First of all, I would like to discuss about my title in this individual assignment.

My chosen issues in economic is Maybank hopes 2014 budget will focus towards trades sector. Trade sector is considered as one of the important element in order to improve the national income. It is a portion of the economy that produces tradable goods, exports or competes with imports. The terms of trade volatility is one of the sources of macroeconomic instability that slow down the growth (Pradesha, 2008). It triumphs especially in a small open economy, which depends heavily on external sector. The development of the external sector in Malaysia was related to the process of industrialization in the country. Although implementing Import Substitution Industrialization (ISI) strategy, limited domestic market was occurred. The local producers failed to achieve international competitiveness and made the exports insignificant. According to our Finance Minister 1, Datuk Seri Najib Tun Razak, it is important to ensure the domestic economy remained resilient and the country could register reasonable growth despite the expected global slowdown. Besides, he also wants to reduce the fiscal deficit and build resilience. Thus, one of the key elements on the Budget is to strengthen domestic and national resilience. He mention that will enhance trade ties with India to a strategic level and set a target to increase bilateral trade to US$100 billion (RM330 billion) in 2015. Hence, it concluded that Malaysia is socialist economy which government totally in charge in production. Government decides what, how and for whom to produce and the price of products. Nowadays, Malaysia still surviving in their economy according to the financial crisis in 2008 because of the sub prime mortgage crisis in the US which swift into a worldwide banking crisis, the global phenomenon of high food prices and volatile commodity prices. The issue of currency has become relevant again. It is not surprising given the hardship that the country went through during the Asian Financial Crisis 1997/98 which was primarily caused by the speculative activities of hedge funds which in turn subjected the currency to extreme volatility. It is worth reminding ourselves that Malaysia, in a measure to curb these speculative attacks against its currency had abolished offshore trading of the Ringgit Malaysia on 1st Sept 1998. After that period the Ringgit Malaysia was fluctuating. This is the decision of the Former Prime Minister;

Datuk Seri Najib Razak said that the Ringgit Malaysia can be internalized. According to the Federation of Malaysian Manufacturers (FMM), internationalizing the ringgit could affect the level of international reserves and influence the real economy. On the other hand, the positive impact of trade sector in Malaysia is to make sure economic recovery and stabilization of employment (Fujita, n. d.). For example, in the end of 1987, Proton started to expand its production and share automobile sales in the market. It will increase the rate of export due to the price of products is cheaper when compare with others country. According to elasticity of supply, elastic supply ( )

occurs when the factor such as economy recover will increase the quantity supply. This is due to the ability of firm manage the resources to produce high quality of product. Trade liberalization will change the prices of the goods that the poor buy and those of the goods and labour services that they sell (Leete, 2006). In the short run, it will determine whether the poor gain or lose from trade. For example, trade reform will regularly lower import prices and raise the real incomes of poorer households who buy imported goods, especially food. Thus, according to law of demand, the demand of buyers will increase due to the factor such as low import prices and high incomes. However, if poor farming households are suppliers of the goods whose prices have fallen, the same trade liberalization programme could lower their real incomes. According to law of supply, supplier will decrease the productivity when the price of product is low and reduce their incomes. Trade development may reduce or remove export taxes. When the taxes are reduced, the demand for the product to others country will increase instead of free service delivery. If the poor are net producers of exported goods, they will receive a larger share of the world price. Therefore, trade reform will affect the welfare of the poor when the changing prices of the goods. They either benefit or lose. They didnt have the authority or power to decide for the prices. In the view of economic, purchase goods in a short period will lead to elastic demand ( time to fulfill buyers satisfaction. ) which increase of price will decline the

quantity of demand. This is because firm unable to find more or others resources in short

There are some strategies to promote trade. The Free Trade Zones Act of 1971 was implemented and Licensed Manufacturing Warehouses was produced mainly for the foreign sector was allowed to operate in Malaysia. Textile, garment, footwear, and semiconductor industries were developed. (Salih, n. d.). The construction of factories and other related facilities in the free trade zones and other industrial centres became a major activity in addition to build roads and utilities to service those facilities. It will increase the rate of trade between country because free of taxes. The cornerstone of Malaysias development planning was made by the diversification and use of manufacturing-based industrialization to improve trade performance. Furthermore, government should foster the development of local small and medium-sized enterprise (SMEs) (Karikomi, 1998). The role of SMEs in economic development and intraregional trade and investment is attracting the attention of policy makers including the facilitation of more open environment for investment in the APEC region. For example, the plans such as invite foreign SMEs contribute directly to the establishment of linkages between assembly firms and supporting industries. The government takes the roles as a coordinator to support the activities. A favorable market environment needs to be created where FDI and technology transfer by foreign firms can be pursued smoothly. In addition, government should recognize the importance of self-employment in term of employment creation and economic growth. An effort has been intensified to create more self-employment opportunities. Business opportunities for self-employment and entrepreneurship include petty trading; SMEs, agriculture, and services have been promoted. In addition, entrepreneurship training programs have been implemented by various Ministries and agencies for unemployed graduates. This method to ensure that graduates able to make the process of trading going smoothly. Malaysia is among the world's leading exporters of a wide range of electrical and electronics products, as well as leading producer and exporter of palm oil, timber, rubber, pepper and cocoa, basic oil and chemicals, and the second largest exporter of tropical hardwood, latex goods and wooden furniture. Exports of frozen sea products are also significant.

Public and private sector partnership will be further strengthened towards sustained economic growth. Therefore, the public and private sector will continue to collaborate particularly in the areas of R&D, human capital development, poverty eradication and equity and employment restructuring. New regional growth centers and growth corridors will be developed together by the Government and the private sector to promote investment. The 9th Malaysia Plan will also see the introduction of the private sector initiative amounting to US$5.6 billion under the privatization program, which will offer more opportunities for private sector participation in the development of infrastructure and utilities. Private sector companies and Government-linked companies have always been encouraged to venture abroad to secure business and investment opportunities. This will increase access to new markets, create demand for domestically produced intermediate goods and components, help to create Malaysian multinational corporations, and more importantly help create more jobs in the longer term. Malaysias commitments under the World Trade Organization, the Association of South East Asian Nations (ASEAN) Free Trade Area. ASEAN-Free Trade Agreement and other bilateral FTAs will expand opportunities for trade and investments. This will also increase opportunities for job creation.