ECO 261 – MALAYSIAN ECONOMICS

WRITTEN REPORT – THE DECLINE IN MALAYSIAN TRADE DUE TO COVID 19

PREPARED FOR:

ASSOC. PROF DR MOHAMED SALADIN ABDUL RASOOL

PROGRAM: FACULTY OF BUSINESS AND MANAGEMENT

GROUP: MBA1115A

PREPARED BY:

NO. NAME NO. MATRICS

1. NURULHUDA BINTI JAMAL 2019271852
2. AMIRAH HUMAIRA BINTI ZAINUL AZHAN 2019287224
3. BALQIS BINTI SAIFUL BAHRI 2019437472
4. SITI HAFIZATUL NUUR AIN BINTI GHAZALI 2019491784

DATE OF SUBMISSION: WEEK 7

INTRODUCTION
International trade referring to the economy that made transactions with other
countries that involves imports and exports of goods and services. Import is referring to the
good or service, purchased by households, business and government sector that were
produce by foreign sectors. Meanwhile, export are goods that were produce by local entities
and purchased by foreign sectors.

The corona-virus 2019 (COVID-19) that was first reported in early December 2019 in
Wuhan, China, where the virus has affected human lives all over the world. Not just that, the
pandemic also gives serious impact to the global economy including Malaysia. It was
recorded on January 25, 2020 where the first COVID-19 cases in Malaysia involving three
Chinese citizens from Wuhan and causes the continued spreading every week in the country
(Rampal & Liew, 2020). This also will cause a serious impact to the country and leads the
declining if Malaysian trade due to Covid-19.

The impacts of Covid-19 on Malaysia’s economy also can be seen through the
unemployment rate and depreciation in Malaysian Ringgit against USD. Study found that
Malaysia’s International Trade in Service recorded the highest deficit in 2020 which is over
RM47.4 billion (International Trade in Service, Department of Statistic Malaysia, 2020). The
trade in services by main components for both imports and exports including transport
services, travel services, telecommunications, computer and information services, and other
business services. For Malaysia’s major trading partners are United States, Singapore and
United Kingdom (International Trade in Service, Department of Statistic Malaysia, 2020).
 Besides, our country Malaysia is the country that exports natural gas products to
these countries such as Singapore, China, Taiwan, Korea and Japan. Study founds that the
reduction in exports in both Taiwan and China had been cause by the COVID-19 outbreak in
China. But in December 2019 and January 2020, Japan still shows a higher growth in the
export of LNG (Malaysian External Trade Statistics, 2021).

OBJECTIVE

Our objectives are:

– To study how COVID-19 pandemic affected the Malaysian trading business.

– To find strategies to revive the country's economy.
– To find a strategy to reopen the country's borders to continue trading business.
– To unite the community in breaking the COVID-19 epidemic chain
STRATEGIES

Effective and efficient strategic planning must be implemented by the government to enable
this trading business to continue even in a pandemic situation.

1. Reduce trade tensions by keeping trade flowing with co-operation and trust

The countries that will supply essentials should not impose export restrictions, and
importing countries should not pose a health risk. At a time of trade tensions, this is a
challenge where an increased number of new restrictions and distortions were already
subjected to the international trading system, from tariff increases among major traders to
support in key sectors by the government (Organization for Economic Co-operation and
Development, 2020). In 2018 US has implement higher tariffs of imports on an additional
USD200. China has voiced its concerns that will affect trade and global growth because of
the escalating trade tensions. The trade tensions between the US and China have escalated
which began in the first quarter of 2018. In January 2020 the prolonged conflict reached a
turning point with the phase one trade deal signing, be that as it may, not after it had
weighed intensely on the worldwide economy for a considerable length of time because of
extra import duties imposed by both China and the US. The US has blamed China for unjust
trading activity, including the robbery of intellectual property, constrained innovation move,
American organization absence of market access in China, and making an unleveled
battleground through state endowments of Chinese organizations. In return, China was
convinced that the US attempting to limit China’s rise as a global economic power (SCMP
Reporters, 2020). This will give spillover effects to the rest of the world including Malaysia.
The escalating global trade tensions will affect Malaysia as a small open economy.
Malaysia’s domestic economy may have spillovers by the weaker trade activity. It is more
important now to avoid more escalation of the current trade tensions in this severe economic
strain because of the Covid-19. In this environment of global uncertainty, Malaysia should
have timely policy strategies to remain resilient and well-positioned so, from its trade
openness, it can benefit and reduce risks. To respond to external shocks, Malaysia should
improve its flexibility through structural reforms and it should continue to be implemented
(Muhamad Aizuddin et al., 2018). Structural reforms are basic measures that change the
structure of an economy, in which businesses and people operate the institutional and
regulatory framework. To guarantee the economy is fit and better ready, they are intended to
understand its development potential in a balanced way (European Central Bank, 2017).
This can be carried out by diversifying Malaysia's exports products in the market, labor
market flexibility should be enhanced, raising overall economic complexity by attracting
quality investment and creating high-value jobs. Malaysia needs to widen and strengthen its
role to stay in the ecosystem by re-examining Malaysia’s position in the global value chain to
capitalize on opportunities. Malaysia must pursue multilateral and bilateral trade pacts with
other economies. These policy strategies would contribute to the future readiness of the
Malaysian economy (Muhamad Aizuddin et al., 2018).  

2. Diversify the supply base

In this pandemic situation, basic necessities such as medical supplies, food supplies,
and raw material are essential. Since the emergence of this COVID-19 outbreak, many
sectors of the economy could not operate and produce the basic needed which caused the
country’s economy to decline drastically. As Malaysia has recently entered a recovery
phase, it has the opportunity to reopen the country's borders to recover back the operation of
international trade business. Therefore, the best way to deal with heavy reliance on one
medium or high risk resource such as one factory, supplier or region is to add more
resources in locations that are not exposed to the same risk. In this way, the basic supply
flow will continue to run and thus help the country’s economy to keep moving. Managers
also should consider regional strategies to produce the bulk of key goods in the regions
where they are used so that the business does not have to hold the stock for too long which
will cause the stock to be damaged and the business to suffer losses. The stock flow can
also run smoothly. Reducing reliance on Chinese products will increase sales of other
products. This is because, items such as furniture, clothing, and household items are
relatively easy to obtain elsewhere because inputs such as wood, fabric, plastic, etc. are the
basic materials that can be found locally. So, not only can we improve local products but
also save the cost of imported goods. (Willy C. Shih, 2020). According to Senior Minister of
International Trade and Industry, Datuk Seri Mohamed Azmin Ali, from what he shared on
his Facebook on 22 October 2021, in his meeting with Secretary of State for International
Trade and President of the UK Board of Trade, Anne-Marie Trevelyan, he noted that the
Malaysian government reopening the economy gets award from the United Kingdom (UK)
government. He stated in the meeting, he and President Anne-Marie Trevelyan reviewed the
strategies adopted by Malaysia and the UK to accelerate economic recovery in heading
towards the endemic phase. He also stated that Malaysia has a very important role in the
global supply chain. (Mohammad Khairil Ashraf Mohd Khalid, 2021). This shows that a
structured and effective strategy will be able to help Malaysia to have the potential to
develop the country's economy in the field of trade if all parties work together to become a
country on par with other developed countries.
3. Help medical researchers collaborate in addressing COVID-19 by enabling data flow

Access to health and medical information is essential to facilitate the search for a
cure for COVID-19 outbreaks. however, in Malaysia, access to health information is often
subject to strict localization requirements and restrictions on cross -border data flow. This
makes it difficult for the people to help medical researchers find a cure for the COVID-19
epidemic due to the lack of knowledge and information on the issue. Governments can
enable the processing and transfer of sensitive data across borders to monitor outbreaks
and encourage the use of restricted access and secure sandboxes in collecting health data
on COVID-19. (OECD Policy Responses to Coronavirus (COVID-19), 2020). This way, the
pandemic can be curbed from spreading and its transmission will be more controlled if more
data on the issue can be shared. The medical community can also share more detailed
information related to this COVID-19 epidemic with university students who are in medical or
science field so that a cure for this disease can be found more quickly and. Not only can
increase medical knowledge in students, but can also help the country in reviving the trading
business when this pandemic can be addressed.

4. Keep trade flowing

To keep trade flowing there are some practical things Malaysia can do in order to
increase how trade can support the fights against Covid-19. First, for food and medical
products speed up border checks. Physical interaction between customs and border officials
and trades at borders should be minimized by converting information such as pictures, text,
or sound into a digital form that can be processed by a computer. To tackle the virus and
speed up the movement of goods, it is important to have an effort to increase international
cooperation on risk management. The government also needs to reduce the tariffs on
communication technology goods and information to make sure there are no delays and
going smoothly to cross border e-commerce, making it low-cost and easier to stay
connected to markets and jobs for people. Enabling data flows with permission by the
government can help medical researchers co-operate on Covid-19. Health information is
regularly dependent upon severe localization requirements and cross-border information
stream limitations. To monitor epidemics, the government can enable sensitive data to be
processed and cross-border (Organization for Economic Co-operation and Development,
2020).
CONCLUSION AND RECOMMENDATION

In conclusion, all parties must carry out their respective responsibilities to achieve the
objectives discussed. The government must make effective strategic planning and actions
that need to be taken in dealing with the situation of this pandemic so that the country's
economy remains secure and the health of the people is also maintained. Citizens must also
carry out their responsibilities by complying with every SOP set by the government so that
the objective of achieving the lowest cases is achieved. In other words, the government and
the people must work together and take care of each other in addressing this global issue.
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storm.

https://blogs.worldbank.org/eastasiapacific/malaysia-recover-revitalize-and-reform-after-
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Mohammad Khairil Ashraf Mohd Khalid (2021). Sinar Harian. Kerjasama Kerajaan Buka
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