Title: Has openness to international trade and investing benefited or harmed the Malayan economic system? How can Malaysia guarantee that it reaps more benefits than injuries from international trade and investing in the hereafter?

When 1 was a immature jackanapes one would, from clip to clip, take a minute off from the attention free pleasances of playing in the Sun and let oneself a short battle with the beat-up old turntable that sat in a corner of the life room. Quite regularly one would take to listen to that catchy and instead profound ditty ‘With a small aid from my Friends’. The conspicuous message of this celebrated Beatles dad vocal, i.e. ‘the importance of friendship’ is peculiarly disposed in depicting today’s international trade. Since in both a friendly relationship and in international trade ; there can be nil inactive or individualistic.

Therefore, it is with this attitude of coaction and friendly relationship with the universe at big that Malaysia, one time depicted by Imperial Edwardian romanticism as a land of botching mahouts, khaki trunkss, and pith helmets has now become a land of fluxing milk and honey and a modern metropolis province. The old backwater outstation of the British Empire is no more.

The cogent evidence of the pudding, nevertheless, is in the feeding. With a globalised economic system, Malaysians from a panoply of economic and educational backgrounds now have an equal chance to work as there are vacancies for both skilled and unskilled labor. Foreign investing excessively has added to the horn of plenty of occupation chances, doing the aforesaid pudding, rather the tasty dainty so.

Furthermore, as a tropical state placed somewhat northwards of the equator and one of the three states that has control over the Straits of Malacca, Malaysia has a comparative advantage over other states of similar economical like. This has led her to specialize in certain countries of the economic system when it comes to international trade.

Malaysia so is one of the largest manufacturers of Sn, gum elastic and palm oil in the universe [ 1 ] . This limited range of production which suits the demand of international trade has allowed the Malayan economic system to secure larger additions in productive efficiency, taking to an ever-increasing export market. This so allows Malaysia to hold a trade excess which in bend props up her Gross Domestic Product ( GDP ) .

There are nevertheless, disadvantages to a extremely specialised economic system. Marx, for illustration criticized economic specialization. Although Marxism itself, like the penny-farthing and the kipper necktie, had at one clip seemed instead stylish. Yet, holding outlived their utility, they are now largely abandoned all and assorted except by naif metropolitan Gypsies normally known as ‘flower peoples’ . Nevertheless to be just to Marx, he did play the Sibyl on a few of import issues sing international trade, and its effect: specialization. This is because, at the clip of his hubbub against capitalist economy, the steam engine was still in its babyhood, people either walked or used a coach-and-four and if one mentioned heavier than air flight like Icarus of old, one would hold had to be institutionalised. Keeping in head the twelvemonth in which this was written [ 2 ] , Marx is therefore topographic point on in clarifying his prognostication of a specialised Bourgeoisie international trade market in his usual snappish manner ;

National differences and hostility between peoples are daily more and more vanishing, owing to the development of the Bourgeoisie, to freedom of commercialism, to the universe market, to uniformity in the manner of production and in the conditions of life…” [ 3 ]

Harmonizing to Marx hence, when the working masses become peculiarly adroit in certain specialized Fieldss to the exclusion of all others, they will doubtless drop deeper into wretchedness and poorness ensuing in rampant pay depression and an anemic, low-skilled, and bland work force. A globalized economic system as Marx contended had made the worker a mere extremity to the machine, wherein all the single appeal of the worker is lost. [ 4 ] When workers continue to endure from pay depression, they will be given to stash more of their income, taking to a weaker buying power and a fluctuating GDP. Therefore, Malaysia has to be really careful in equilibrating the felicity and contentment of the work force and can make so by increasing the lower limit pay to guarantee that the work force will go on to pass their income to develop the Malayan economic system.

International trade and investing have besides allowed companies to engage foreign labor particularly unskilled labor to stand in for less savory work, which the norm Malayan refuses to crouch low plenty to. This helps work out the deficiency of work force required in these Fieldss.

In an interview with Malayan Digest, Malayan Employers Federation ( MEF ) executive manager Datuk Shamsuddin Bardan, said, there are presently 2.8 to 2.9 million migratory workers in Malaysia. [ 5 ] Migrant myrmidons, who are here to react to the international market demands of Malaysia make up near to half of the work force in the building sector and two-thirds of the fabrication sector.

All in all, the migratory labor in Malaysia contributes to about 20 % of the entire work force in Malaysia. [ 6 ] It is beyond uncertainty therefore that foreign labor does so lend rather significantly to the national economic system.

Yet as it is with specialisation, migratory workers excessively, present a quandary for Malayan economic sciences. This quandary is highlighted by the fact that Malaysia has been flooded by migrators be it legal or illegal. [ 7 ] The hurt of migration into Malaysia is non the loss of occupations nor is it the rise of offense. Rather the hurt of uncontrolled migration is the anxiousness it has caused for the native population and frailty versa.

Nett Migration


Figure 1 – Net Migration into Malaysia. [ 8 ]

As seen in Figure 1, the net migration into Malaysia is on the addition. These migratory and migratory descended populations are secluded into their peculiar communities and unrecorded in certain geographical locations off from the homogeneousness of the general population. [ 9 ] They have non taken attentiveness thereto, the Malay adage, “enter thou a pen, bleat ; enter thou a cowbarn, low” [ 10 ] and have accordingly failed to incorporate into the Malayan hegemony. Therefore communalism, denominationalism, and a possible for societal agitation between the migrators and the indigens will doubtless originate. It is like a bare lucifer inching of all time closer to a tinderbox. Any closer ( i.e. more addition in net migration ) and the resulting fire will certainly be a funeral pyre upon which burns our chances for future investing. Uncontrolled migration therefore, will decidedly impact the stableness that hegemony brings to Malaysia, and if this stableness suffers, her economic system will endure every bit good.

In the terminal, if Malaysia fails to command migration into manageable proportions, one can merely repeat the warning of the late British Parliamentarian, John Enoch Powell, who compactly summarized the hazards of uncontrolled migration with a quotation mark from the basic text edition of every classicist, Virgil’s Aenied: “Like the Roman, I seem to see the River Tiber frothing with much blood.” [ 11 ]

Besides foreign labor, Malaysia excessively has progressively benefited from a more broad and just opportunity to excite economic growing via Free Trade Agreements ( FTA ) . This is an of import development in international trading in Malaysia.

FTA’s with states such as New Zealand, India, and Australia hence [ 12 ] have created for Malaysia a larger export market. Tariffs for exports can besides be negotiated or be done off with. Business cognition and acumen have besides increased in Malaysia thanks to the technological and proficient coaction between signers of a FTA. Malaysia is now able to export more merchandises than importing them, making a trade excess and as a effect, an increased GDP.

However, the FTA is verily a dual edged blade. There is a fright that with the addition of Malayan engagement in FTAs, the law-making sovereignty of the houses of Parliament will be taken off bit-by-bit. An illustration of the above scenario can be seen when the United Kingdom joined what was so known as the European Common Market via the Treaty of Rome. In its current manifestation this common market now known as the European Union enacts about half of all British Torahs including statute law on the economic system [ 13 ] . Ergo, the Malayan authorities must continue with cautiousness lest they sign off their powers of administration. Let us non step in the contrary way of our former colonial Masterss.

If Malaysia intends to go on harvesting the benefits of international trade, it is imperative that certain stairss be taken. The first measure the Malayan authorities can take is to take down revenue enhancements. The recent execution of the Goods and Services Tax has caused the monetary value of goods to lift while rewards remain dead. The general population therefore, will turn to to stashing their net incomes alternatively of passing them, ensuing in a weaker buying power. As a effect of this a mean population, Malaysia’s ability to import goods will diminish, doing Malaysia unattractive to international trade. Therefore by cut downing revenue enhancements, Malaysia will go on to be an attractive proposition to international trade or investing.

Another measure in which the Malayan authorities ought to take is to be more extravagant in her governmental disbursement. Absurd, as it may look at a clip where Malaysia is mired in a national debt shortage as seen in Figure 2. Yet as Keynesian economic sciences dictate, this does non intend that the authorities should concentrate on budget cuts. [ 14 ] By increasing shortage disbursement on popular undertakings such as bettering route plants and substructure via borrowing money through international investing and trade, the authorities will make new occupations and increase the buying power of the population. This in bend will let more of the debt to be paid off in the long tally.

RM ( Mill )


[ 15 ] Figure 2- Federal Government Debt.

Last as noted in Figure 3, Malaysia has a trade excess in their balance of trade. By trade excess it is meant that Malaysia exports more than it imports. This is inherently a really good thing for Malaysia and contributes massively to the one-year increase of the GDP. Nevertheless, to farther increase the trade excess, the Malayan authorities ought to pass the entree income in states which are presently sing a trade shortage but however rely on Malayan imports. This will make new beginnings of income and work in those several states which will in bend increase their purchasing power and therefore doing them able to buy more Malayan merchandises in the coming old ages. In short, Malaysia needs to be an active participant in the foreign investing market via her autonomous financess such as Khazanah and UEM.

Figure 3- Malayan Balance of Trade. [ 16 ]

In decision, it is platitudinously obvious that without international trade, the Malayan economic system will hold all the back bone of a lumbar pain riddled blob-fish. On the other manus nevertheless, international trade and investing must besides ever strive to supply a merely and just procedure to the mundane Malayan worker and to be able to allow to them, both the freedom and the chance to labor for theirpanis hodie. As a concluding word stressing the importance of justness in international trade and investing, let one the indulgence to cite from the poesy of Holy Writ, “It is a joy to the merely to make opinion but devastation shall be to the workers of wickedness.” [ 17 ] (1992 Wordss)


  1. The Communist Manifesto, Karl Marx and Friedrich Engels, First Signet Classics Printing, ( Kotkin Afterword ) , May 2011
  2. The Fall and Rise of Keynesian Economics, John Eatwell ; Murray Milgate,Oxford University Press, 2011
  3. OECD Migration and the Labour Market in Asia 2001 Recent Trends and Policies: Recent Tendencies and Policies. OECD Publishing, 25 January 2002
  4. Like the Roman: The Life of Enoch Powell, S. Heffer, Phoenix: Weidenfeld & A ; Nicolson 1999.
  5. Dustmann, C and Frattini, T. ( November 2013 ) . The Fiscal Effectss of Immigration to the UK. CReAM Discussion Paper. No. 22/13.
  6. Alex Tabarrok. ( February 2009 ) . The Future of Economic Growth. Ted Conference, Long Beach, California.