Malaysia Household Income And Expenditure Trends Economics Essay

Malaysia Ho usagehold Income And Expenditure Trends stintings EssayThis section will talk over the background of the study, which explained the frugal activities and economic branch by field and by role persona, Malaysia home plate income and wasting disease trends. This study similarly menti mavend the concept of sustainable development and harvest-time. This study chooses sinew utilisation in rules of order to identify the factor of environment. From vigor enjoyment, this study will observe the effect of energy enjoyment on environment. Next, the problem statement will cover the issues and objective, signifi idlert, scope and limitation of the study.Background of the studyMalaysia is the third wealthiest clownish in south-east Asia after Singapore and Brunei Darussalam base on gross domestic product at purchasing office staff parity (PPP) per capita are shown in set back 1.1. It had a population of around 26 jillion muckle in 2007. According to the fall in N ations Development Programme, the population of Malaysia is estimated to grow to 29.8 millions by the course of instruction 2020. Most Malaysian is active economically and independently. The start of a sustainable reco very(prenominal) cycle was seen in 2002 besides the operation s lackened in 2005 gross domestic product growing outrank was 7.2% in 2004 and 5.2% in 2005 as shown in Table 1.2. domestic demand and export dynamism are two study result factors. Malaysia is characterized by its miserlinesss biggish bareness and favourable behaviour to state of wards foreign enthr wholenessments. During the New economical Policy 1971 1990, a number of policies could be identify to explain the pattern of income. The promotion of export-oriented industrialisation driven primarily by foreign bear enthronisation has seen a make for moil, thus lowering unemployment and raising household incomes. The around dynamic activity vault of heaven is electronics, given that the coun try is one of the worlds major exporters of semi-conductors and electronic components in the mid-nineties.Table 1.1 Countries of Southeast Asia sorted by their gross domestic product (gross domestic product) at purchasing power parity (PPP) per capita in US$Southeast Asia CountryRankInternational Monetary Fund (2009)+ globe Bank (2008)++CIA World Factbook+++Singapore150,52349,32150,300Brunei249,11050,100Malaysia313,76914,21514,800Thailand48,0608,0868,100Indonesia54,1573,9944,000Philippines63,5213,5133,300Vietnam72,9422,7872,900Cambodia82,0151,9511,900 get-go +Data list to the year 2009. World sparing Outlook Database-April 2010, International Monetary Fund. ++Data refer to the year 2008. World Development Indicators database, World Bank.Note Per capita values were obtained by dividing the PPP gross domestic product data by the Population data. +++GDP per capita (PPP), The World Factbook 2010, Central Intelligence Agency.The economic activity has been much reliant on galvanising and electronic celestial sphere and the country must find new growth-genera displaceg activities, especially in the face of the soaring arguing betwixt countries of this region. Besides, Malaysia is classified among the worlds largest producers in the agriculture sector, curiously of palm oil, cocoa and rubber.Table 1.2 Malaysias Economic branch from 2006 to 2009Economic Indicator2006200720082009(f)GDP$million125,051132,988139,159139,174Growth of GDP%6.06.05.0-3.1Inflation (CPI)%4.02.05.01.1Unemployment%3.03.03.74.5Foreign direct investment% of GDP4.05.03.04Export growth%7.04.01.5(16.6)Import growth%9.05.02.2(14.9)Current depend balance$million26,20029,24338,91421,053 inaugurations The World Bank, World Development Indicators 2010 for 2006-2008,Economic Planning Units Forecasting for 2009.The country is also the leading exporter of tropical woods. The United States, Singapore and Japan are Malaysias major trade partners. The country imports mainly manufactured products, polit ical machine tools and vehicles. Nevertheless the economic growth of Malaysia has wide implications for geomorphologic change in the scrimping (from agriculture sector to industrialisation), growth of employment opportunities outgrowth in personal income and change in usage pattern. It has also naturalized the environment through a variety of techniques such as pollution natural resources overexpolitation degradation and wildlife home ground disappeared, and changes in weather. The result of the larger consumption levels in the environmental problem as proven in the declining in the fisheries haul, increasing in threatehned and endangered flora and founa, destroyed of wilflife natural resources, polution and purposely exotic killing, (Khalid, 2007)environmental policies usually take into consideration the value of natural resources in contri buting to formes of biological particularly in controlling flood levels, climate change rules, merchandise of oxygen and absorption of carbon dioxide in the fall in areas as nearly as protection of flora and fauna. surroundingsal degradation is not accurately mensural by GDP because the economic growth of the nation depend on natural resources but the potence of the economy must include the condition and sustainability of natural resources. This situation is not happening in Malaysia but those concerned about the protection of wildlife believe good treatment needs to be given to the eroding impact of economic growth on wildlife. Recently, environmental concerns suffer grown among the community and society, policy manufacturer and government through the sustainable development, despite environmental problem never won against the mega development project, for exemplar Bakun dam project. The main objective among the exploitation countries is economic growth through the natural resources exploitation.1.3 Overview of Malaysia economyMalaysia is the one of the developing countries have modify itself from 1970s to 1990s from raw materials producer to the multi-sector economy particularly manufacturing and operate sector. This transformation was induced by positive economy growth which al well-nigh exclusively driven by export of electrical and electronics components. Consequently, global economic crisis and the slump in the information technology (IT) sector in 2001 and 2002 have affected Malaysia economy. However, Malaysia economy grew 5.7 portion in 2003 despite at first half very difficult to sustain payable to away pressures such as Severe Acute Respiratory Syndrome (SARS) and the Iraq war to be concerned among business society. In 2004, growth peaked 7 percent and 5 percent in 2005-2006 and 4.6 percent in 2009.The economic growth thereafter was not as remarkable as before, though some recovery took place in 1987. This was the beat when the manufacturing sector for intermediate goods started to expand, which subsequently hatch the Malaysian economy forward. This established a ne w structural change from merely producing primary commodities to process manufacturing and advanced manufacturing, including electronic semiconductors and components of electrical products. In the middle of 1997, the economy faced another economic disaster, the Asian financial crisis that began in Thailand and subsequently spread to all over the ASEAN countries including Malaysia. In fact the exchange rate badly affected most of the ASEAN countries. ASEAN countries had no other choice but to liquidate their current assets in order to offset their losses resulting from the currency devaluation. Slightly to a greater extent than one year later, the Malaysian economy recovered. tout ensemble these events have changed the structure of the Malaysian economy to what it is today.It has become a tradition at the while away of each ex to predict the path or direction and magnitude of economic growth deep down the context of the challenges and prospects for the next 10 years or more. The 1980s were an enormously difficult and turbulent decade for the global economy. In fact in the 1990s, though expected by some to be sanely less turbulent and difficult, the struggle should be quite different for Malaysia in its quest to become a saucily-industrialised economy. Given the diverse structures of the economy, it has its own internal problems, with its strengths and weaknesses.Malaysia has benefited from higher world energy prices although at the time the make up of domestic gasoline and diesel rising and it has forced the government to reduce the subsidies as well as contributed the higher inflation. Malaysia has reduces the risk of financial crisis throughout the strong foreign exchanges reverse and a small external debt. However, Malaysia economy is comfort depend on continued growth in the US, China and Japan as a top exporting countries and main sources of foreign investment. All these plans are stated in one-ninth Malaysia Plan for its five years national develo pment agenda. The plans targets the development of higher value added manufacturing and an expansion of the profit sector stated in Tenth Malaysia Plan.1.3.1 Economic growth by sector and employment parcel outMalaysias gross domestic product (GDP) grew from RM10 billion in 1970 to about RM37 billion in 1980. It increase make headway to RM119 billion in 1990 and RM222 billion in 1995. In 2005 and 2009, it increased from RM449 billion to RM528 billion. These figures represent a GDP growth rate of 11% in the midst of 1970 and 2009 as shown in Table 1.3. The manufacturing sector expanded from 15% of GDP the in 1970 to 19, 24, 26, 33 and 27 % in 1980, 1990, 1995, 2000 and 2009, one by one and decomposition in qualityd to 31% in 2005, while the share of agriculture in the GDP declined from 28 % in 1970 to 25, 15, 13 and 10 % in 1980, 1990, 1995 and 2005 respectively. The run sector declined from 42 % in 1970 to 39 in 1980. This sector increases to 46 % and 51 % in 1990 and 1995 re spectively but declined to 47 % in 2005, indicating the growing government role and common enhancement in the service condition. All the sectors also changed during the last two decades, particularly in agriculture and mining sectors. In the mining sector, tin production has declined subsequently crude petroleum became the majot contributor to the Malaysia economy growth.The manufacturing sector transformed from agriculture based products to the manufactured of electrical and electronic components, petroleum products and palm oil products. the export was significant contributor to growth particularly on manufactured goods which has contributed 74.8 percent of count export in 2007. (sourcesMITI, Vol.18, date 30 Otc.2008). the electrical and electronic products became the major export of manufactured product, followed by chemical products, machinery, metal, wood products and scientific equipment.Table 1.3 Malaysian gross domestic products by industry, 1970-2005(RM million in 2000 pri ces)Source Economic Report, various issues, Ministry of Finance, Kuala LumpurThe unemployment rate has been relatively decline with a increase in the employment situation for manufacturing and services sector but lessening in agriculture and mining sectors. The services sector has absorbed 52 percent in 2009 compared to 32 percent in 1970. Figure 1.1 shows the contribution to the GDP by the main sectors in Malaysia for year 2009. The services sector became the largest contributor to the GDP compared with the manufacturing sector. This sector includes electricity, water, transportation, wholesale, health, education, hotel and restaurant.Source Economic Planning Unit, 2009Figure 1.1 Contribution to the GDP by sector, Malaysia, 2009In 1970, employment share of the primary sector (agriculture and mining) accounted for 53 % of the total employment. In 1980 and 1990, it declined to 41.4 and 26.6 % respectively as shown in Table 1.4. Employment in the primary sector declined further to 15.2 % and 12 % in 2000 and 2009, respectively. On the other hand, the secondary (manufacturing and construction) sector absorbed about 35.0 % of the spend a pennyforce in 2009, compared with 26.2, 21.3 and 11.4 % in 1990, 1980 and 1970 respectively.Table 1.4 Gross domestic product and employment share by industry(In 2000 prices)GDP Share (Employment Share)197019801990200020052009 primeval SectorAgriculture, forestry, livestock and fishing28 (53.5)25 (39.7)15 (26.0)9(15.2)10(12)7(12)digging and quarrying7(2.6)10 (1.7)12(0.6)11(0.4)13(0.4)8(0.4)Secondary sectorManufacturing15(8.7)19(15.7)24 (19.9)33 (27.6)31(28.6)26(28.4)Construction4(2.7)4 (5.6)4(6.3)4(8.1)3(7.0)3(6.6)Services sector42 (32.5)39 (37.3)46 (57.2)48 (48.7)47(51.0)56(52.6)Total100100100100100100(Unemployment)%7.45.75.13.13.24.5Per capita GDP (RM)1,9323,0384,4268,89916,49718,838Source Economic Report, various issues, Economic Planning UnitThe GDP per capita increased from about RM1,932 in 1970 to about RM3,038, RM4,426 a nd RM18,838 in 1980, 1990 and 2009 respectively. The employment share in the primary sector decreased from 56.1% to 12% while that of the industrial and services sectors increased from 8.7 % and 32.5 to 28 % and 52.6 % respectively over the thirty-year conclusion from 1970 to 2009 (shown in Table 1.4). With the wax in the employment opportunities, the unemployment rate contracted, except for the mid-1980s, from 7.4 % in 1970 to 3.2 % in 2005 but has since then risen slightly to 4.5% by 2009. The labour market became so tight in the 1990s that some sub-sectors had to resort to imported labour from a colossal. (EADN, 2006).Since the 1970s, Malaysia has transformed itself from an economy dependent on raw materials production with a largely poor population to a multisector economy with a middle-income population. These changes have affected the Malaysian household through employment opportunities especially when the Malaysian economy has undergone major structural changes since 20 yea rs ago consequence, the quality of life improved due to the strong growth in the manufacturing and services sector. The Malaysian household has benefited through on increase in its income as well as an improvement in its standard of living and change in pulmonary tuberculosis pattern.1.3.2 The Malaysian household income and expenditure trendsSince Malaysia has experienced a remarkable change from an agriculture country to an industrialise country, its GDP has grown from RM37 billion in 1980 to RM528 billion in 2009. As Sanne (1998) pointed out that there is close family between expenditure and income because expenditure patterns tend to change when incomes increase. However, expenditure or consumption plays an grand role in generating GDP after export. Figure 1.2 shows a comparison of the GDP per capita between Malaysia, Asia and the world. During 1991 to 2006, Malaysias GDP per capita rapidly increased twice compared with Asia and World. Mean thats, the income of every Malaysia n household has increased from time to time except for 1997 when Malaysia suffered from the economic crisis, but the Malaysian economy was still under control compared with other developing countries.Source Earth Trends Country Profiles, MalaysiaFigure 1.2 GDP per capita, 1991-2006Figure 1.3 shows the Malaysian mean annual household income between 1985 and 2007. Households benefited from the continued increase in disposable incomes arising from high export earnings and positive economic growth which also generated full-employment and income-earning opportunities among the Malaysians. Moreover, the competitive credit provided further support to more household spending. The growth and structural transformation of the Malaysian economy has wide implication on the growth of employment opportunities as well as the distribution of labor force by sectors.Source Economic Asian Development Network, Economic Reports (Various Issues)Table 1.3 Malaysian mean annually gross household income (RM) 1985-2007As income level increased, the monthly consumption expenditure per household grew from RM731 in 1980 to RM1, 935 in 2005 (Department of Statistic, 1980-2005). With this quantitative rise in spending came a charge in the type of goods and services under demand. Income grew at an average rate 4 % during 1997 to 2007. According to the Economic Planning Unit, household income in 2004 was around RM38,988. This suggests that the average Malaysian household was quite capable of managing its cash in hand and avoiding overspending. In 1980/82, the average household spending amounted to RM732 monthly, compared with RM412 in 1973. The rise in household expenditure during the period 1994 -1999 was not due to price increases only that households were consuming more, indicating an increase in their income and purchasing power, corresponding to the legion(predicate) years of healthy economic growth. After adjusting for inflation, households recorded a 3.4 % growth in expenditure, in s quare foothold, during the period of 1994-1999. The higher household spending in 1999 was accompanied by the increase in the clunk of goods bought by households, not just because of higher prices.1.4 Sustainable development and populationThe basic issue between economic development and environment is the concept of sustainable development. The concept of sustainable development is a broad view of military personnel wellbeing, a long term perspective about the consequences of present activities and full meshing of civil society to reach possible resolutions. There are many predecessors (see, for example, Barry, 1977 Page, 1977), the most popular construction given by the World Commission on Environment and Development on the subject of the sustainable development basic conceptdevelopment that meets the needs of the present times without compromising the ability of incoming generations to meet their own needs (WCED, 1987, p43).In terms of economic, the concept of sustainable dev elopment implies the important relationship between economic growth and environmental protection in conducting economic activities and utilizing natural resources to fulfill human needs. In Malaysia, sustainable development cannot be achieved if economic growth, social development and environmental protection work separately. Hence, the policy on the environmental has been developed to take into consideration the incorporation of these three actions. Through the sustainable development, Malaysian government plans at continued in enhancing the economic performance, social and quality of life of its race (National policy on environment, 2002).The issue of environmental is crucial for policy-makers in their effort to appear green, in terms of global warming, destruction of the ozone layer, deforestation and population pressure. A number of competing issues and possible solutions to threats ranging from air to water, ground, noise pollution, radioactivity, virulent wastes, pesticides, and endangered species have been implemented (Khalid, 2007).Most of the important goals of sustainable development such as providing a high quality of life for present and future generations were achieved but the economic and social problems are still exist. The economic and social problems faced by Malaysia were mostly from the lack of development and insufficient infrastructure in its early period of industrialization. The rapidly economic development through urbanization, industrialization and other land-use activities since 1980s later gave rise to water, air and land pollution, which have remained as serious environmental problems in Malaysia (Khalid,2007). This problems related to the lack of development in Malaysia gave rise to environment imparts due to inadequate hygienic facilities and lack of proper house particularly in the rural area. This is the same arise to urban settlement where the unchecked sprawling growth resulted in crowded condition and pollution of river s by human being. Figure 1.4 shows that quality of life forefinger performed better from 1992 to 2002, while environment index not performed well due to economic and social problem. Environment index grew at -4.3 percent from 1990 to 2007 and this sturcutre should be taken into consideration. In commonly, human being is need the modify water and hygienic services because it is very important to ensure good health and proper living.Source Malaysia Quality of Life, 2004, Economic Planning Unit (EPU),MalaysiaFigure 1.4 Malaysia quality of life index and environment index, 1990-2000Moreover, environmental problems are also closely related to industrialization activities directly and indirectly by households. Economists view on the purpose of production is to feed consumption or household demand. Evaluation of the environmental and social impacts of households need to account for both the direct impacts of the household, such as disposal of household wastes and the emission arising fr om fuel burning in a household, and the indirect impacts which are caused during the production of the goods and the delivery of the services to the household.In Malaysia, three factors that shape the intensity of environmental pollution are population size, economic activities and production activities. From these factors, production activities are the most responsible for worsening industrial pollution in Malaysia (Khalid, 2007). Some studies suggest that population growth is one of the major factors causing carbonic acid gas emissions (York et al., 2003 Shi, 2003 Cole and Neumeyer, 2004), but the growth of population in Malaysia can also contributed to the worsening of natural resources or establishment of biological life support. As population increases, the symptom of ecological pressures and scarcity of natural resources will be occurred including deforestation, soil erosion, overfishing and overcrowding as well as economic puree is indicated through lower output, inflati on and unemployment, and social problems.Due to the increasing population, pressure builds up for increased production from land use, hence the results from these activities will raise the soil erosion and degradation. These activities are not limited to the destroyed of land but also a declined in the flow of rivers, increased flood levels and silting of reservoir and dam. (Khalid, 2007). A growing population also leads to increase in energy consumption especially electricity, to meet the increased demand and to service the new development areas. Motor vehicle ownership is also increased with a growing population that becomes more affluent, and consequently contributing to greater pollution, particularly in generating CO2 emissions.Sources United Nation Statistic Division, IMF/2005Figure 1.5 The total number of newly registered motor vehicles and energy consumption per capita, 1980-2004From 1980 to 2004, a general increase in CO2 emission was experienced by Malaysia. Only in 1998/1 999 was a decline to about 17.6 % seen Figure 1.5. At this time, there was also a drop in the number newly registered private motor vehicles and energy consumption as shown in Figure 1.5. This indicates that a reduction in the use or ownership of motor vehicles will reduce energy consumption (of petroleum) and thereby the generation of CO2. Figure 1.6 shows the total of CO2 emissions in Malaysia. Therefore, household expenditure continues to shift away from food towards transports particularly in fuel consumption even though spending on motor vehicles fall. Fuels consumption continues to rise with worsening in public transport system have declined from 11 % to 6 % and it grew at -4.1 % between 1999 and 2005 (DOS).Sources United Nation Statistic Division, IMFFigure 1.6 The Carbon dioxide emissions (CO2), MalaysiaIn order to reduce the CO2 emissions, many policy-makers have implemented various pollution control policies, for example by improving the public transportation system and in creasing the oil price. However, the best way to reduce CO2 emission is to reduce energy consumption by household direct and indirectly.1.5 Total primary energy render and final consumption in MalaysiaThe rapid economic growth in Malaysia has largely impact the energy hang on and consumption. The annual growth rate of GDP and total households energy primary use are 5.7 and 7.4 respectively in the 1990s as shown in Table 1.5. However, the economic growth slowed down from 1996 to 2000 due to economic crisis of 1997 in Asian region. The annual average total primary energy supply (TPES) growth increases much from 1991 to 2000 due to major investments particularly in the transportation and industrial sectors, 41.8% and 37.7% respectively.The trends in energy use of Malaysia are relatively same to the trends found in many developing countries such as study done by common (2007) for Korea and Pachauri (2002) for India. The total primary energy supply (TPES) in Malaysia increased from 5- 10 Mtoe between 1991 and 2006.Table 1.5 Income and energy supply and consumption in MalaysiaAnnual growth rates in %1991200020081991-20002000-20081991-2008GDP in Ringgit Malaysia at 2000 unalterable prices (Million)205,312356,401476,1825.72.948.78Total primary energy supply (Ktoe)26,33550,71069,8466.83.2510.25(Per capita TPES in Ktoe)1.392.172.594.61.776.41Total household primary energy use (Ktoe)13,96128,70542,9017.54.1011.88(Per capita total household energy in Ktoe)0.741.231.595.22.597.94Direct household primary energy use (Ktoe)8431,6502,5656.94.5111.77(Per capita direct household energy in Ktoe)0.040.070.104.73.109.04Sources Department of Statistic Malaysia and own calculationThe enormous growth rates of Asian economy give a large impact to the energy consumption. In the 1990s, the petroleum production and consumption increased tremendously as well as an increase of hydroelectric and coal in generating the electricity for the nation. The demand and consumption of energy increa sed tremendously from 1991-1997 as shown in figure 1.7. A large amount of investment on electrical infrastructure and automobile has caused primary energy consumption reached at approximately 27.23 million tones and electricity generation almost 6 Mtoe in 2000 and will continue to rise.Source Malaysia zippo Centre, 2000Figure 1.7 The total energy consumption and GDP in Malaysia from 1991 to 2006.The future economic growth for any country is hard to forecast but to generate an exactly estimation, firstly must account for the physical and economic growth of the nation. Malaysia projected to grow at 5.7% % annually and will continue at this rate for many years. With increasing rate of urbanization, total primary energy demand is set to increase by nearly 7 % annually. Moreover, political stability and development will continue to drive the economy forward. The Malaysian Ministry of Energy suggest that to provide for its citizens energy demands, RM 4.86 billion dollars will be required over the next 10-15 years 60% allotted to energy generation and the remainder to transmission and distribution of energy.such(prenominal) enormous economic growth and increasing infrastructure and demand will likely send the total energy use to well over 100 Mtoe in the year 2020. The growth rate of urbanization shows that the industrial sector of the economy, the sector remains unchanged to require large portions of the total amount of energy used in the nation. The industrial sector could increase to upwards of 50% of the nations economy in move competition. The switch towards public transportation in urban areas will potentially cause a decline in the percentage of the economy occupied by the transportation sector. The energy use of residential and commercial-grade sector remains relatively constant occupying only 13%-14% of the total energy use.Vision 2020 sets goals and standards for the nations future as a whole. Malaysia is become a totally developed and united country by the year 2020. In line with to this, Malaysia targets to raise the living standard of rural and urban peoples as well as reducing poverty, finally leading to an increase in the total household primary energy consumption all over the nation. The annual growth rate of total household primary energy consumption is 7.5% and direct household primary energy consumption about 6.9% from 1996 to 2000. Since households income and consumption expenditure increased, the household energy requirement increased too as shown in Figure 1.6. The total primary energy supply of 50,710 Ktoe in 2000 was for an income of RM 356,401million economy very high compared to 1991.1.6 The effect of energy consumption on the environmentEnergy use contributes to a range of environmental pressures and is a major source of greenhouse and acid gases. The most polluting fuel, in terms of CO2, SO2, NOx and particulate emissions, is coal, followed by oil. Natural gas burns much more cleanly, can be used more efficiently in domestic boilers, and produces as much CO2 per unit of energy. Disposal of electronic waste such as dry batteries presents serious risks associated with carcinogenic substances, which can be leached to soil and groundwater over the medium and long term. Uncontrolled land filling also releases contaminants, with a time lag. Incineration or co-incineration of electronic equipment waste with neithe