first part of the
Digital Free Trade Zone (DFTZ) was start in the process of on boarding more than
1,500 local small and medium enterprises (SMEs).It was launched by the Prime
Minister Datuk Seri Najib Tun Razak and Alibaba Group founder, Jack Ma in early
November2017.DFTZ will be a boost to Malaysia’s eCommerce roadmap that was
introduced in 2017 which aims to double the nation’s eCommerce growth and increase
the GDP contribution to RM211 billion approximately US$47.68 billion by
year2020.The macroeconomics from economists.Economists explain macroeconomics
as a field of economics that studies the relationship between aggregate variables such as
income, purchasing power, price and money(www.khanacademy.org). This means
macroeconomics examines the function of the economy as a whole system, looking at
how demand and supply of products, services and resources are determined and factors
that influence them.

The launch of the first phase of the Digital Free Trade Zone (DFTZ) inNovember 2017
is already proving to be an eCommerce game changer for the eCommerce world.

Minister Datuk Najib Tun Razak on 13 October 2016, who at the time said that one of
the objectives was to double Malaysia’s eCommerce annual growth rate from 10.8% in
2016 to 20.8% in 2020, and to reach a GDP contribution of RM211 billion by 2020.
Malaysia is reach these targets as the expected growth rate for 2018 – 2020 is already
expected to achieve17.9 % - resulting in a market volume of RM9.9M in 2020. The
main Plan includes planned interventions with six thrust areas - namely accelerate the
eCommerce adoption by seller (SMEs); increase adoption of eProcurement by
businesses; lift non-tariff barriers; realign existing economic incentives; make strategic
investments in selected eCommerce players; and promote national brand to boost
cross-border eCommerce.The action plans drawn up by the NeCC included the
formation of a technical committee to undertake detailed discussions and solutions of a
taxation system for eCommerce activities in Malaysia.

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 The second action plan care increasing the adoption rate of eCommerce by assisting
SME to more efficiently manage the digital aspects of their business also it will
achieved with the 'Go international Malaysia' programme which is a public-private
partnership initiative led by industry partners, namely, Google, Alliance Bank,
Master-card and Maxis, along with government partners including the Ministry of
International Trade , Malaysia outside Trade Development Corporation and Malaysia
Digital Economy Corporation. The programme’s major objective is to empower SMEs
to build their business capabilities, connect with digital ecosystem partners, promote
international exports and grow to become globally competitive companies.

Disadvantages and advantage can bring success

B. Evaluate the advantages and disadvantages of international trade provided by

DFTZ in Malaysia by providing some evidence from newspaper cutting, journals
or websites.

March 2017, Malaysia formally launched the Digital Free Trade Zone vision at the
Global Transformation Forum and It is the first digital global trade platform beyond
China and the Malaysian government believes that a collaboration with Jack Ma will
increase SMEs’ contribution to the nation’s GDP, which currently stands at 37 per cent,
despite 97 per cent of businesses in Malaysia currently being micro or SMEs.

Advantages (www.yourarticlelibrary.com)www.pressreader.com.

 One of the biggest advantages of this is that it gives room for online traders to
compete in a healthy environment.

 This helps to increase the 18 per cent of SMEs in Malaysia involving in export
business to be upgraded to 30 per cent. Malaysia has drafted its e-commerce path to
move forward.

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 The development of SMEs help to cushion off poverty gap in the world. It also
benefits in stabilising job and develop regional economy.

 This allows more SMEs and young people to participate in globalised trade.
Selling products outside the country remains as ideal. It is also an opportunity to
learn dealing with the world.

 International trade helps each country to make optimum use of its natural
resources. Each country can concentrate on production of those goods for which
its resources are best suited. Wastage of resources is avoided.

 It enables a country to obtain goods which it cannot produce or which it is not

producing due to higher costs, by importing from other countries at lower costs.

 Foreign trade leads to specialization and encourages production of different

goods in different countries. Goods can be produced at a comparatively low cost
due to advantages of division of labour.

 Due to international trade, goods are produced not only for home consumption
but for export to other countries also. Nations of the world can dispose of goods
which they have in surplus in the international markets. This leads to production
at large scale and the advantages of large scale production can be obtained by all
the countries of the world.

Disadvantages .(http://beet2013.blogspot.com)

 The first disadvantage is the transactions costs are often substantial. The
engagement set up cost is high and it takes long time to get the approval.

 It may influence the competitive companies that are located outside the FTZ. The
company in FTZ has a competitive advantage in the market by enjoying lower cost
of production and higher profit.

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 Government forgoes customs revenue. In order to encourage the investment,
government may offer foreign companies flexible trading law with no custom tax.

 There is problem of smuggling and fraud by authorities. They may smuggle the
goods that is not being tax in FTZ for getting a huge profit.

 Health hazards. Repetitive work and inappropriate shift work would lead to health
problems for the workers.

 International trade has an adverse effect on the development of home industries.

It poses a threat to the survival of infant industries at home. Due to foreign
competition and unrestricted imports, the upcoming industries in the country may
collapse.

 The impact on Malaysia is limited as the country is still embroiled in conflicts in

politics.

Conclusion

DFTZ To help SMEs businesses in ship their goods easily, with the help of leading
satisfaction service providers.The technological Services program will be made
available in time to support the goods movement within DFTZ. The technological
sectors will also offer combined services that will help deliver a streamlined and
efficient experience to the users operating from the DFTZ.

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