FACULTY OF ADMINISTRATIVE SCIENCE AND POLICY STUDIES
BACHELOR OF ADMINISTRATIVE SCIENCE
ADM 504: MALAYSIAN ECONOMY
TUTORIAL CHAPTER 7: QUESTION 2
REASONS FOR GOVERNMENT TO INTRODUCED PROTECTIONISM POLICY IN
MALAYSIA.
PREPARED BY:
SOFEA NURFARAH BINTI AIDIL AZHARY (2019314937)
NUR AIDA AQILAH BINTI RAMLI (2019707187)
NURSHAFAWATI BINTI SHARUM (2019324581)
NURUL HAZIQAH BINTI ARIFFIN (2019350711)
NUR FARIZA BINTI ABU ZAHARIN (2019317051)
‘ALIA SHAHIRABINTI MOHAMAD FAUDZI (2019326651)
GROUP: AM228 5D
PREPARED FOR:
SIR AHMAD SHAH PAKEER
Protectionism refers to policies of government that restrict international trade to aid
domestic industries. Protectionist policies are implemented with the aim to increase the economic
activity within a domestic economy but it also can be implemented for quality or security
concerns. Generally, protectionist policies typically focus on imports, but other aspects of
international trade, such as product standards and government subsidies, may also be involved.
Basically, there are several reasons for government to introduce protectionism policy in Malaysia
which are provide more job, to reduce the influence of trade on customer tastes, to protect local
and domestic product and anti-dumping.
The reason for protectionism policy being used is to reduce influence of trade on
consumer tastes especially products that come from multinational companies. Undeniably, some
of the products may better than local one. Some examples of multinational company such as
Panasonic, Colgate, McDonald, Honda and many more. Those companies are allowed to run
their business in Malaysia, while they could gain much revenue till these days. This is because
they already influence the consumers’ tastes with their acceptable products. However, Malaysia
has imposed some of trade barriers and set standards for protectionism purposes. For example,
all imported beef, lamb, and poultry products must originate from facilities that halal or
acceptable for consumption by Muslims. Meanwhile, pork products may be imported into
Malaysia only if Malaysia's Department of Veterinary Services (DVS) issues a permit
authorizing its importation. Same goes to any manufacturing companies, they should meet
standard set up by SIRIM for instance to ensure quality, safety & environmental protection.
There are the others trade restrictions imposed as purpose to control the influence on consumer
tastes besides preserve domestic products.
Besides that, the reason for government to introduce the protectionism policy in Malaysia
is to protect the local or domestic product. Protectionist measures are often being accept due to a
desire to level the playing field between local and foreign firms. A protectionist trade policy in
Malaysia will allow the government to promote domestic producers and thereby boost
the domestic production of goods and services. The method is by imposing tariffs as this is bring
an advantage in enhancing the domestic product. It also can be done by limiting the goods from
the foreign county and services in the marketplace. In addition, it also brings advantage as it can
increase the growth of opportunities to the Malaysian in gaining the knowledge and skill as the
people will have more experienced and can compete to the international market.
The other reason is to provide more job opportunities. How this can happen is when
government introduce some restrictions such as imposed tariffs and quotas on imported goods, it
indirectly encourages our local products to grow. For instance, government imposed a high tariff
on imported cars so only few people can afford it due to its high price. The remaining people will
buy the local car brands. This can be justified by in 2019, the revenue of Malaysia’s local car
brand which is Perodua got increase by 7.3% compared to 2018. By this, the manufacturing
industries will expand due to it increasing in demand and this will lead providing more job
vacancy to people because more positions and tasks will available. This is in line with the
economic theory of higher demand for products, the higher the demand for labor.
Lastly, government introduce protectionism policy in Malaysia due to anti-dumping. It
means that the foreign country is supplying cheap import favourable to consumers. In this case,
an anti-dumping duty is a protectionist tariff imposed on international products by a national
government which it claims is valued below reasonable market value. For protection, many
countries impose stiff duties on products they believe are being dumped in their national market,
undercutting local businesses and markets. Sometimes, it is illegal in some countries to dump
certain product into them because they want to protect their own industries from such
competition, especially because dumping can result in a disparity in the domestic growth product
that at the end impact the countries. For an example, Malaysia has imposed anti-dumping duties
of 3.84% to 26.39% on imports of cold/rolled coils of iron or non-alloy steel of width more than
1300 mm from China, Japan, South Korea and Vietnam.
As a conclusion, there are four reasons for protectionism policy by Malaysia
government such as more jobs offer, to reduce the influence of trade on customer tastes, protect
local and domestic product and anti-dumping. Thus, through the protectionism policy, Malaysia
able to stand out among developing countries for its long-standing commitment to maintain a
relatively open trade and investment policy regime.
References
