Explain two types of poverty adopted in Malaysia

There are two types of poverty adopted in Malaysia. Firstly, is rural poverty where the
poverty faced among village peoples that lives in rural areas. This kind of poverty usually happened
because of the lack of infrastructure provided and the lack in education among the children of the
poor. For example, peoples the lived far away from the city and have a difficulty on the accessibility
to reach to their village like in Sabah and Sarawak. Besides, most of the rural households are
depends on the small scale of agriculture sector that sometimes only able to provide just enough for
them to support their living as mostly the profit taken greatly by the middlemen. On the other
hands, most of poor peoples have a big family members. This can be explained when they are mostly
lack of knowledge in sex education. The bigger the family members, the bigger cost of living that
need to be supported by the leader however in their circumstances it is quite difficult to have a
comfortable living.

The second type of poverty is urban poverty. It refer to the poor situations that occur in the
urban areas. One of the main causes that lead to this situation is mostly because of the high cost of
living where the amount of salary gained is basically not enough to support the cost of living in this
city. Such circumstances may be due to the high cost of house rental as well as the high cost of the
goods. Besides, lack of job opportunities may also lead to this phenomena. For an example, when
most of the rural peoples decided to move to the city, there is high competition to get a job where
they are not only need to compete with the local but as well with the foreign workers. Sometimes,
the employers prefer to hire the foreign workers as the willing to take a low salary compare to the
local workers make it hard for the local to get a job. Additionally, when they are living in the urban
areas, there are a lot of commitments that need to be bear by them like high rent house, the
transportations, various taxes imposed as well as the continuous increase of the prices of goods and
services.
Discuss TWO (2) reasons for the existence of poverty in rural areas.

One of the reasons of the existence of poverty in rural areas is the geographical location
of the village. Sometimes rural poverty occurred because the location of the village is difficult to
reach and have high degree of inaccessibility. For examples the villages in Sabah and Sarawak
where most of the location is too far away from the city and some of them need to go on with
the boat before arrived to the location. Their geographical location is not only make it hard for
them to have an access towards the facilities provided by the government for example is
education but also lead to the high cost of goods as the sellers need to support the cost of
transportation in order to bring in the goods to the village peoples. With a very limited resources,
most of them especially the poor unable to have a comfortable life and sometimes they only
relied to the products of their crops as the sources of foods. For example, Sabah recorded a
significant reduction from 19.7% to 8.1% followed by Perlis from 6% to 1.9% and Terengganu
from 4% to 1.7% on 2018 as these states is lack of industries activities due to their geographical
location.

Secondly is the economic activities practised by them. Most of rural peoples are rely in a
small scale of agriculture sector. One of the reasons is because of the land shortages that force
landless farmers to work as agricultural labourers on plantations, or else farm small uneconomical
plots. Beside they are reliance with the cost of market products that are not sustainable. For
example, the price of rubber having fluctuation since the past years make it hard for them to
support their living. Sometimes, they are being lie by the middle man where in many situations,
mostly the middle man is the one that will take a lot of profits compare to the main producers. In
this situations, the poor keep being poor as the one at the top keep manipulated them in order
to gain more. For example, the middle man will usually take chillies from the main supplier with
amount of RM 13 perkilogram but the sell the chillies to the third parties with a double amount
the pay from the main consumers.
Explain TWO (2) strategies taken by the Malaysian Government in order to curb the unemployment
problem.

The first strategies taken by the government in combating the unemployment is widening the access
to training and re-training. Malaysia government has addressed this issues by imposing a training
levy on employer for the creation of HRD fund for the purpose of training and re-training. For an
example, for the public servants, they have INTAN institution that act as the training arm for the
public servants to help keep updated with the current system and knowledge that are related with
their works. On the other hand, government has also launched many programmes that can helped
to trained the youth and bring them exposure to the working place through the activities of practical
programmes like Majlis Latihan Vokasional Kebangsaan. In facts, while workers poses the right works
values and the desire to continually maintain their employability, the government will keep provide
the HR development facilities and financial assistance.

The second strategies is equipping new labor market entrants with the right knowledge and skills.
One of the principles causes of an unemployment is a mismatch between the requirements of
industry and the knowledge and skills possessed by the workers. Thus government create a
mechanism for collaboration between industry and business and the educational and training
institutions to produce the graduate that meet the requirement of the labor market. For the
example, government itself has provided the internship programme for students that are looking for
an intern in most of their departments.
Discuss any FOUR (4) effects of the COVID-19 pandemic to the Malaysian economy.

The world is facing the outbreak of covid 19 since January 2020 where most of the countries
has implemented movement control in order to control the spread of this virus. However, there are
a lot of sectors being affected by this new norms where it basically also give impact to the world
economy growth. As what has been said by the IMF, this time the wold facing the worst economic
crisis where it is estimated that global real GDP growth forecast for 2020 to a range of -4.0% to
-1.5%, compared to 2.6-3.4% growth forecast in the last pre-COVID-19 pandemic forecast.

One of the effects of covid 19 pandemic to Malaysia is the increasing to the rate of
unemployment. This pandemic is not only resulted to the economic crisis but as well give a massive
damage to the many workers on their capacity to earn a living. Based on the statistic released from
the online survey conducted by Malaysia Statistic Department, from 4,094 companies nationwide,
about 53.4 per cent of them said that they unable to continue their business if they are acquire to
give paid or half-paid leave to workers during the MCO. Meanwhile, 67.8 per cent of companies said
that they did not make any money during the MCO. This pandemic has contributed to the highest
rate of unemployment in Malaysia with about 610,500 jobless, in March compared to last years as
most of the business being asked to stop the production and being encouraged by the government
to work from home. However the number of unemployment is expected to reach to the triple
amount by Bank Negara to about 1.8 million of total loss of employment by Malaysian.

Secondly is the increasing of social/crime issues. It is said that the domestic abuse has been
recorded to increase since MCO but there is decrease in the rate of criminal issues. For an example,
it is recorded that there is increase over Talian Kasih hotline since MCO about 1800 call which it was
introduced by the government in proving the counselling and assistance for women and children
experiencing abuse and mental health problems. However, these data is not reliable as there is
speculated that there might be higher number of unreported cases as many would probably be far
too fearful to reach out for help, as their abusers are now forced to stay within the household in
close proximity to their victims. Besides, as the citizens are not allow to go out, following with most
of them being loss of works, they might be having a high pressure thus their loves ones has becomes
the victims for them to release their anger. On the other hand, it is recorded the nationwide crime
index is said to drop about 49.1 percent since May 5 based on the statistic release by Bukit Aman
Criminal Investigations department. This may also be attribute to the restriction of movement with a
strict regulations being imposed to those that are not abide to the rules.

The third effect of Covid-19 to Malaysia is the small and medium enterprise (SMEs). Most of
the small business unable to survive as they basically have limited capital to support their cost of
production that are not in operation. Most of the owners of SMEs has seek for the financial
assistance from the government to help them reduce the burden faced in their business during
MCO. When some of business owners find themselves unable to keep their businesses afloat, then
the employees will need to going through unemployment, and they may face the difficult prospect
of seeking employment again post-pandemic. According to an online survey by the SME Association
of Malaysia, only 37.8% have sufficient cash flow to sustain themselves through April 2020. Many
effots have been taken by these small business to keep their business afloat including seeking
cheaper raw material supply, cutting down manpower-related costs, as well as putting expansion
plans on hold.

The tourism industry has also become the victims of this covid-19. This outbreak of covid-19
has given huge impacts to the Visit Malaysia 2020 as about 50% of Malaysia’s tourist come from
Singapore and Chine. With the closed border implemented by both countries, most of the booked
flight tickets, hotels and other tourism services has been cancelled by the tourist. Most of the
services under tourism sectors faced the impacts including the airline industry where the current
travel bans and plummeting demand around the world have put the loss-making carrier at risk of
bankruptcy. For example, two major airline including Air Asia and Malaysia Airlines have initiated
salary cut range from 10% to 100% and unpaid leave depending on the salary range and position.
100 of workers being terminate and lay off to pare down its operations amidst the Covid-19
pandemic. Not only that, A total of 170,084 hotel room bookings during the period 11 January 2020
until 16 March 2020 had been cancelled, which caused a loss of revenue amounting to
RM68,190,364. In order to help this tourism industries, the government have encourage the local to
go on travel inside the countries with various incentives provided including the exemption of taxes
imposed.

In conclusion, government basically having a huge of loss in this years with various industries
need to go through the process of cost cut down to support the cost production. As still many
countries closed their borders, it has limiting the foreign investment to flow inside the countries.
Various incentives has been imposed by the government to give colours to the local industries in
order to cover up back all the loss that have been faced during the implantation of MCO.
Identify any FOUR (4) advantages for restricting trade of certain goods and services to Malaysia.

International trade is usually refers to the exchange of goods and services across
international borders of territories. The international trades have provide many benefits to the
government including encourage the exchange of technologies and increase the productivity level.
Malaysia is one of the countries that has applied the open economy concept with a free trade
prided. However in some situations there are the rules and regulation in other words the
protectionism policies that need to be abide by the foreign business.

One of the advantages in restricting trade of certain goods and services to Malaysia is to
protect the infant industries from foreign competition. Infant industries is usually focussed to the
small medium entrepreneurship (SMEs). Most of SMEs is basically have a limited capital and
recognition to the publics. They are also consider as a new firm in a new industries that has many
disadvantages. The new industries need some protection from the power of already established
competitors to be able to grow and achieve economies of scale. This is because they must train
specialized management and labor, learn new techniques and cope with a small-scale productions.
They are also need to compete the price of goods with the big companies that are mostly able to put
a cheaper price compare to this small industries. Due to that, tariff protection will give a new firm
times to expand output to the point of lowest long-run average cost. For example, government has
provides a lot of incentives to support the small business survival by proving loan incentives, income
tax exemption and etc.

Secondly is to prevent dumping. Dumping is occurred when a foreign countries is supplying

cheap imports favourable to consumers. In this situation the local consumers are need to pay more
in buying local products compare to foreign products thus it will shift the customers preferences
from local to foreign. As an effect, the local business may need to shut down the production as they
are unable to compete with the import items especially in terms of prices. Due to that government
will apply the anti-dumping policy as a protectionist tariff if it is found that the foreign supplier try to
have a price war with the home producers. For an example, government imposed the duties
products that they believed tried to cut local business and markets like the cigarettes.

Thirdly the protectionism policy is act as the one of government revenue sources. Where
protectionism takes the form of a tariff, this will also raise revenue for the government, like any
other tax. Basically there are two type of tariff imposed by the government. The first on is ad-
valorem tariff where the tax will be imposed based on the 50% of the price of the goods. Meanwhile
the second one is specific tariff where the taxes will be imposed in a fix rate despite of the changes
in the price of goods. Malaysia will usually imposed the tariff on valorem basis with the rate of 6.1
percent for industrial goods. The outcome of this revenues will then be used for the state’s
development. For example, certain goods, such as alcohol, wine, poultry, and pork, Malaysia charges
specific duties that represent extremely high effective tariff rates.

Lastly is to improved employment and balance of payment. When there is restricting trade
of certain goods and services to Malaysia, it will encourage the local producers to compete along in
the arena of business. With this existing competition, there will be a lot more job opportunities
provided for the local workers that seek for a job. Besides, protectionist policies reduce the level of
imports and increase aggregate demand, resulting in a higher level of national output and
employment. For example, due to high taxes imposed by the government on some branded
products, local peoples especially the middle class mostly preferred to consume local brand like local
rice, which it helped the firm to have continuous demand thus able to hired workers to be part of
the firm.In terms of balance of payment, when the value of import is greater than the export, it will
cause the reduction of current account in the balance of payment. As an impact, the government are
acquired to raise even higher amounts of loans.

In conclusion, import and exports activities both have their own pro and cons but a
prolonged trade imbalance, will generally give a bad impacts to the country’s economy. Due to that,
with the restriction on trade imposed by the government, it will help to stabilize both activities in a
more sustainable manner.
 a.  Discuss TWO (2) types of unemployment in Malaysia.

Firstly is frictional unemployment. It is said that about 2% to 4% of the rate of frictional

unemployment occurred in Malaysia. Basically this situation happened not because there is no job
opportunities in the job market but peoples trying to find a better job with a better payment. This
situation is mostly occurred among our new graduates as they prefer to work in the area that are
first with their qualifications and skills. Most of the new graduates especially, wants a job that can
give a feeling of satisfaction with a good payment and environment after break their legs for years to
gain a piece of certification in a specific level of education. Besides most of them taking a loan
education thus they are expecting that the work that will be gained is worth of every penny and
efforts. However, in the current situation, mostly the employers will try to limit their cost of
productions by imposing lower wages to the employees thus most of them are more prefer to hire
the foreign workers as they are willing to take whatever amount of salaries that being offered to
them compared to the new graduates. For example, number of unemployed graduates in 2018 was
162.0 thousand persons, increased 4.6 per cent from 2017 that is 154.9 thousand persons.

The second type of unemployment is cyclical unemployment. This situation is based on the
demands of the products in the market. At one time the demand is higher which force the labor to
increase their production thus encourage them to open more job opportunities to the workers.
However, under the low aggregate of demand, the firms have no choice other than need to reduce
the amount of production to avoid surplus in the output thus they need to keep reducing the
number of workers to manage the cost of production. The workers either being asked to go through
the process of lay-off, retrenchment or being terminate of their services which will then contribute
to higher unemployment level. For example, during this outbreak of covid-19, the rate of
unemployment in Malaysia is increase from 3.3 percent to 3.9 percent as most of the firms unable to
support in paying their workers salary. This is because, most of industry production being asked by
the government to be stopped during the implementation of movement control order.