Malaysia’s June exports up 10% to RM73.1 bil from year ago

KUALA LUMPUR: Malaysia’s exports rose 10%, or RM6.6bil to RM73.1bil in June 2017 from a year ago, boosted by electrical and electronic (E&E) products, but the increase was below economists’ expectations of a growth of 18.3%.

The Statistics Department in a statement on Friday said re-exports in June 2017 was valued at RM9.7bil and accounted for 13.2% of total exports. Domestic exports was higher by RM7.6bil to register at RM63.4bil.

It said on a year-on-year basis, imports also increased, rising RM2.3bil to RM63.2bil. However, the growth was below the 19.8% rise by economists’ forecast.

Total trade in June 2017 which was valued at RM136.3bil grew RM8.9bil or 7.0% from a year ago. However, it fell RM17.1bil or 11.1% when compared to May.

In June 2017, a trade surplus of RM9.9bil was recorded, where a similar increase of RM4.4bil or 79.0% for both year-on-year and month-on-month was registered.

Compared to May 2017, total trade, exports and imports fell 11.1%, 8% and 14.5%, respectively.

The Statistics Department said June 2017’s exports were mainly driven by an increase in E&E products, which rose RM3.7bil to RM28bil.

Liquefied natural gas (LNG), which contributed 5.4% to total exports, grew RM2bil or 97.3% to RM4bil due to the increase in both average unit value and export volume.

Palm oil and palm oil-based products, rose RM845.7mil to RM6.2bil. Exports of palm oil, the major commodity in this group of products, rose RM524.1mil or 16.5% due to the increase in both export volume and average unit value.

However, refined petroleum products, which accounted for 5% of total exports, shrank RM679.4mil or 15.7% to RM3.7bil due to the decrease in export volume (-31%) as average unit value increased 22.2%.

Timber and timber-based products fell RM67.1mil to RM1.7bil while crude petroleum decreased RM19.9mil to RM1.9bil due to the decline in export volume (-9.2%) as average unit value increased 9%.

The Statistic Department said on a year-on-year basis, imports increased 3.7% from RM60.9bil contributed by intermediate goods and capital goods.

It said intermediate goods which constituted 60.5% of total imports increased RM3.6bil to RM38.2bil. The growth was mainly attributed to parts and accessories of capital goods (except transport equipment), industrial supplies, processed, industrial supplies, primary and food and beverages, processed, mainly for industries.

In the first half of 2017, Malaysia’s total trade rose by 22% to RM859.17bil from RM704bil recorded in the first half of 2016.

TAGS / KEYWORDS:Economy , Trade Surplus , Exports

sources: https://www.thestar.com.my/business/business-news/2017/08/04/malaysia-june-exports-rose-10pc-to-rm73-1bil/

conclusion : Increasing exports is generally considered to be beneficial to the economy. It increases production and GDP, and (all else remaining the same) improves the balance of trade. However, the increase in production will increase demand for inputs which may have negative effects on other sectors; and the increase in exports could cause the exchange rate to appreciate. These economy-wide effects may partially (or even completely) cancel out the beneficial effects of the increase in exports. This scenario looks at the aggregate impact of these various different effects.

Importance of exports

• Employment. Growth in exports can create employment. 

• Economic growth. Exports are a component of aggregate demand (AD). Rising exports will help increase AD and cause higher economic growth. Growth in exports can also have a knock on effect to related ‘service industries.

• Current account deficit. The strength of exports has a large role in determining the current account deficit. 

Malaysia factory output up 6.1% in July, beating forecasts

KUALA LUMPUR (REUTERS) - Malaysia's industrial production in July expanded at its fastest pace in eight months, government data showed on Monday (Sept 11), boosted by gains in all three major sectors.

Factory output grew 6.1 per cent from a year earlier in July, the fastest since November 2016 and beating the 5.3 percent annual rise forecast in a Reuters poll.

Industrial output was up 4 per cent in June.

July's factory output was due to strength in the manufacturing, electricity and mining sectors, according to data from the Statistics Department.

Manufacturing output grew 8 per cent from a year earlier in July, boosted by growth in the food, tobacco, and electrical and electronic products subsectors, the data showed.

The electricity generation sector rose 7.9 per cent year-on-year, while mining output grew 0.2 per cent.

Malaysia's exports in July beat economists' estimates, rising 30.9 per cent from a year earlier, on higher shipments of manufactured products and mining goods.

source : http://www.straitstimes.com/business/economy/malaysia-factory-output-up-61-in-july-beating-forecasts

conclusion ;

In the article said that, factory output increase in 6.1% in July due to the strength in the manufacturing, electricity and mining sectors, according to data from the Statistics Department.  This cause of rising in Malaysia's export in July.

The effect:
when output increases, supply also increases,then the price of output will increases too.
The more production, the more cost will occur.

In the short-run, increases (decreases) in demand in a competitive market will cause prices and output to increase (decrease). 

In the long-run, increases (decreases) in demand in a competitive market will cause increases (decreases) in output. Initially, markets with an increase (decrease) in demand will have firms experiencing economic profits (losses). Over time, markets with firms experiencing economic profits (losses) will have additional firms enter (existing firms will exit) the market, and prices will decrease (increase) towards previous levels. If cost conditions remain the same, then prices will revert to what they were before the increase (decrease) in demand.

Figure 3.10: Long Run Supply: Increasing Cost Industry

For a decreasing cost industry, if demand increases, in the long run firms can provide more output at lower prices. The need to produce larger quantities of goods and services in response to increased demand induces technological change, which lowers costs for the producer and these savings are passed on to consumers in the long run.

Malaysia GST – Types of Supply

Under the scope of Goods and Services Tax (GST) in Malaysia, supplies fall into 4 categories. They are, standard rated supplies, zero rated supplies, exempt supplies and supplies not within the scope of GST. Goods and Services that fall under each category predetermined by the Royal Custom Department of Malaysia.

Below is the explanation of each category.

1. Standard Rated Supplies

Standard rated supplies are referring to taxable goods and services, which are subject to a standard rate of 6%.

Any taxable person or company who is registered under GST requires to collect GST on behalf of the government on their sales of the supplies.  The person or company is eligible to claim input GST credit on the business inputs in making the said supplies.

For the consumers, they can identify the standard rated supplies by looking at the receipt when making the purchase. Normally, standard rated supplies GST labelled with an “S”.

The examples of standard rated supplies are local supply of goods or services, supply of land and building for commercial and construction of all types of building.

2. Zero Rated Supplies

Zero rated supplies are referring to taxable goods and services, which are subject to a tax rate of 0%.

Within this category, taxable person or company who is registered under GST does not require to collect any GST on their sales.  However, the said person or company is eligible to claim input GST credit on the business inputs in making the said supplies.

For the consumers, they can identify the zero rated supplies by looking at the receipt when making the purchase. Normally, zero rated supplies GST labelled with a “Z”.

The examples of zero rated supplies are goods such as basic food and utilities such as beef, rice, sugar, water for domestic use and first 200 units of electricity per months for domestic use.

3. Exempt Supplies

Exempt supplies are referring to goods and services, which are not subject to GST.

Within this category, taxable person or company who is registered under GST does not required to collect any GST on their sales nor eligible to claim input GST credit on the business inputs in making the said supplies.

For the consumers, they can identify the zero rated supplies by looking at the receipt when making the purchase. Normally, exempt rated supplies GST labelled with a “Z”.

The examples of exempt supplies are transport services, toll or highway and certain financial services.

4. Supplies not within the scope of GST

This category refers to supplies, which do not fall within the charging provision of the GST Act.

The example include non-business transactions, sale of goods from a place outside Malaysia to another place outside Malaysia as well as services provided by the Government sector.

Summary

Type of Supplies	GST Rate	Input GST
Standard Rated	6%	Claimable
Zero Rated	0%	Claimable
Exempt	Not Charged	Not Claimable

sources : https://www.hasilnet.org.my/gst-types-of-supply/

Conclusion

The Goods and Services Tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption. The GST is paid by consumers, but it is remitted to the government by the businesses selling the goods and services. 

• GST is progressive tax mean a tax that take a large percentage from high-income earners than it does from lower income individual.
• GST provides revenue for the government.
• GST is indirect tax.

GRAPH INCIDENT OF TAX:

MALAYSIAN SUBSIDIES

MALAYSIAN SUBSIDIES AND IMPACT TO THE COUNTRY

Who benefits most from subsidies? — Lim Sue Goan

OCT 3 — The huge amount of subsidies in the Budget 2013 has triggered a question over the effectiveness of the existing subsidy system. The rich and corporations have benefited the most from it, rather than the poor.

The day after the Budget was tabled, sugar refineries have notified retailers to raise sugar prices by 20 sen. The move to slash prices is always slow but when it comes to raising prices, it is lighting fast.

Would subsidising necessities benefit the people, or business operators? It was rumoured that some industrial operators have taken advantage of legal loopholes to buy large quantities of diesel from petrol stations, causing shortages in Johor, Malacca and Perak. Subsidised diesel and petrol have been smuggled and abused. Rich people with big cars can enjoy more subsidised fuel compared to the poor with small cars. Many sport utility vehicle and four-wheel-drive cars are also consuming diesel.

The government will allocate RM386 million to introduce the price uniformity programme and ensure the prices of essential goods in Sabah, Sarawak and Labuan are sold at lower prices through the opening of 57 Kedai Rakyat 1Malaysia (KR1M). Domestic Trade, Co-operatives and Consumerism Deputy Ministry Datuk Tan Lian Hoe pointed out that the government might provide subsidies to shipping companies. Why don’t they just repeal the cabotage shipping policy to directly ship goods to Sabah, Sarawak and Labuan without going through Port Klang?

In addition, Energy, Green Technology and Water Minister Datuk Seri Peter Chin Fah Kui said that with the rising international fuel prices, including coal and natural gas prices, tariff adjustments will be an inevitable trend in the future. The government gives many subsidies to independent power plant operators to maintain “cheap electricity tariffs”. However, the tariffs will still have to be adjusted eventually.

The rich and the poor have to pay the same tariff rates. The poor might not afford even an air conditioner but the rich might have installed a dozen of air conditioners. The subsidies have eventually given to the rich. From 2010 to July 2011, the government had allocated RM36.7 billion under the National Key Results Areas (NKRAs) for various subsidies and assistance, including the establishment of the KRIM, the Menu Rakyat 1 Malaysia and the 1 Malaysia klinik. However, these benefits can also be enjoyed by the rich.

The government also provides subsidies to other companies. According to Proton’s financial report as of March 31, 2011, it had received RM175 million of R&D incentives. The government has not studied whether these kinds of subsidies are effective or not, as well as to what degree the people can enjoy the benefits. Since there are many loopholes in the existing subsidy system, the prime minister said when delivering his Budget speech that the government will change the bulk subsidies into targeted subsidies.

I believe that the government will implement the subsidy rationalisation programme and goods and services tax (GST) after the general election to cut subsidies and increase tax revenues, and use the money to assist the poor and disabilities. The assistance for these targeted groups will be increased to help them cope with the increasing cost of living.

The minimum wage policy is meant for the same target. However, raising salaries while prices are rising will eventually raise commercial and industrial costs, causing the final products to lose their competitiveness in the international market.

Moreover, strengthening the people’s assistance scheme might lead the country towards the European welfare state system, which could turn the country into a lazy state. Malaysia should learn from Hong Kong and Singapore to first manage well the national finance and return the fiscal surplus to the people. A set of fair social policies is also essential to help the poor buy a house and solve education problems. The existing subsidy system has failed to lead the poor out of poverty while the resources have flown into the pockets of the rich. Subsidies are easily misused or abused and it is now the time to change the course. — mysinchew.com * This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.

CONCLUSION :

• Government subsidies help an industry by paying for part of the cost of the production of a good or service 

• Governments seek to implement subsidies to encourage production and consumption in specific industries. On the supply side, government subsidies help an industry by allowing the producers to produce more goods and services. This increases the overall supply of that good or service, increases the quantity demanded for that good or service, and lowers the overall price of the good or service.

• On the consumer side, government subsidies can help potential consumers with the cost to of a good or service, usually through tax credits. 

• Government subsidies can help an industry on both supplier side and the consumer side. To implement subsidies, governments need to raise taxes or reallocate taxes from existing budgets such as Goods and Services Taxes (GST)

SUBSIDY VISUALIZATION