Business Economics Module

QUESTION 1

The GDP of a country is a way to measure the level of national economic achievement of a
country in a year. GDP is the total market value of the total final goods and services produced
in a country at a given time, usually within a year. There are three methods used by
economists to determine the value of this GDP. Usually the government will use one of these
three methods. These methods include the income approach, the expenditure approach
method and the production approach. Social well-being refers to a state of health, happiness
and comfort or financial support from the government.

Based on the statement that Singapore’s GDP growth has deceased by of 2.2 for the
first quartile in 2020, the welfares people of Singaporeans has decrease at the same rate.
There are several important indicators that explain how people’s well-being declines, such as
health, sources of income, employment opportunities, social activities, access to food and
education. A country with a good health system can affect the health of the people. Singapore
has the best health system in the world. According to the World Health Organization (WHO)
ranking of the world health system in 2000, Singapore is still ranked 6th among all countries
(Michael, 2020).

Singapore’s health care system aims to ensure affordability for all citizens and
requires citizens to take responsibility for their own health. The national health care system is
funded by the government and individuals. Government spending on health care is only 3.5%
of GDP, 68.1% of which is provided by private citiznes. This shows that the health
Singaporeans contributes to the growth of GDP. However, the deterioration in health has led
to a 2.2% decline in GDP growth in quartile 2020. The decline in Singaporeans health care is
due to the economic and health situation. According to Austin (2018) a decline in economic
growth affects the health care of citizens. People tend to use their source of income for food
needs rather than health. In 2020, the outbreak of Covid-19 disease has caused the health of
Singaporeans to deteriorate. Moreover, the health care of Singaporeans is decreasing due to
the government policies. Everyone whos is confirmed positive will receive treatment in
government hospitals. Covid-19 patients are also not recommended to be treated in private
hospitals, which further reduces the revenue of the private healtcare sector.

Besides, the decline in the welfare of the population is due to the declining
employment opportunities. As a result of globalization, some manufacturing activities have
been shifted to other countries with low labor costs. The share of manufacturing in total
employment has declined by about10% by 2020. At the same time, the use of physical labor
for the economy has increased in recent years, supported by the influx of foreign labor.
Compared to the manufacturing, productivity in the services sector tends to be lower.
Morever, productivity tends to be low as labor input increases. Annual productivity growth
(total productivity factors) declined from 2 percent in the 1980s to 0.5 percent between 2000.
Given the slowdown in productivity growth,

Changes in the labor market and the aging of population indicate that many workers
income are insufficient to finance health, education and housing expenses for themselves and
their family members (Asher and Nandy, 2009). This situation indicates that the wealth of
the people in Singapore is declining. The emergence of poor working families is a problem
that needs to be addressed. It was reported that 41 percent of working seniors earned less than
40 percent of the income of the median working population in 2011, compared to 13 percent
in 1995. The income gap is also widening. The ratio between the wage income of individuals
in is different. In other words, self - sufficiency and family support may not be enough to
meet welfare needs.

The decline in GDP and welfare in Singapore was also caused by the Covid-19
pandemic. Singapore implemented the Movement Control Order (MCO) to control the spread
of the Covid-19 epidemic. The implementation of MCO did indeed have a positive effect on
the regulation of Covid-19. However, the implementation of the MCO also has a negative
impact on the social and economy situation in Singapore. The negative social and economic
impacts have led to a decrease in the welfare of Singapore. Social activities are restricted due
to the Movement Control Order (MCO) imposed by the government. In addition, the barriers
that prevent individuals and households from engaging in social activities can lead to mental
health problems.

Although the MCO is able to reduce the impact of infections among Singaporeans, it
not only affect the country’s economy but also the people. This is because they are restricted
in their movement, which affect their income and expenditure. The monthly income earned
has a great impact on individuals (Abdussalam et.all, 2015). The increasing income leads to
higher quality of life which in turn shows that the welfare of the people in a country.
However, when the source of income is affected, the welfare in people of a country definitely
decreseas. As the income increases, the quality of life increases which in turn shows that the
welfare of the people in a country is ensured.

Based on observations and information collected by Talha (2020), he found that the
people affected by the enforcement of MCO included employers, government and private
employees, traders, farmers and fishermen. These groups were affected because the MCO
caused them to lose their jobs and sources of income, reduced demand and sales from
wholesalers and traders, disrupted them at wotk, forced them to close their shope or permises
and caused them to suffer salary losses. Based on a special survey conducted by the
Department of Statistics Malaysia (DOSM) (2020a) in the first round for the period March
23-31, 2020 with a total of 168,182 respondents, 52.6 percent of respondents said they were
very impressed during the MCO period. If this MCO continues, it will definitely have a
greater impact on the economy of Malaysians and hence on GDP growth. According to
economic theory, national income falls when household spending falls. A decline in national
income will leads to slower GDP growth.

In conclusion, the economic growth of a country is affected by various factors such as

the state of the economic, epidemics, disasters and others. This can be dismontrated by the
occurrence of a disease epidemic namely Covid-19. The occurence of Covid-19 has triggered
a health which in turn has negatively affected the conomy of a country as shown by the
example of Singapore. Singapore's GDP, which showed negative growth, also led to decline
in the wealth of the population. Many people lost their jobs and sources of income. The
Covid-19 outbreak also affected the health status of Singaporeans. Restricted social activities
also cause mental health problems among Singaporeans.
QUESTION 2

The tourism, hospitality and aviation sectors for example have been the hardest hit by the
restrictions on foreign tourists entering the country, which have been imposed on all countries
of entry including Malaysia. More impressively, business owners in these sectors are taking
steps to cut wages, furlough and lay off employees and close the bussineses. The donwsizing
and closure of theses businesses was the worst impact that also occurred in other sectors such
as the small and medium enterprises (SMEs) sector, the food industry, the service sector and
the private sector. As reported by Zainuddin (2020) in his report based on study by Nielson,
during the MCO period, more than 40 percent of the group workers surveyed suffered
income losses. Currently, economic instability in most countries is at a relatively critical
level as a result of the increase in daily cases of COVID-19 pandemic infections worldwide.
The deaths in population and the high rate of infection have led to a complete shutdown of
the economic sector to prevent the epidemic from spreading to other areas.

The spread of pandemics over a long period of time has also crippled the global
tourism industry. The closure of businesses in the tourism and hotel industry resulted in huge
losses, causing some of them to go bankrupt. Many workers in the tourism industry had to be
laid off as a result of the pandemic COVID-19. The contraction of the global tourism sector
is currently more than 25 percent compared to before the outbreak of the COVID-19
pandemic. In Western countries, such as United States, the loss job in the tourism industry
resulted in a loss of USD 8 million which led to a decrease in spending in the tourism sector.
In Brazil, 80 percent of the hotel industry has closed as tourist arrivals are expected to decline
by 50 by 2020. In France, the implementation of a a curfew has resulted in 1 million people
to losing their jobs in the tech sector and 80 percent to lose their jobs in the tourism industry
(Shohini, 2020).

The impact of the implementation of the Movement Control Order (MCO) in

Malaysia has caused heavy losses to traders and entrepreneurs. The excessive drop in profits
has forced employers to lay off employees and halve their salaries in order to continue their
business. According to the Department of Statistics Malaysia (2020), a total of 69.7% of
those who work for less than a year can survive for less than 1 month if they manage their
financial savings. Those who have worked 4 - 10 years are able to survive for 2 months and
those who have worked 21 - 30 years are able to manage their finances for 4 months when
MCO is implemented. This has impications for the economy of the population. For example,
the restrictions on movement make it impossible for fishermen to go out to sea, their source
of income to support their families. In some cases, there is an increase in the cost of cooking
as the large number of family members cannot be fully supported by the head of the family
during the time when MCO is taking place at home.

In addition, many workers were unemployed due to the employment sectors affected
by the introduction of the MCO, including tourism, aviation, business, creative industries,
housing, manufacturing, business, human resources, private medicine, professional services,
non -governmental organizations (NGOs), the agricultural and plantations (Mohd Zaky
Zainudin, 2020). A survet conducted by a market research firm (IPSOS) revealed that
concern about unemployment in COVID-19 has risen a high of 40 percent compared to the
previous year. The survey data also showed that 62 per cent of Malaysians indicated concerns
about the COVID-19 epidemic which also affected the national economy as they were
apprehensive about undertaking any form of outdoor activities, including (IPSOS Report,
2020). This is compounded by the MCO’s current restrictions on movement. Therefore, the
spread of the COVID-19 epidemic has not only crippled the economy in Malaysia, but
around the world. As a result, many workers have had to take unpaid leave for several
months, wages have been cut by 20 to 50 percent, and some workers even face the problem
of job insecurity when companies close their operations. This also leads to the workforce
facing downsizing problems and as a result the unemployment rate increases (Sinar Harian,
2020).

In conclusion, tourism is a very important driver of the national economy in the short
and long term. The tourism industry has proven to bring many benefits to the development of
the country. All parties must join hands to ensure that the country's dream of becoming a
major tourist destination is fullfilledd. The efforts of any one party is not enough to develop
the country in the tourism industry. The support of all Malaysians in developing and
implementing the tourism industry is urgently needed.
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