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2018 WTO Trade Policy Review of Malaysia
Author(s) -
Okafor Luke Emeka,
Teo Wing Leong
Publication year - 2019
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12846
Subject(s) - economics , depreciation (economics) , balance of trade , international economics , attractiveness , commodity , foreign direct investment , international trade , index (typography) , balance (ability) , balance of payments , tourism , commercial policy , terms of trade , macroeconomics , capital formation , market economy , political science , psychology , medicine , financial capital , world wide web , computer science , psychoanalysis , law , physical medicine and rehabilitation , human capital
This paper presents an academic analysis and review of the recently completed WTO Trade Policy Review (TPR) of Malaysia, 2018. This includes suggesting policies that can help to promote Malaysia's international competitiveness. We show that the sharp decline in commodity prices that started in 2014 contributed in narrowing Malaysia's trade balance and current account balance as a share of GDP. The faster decline of exports as a share of GDP compared to imports accounted for most of the substantial reduction. Further, the collapse of commodity prices was accompanied by a sharp depreciation of Ringgit Malaysia. We also show that Malaysia is losing international attractiveness in terms of FDI inflows relative to its economic size. This is evidenced by the downward trend in Malaysia's FDI performance index since 1992. Further, international tourism has fallen on average since 2014, due largely to a drop in tourist arrivals from Singapore. Policymakers should introduce policies to enhance international competitiveness, such as reforming the education system to produce skilled workers and reducing reliance on low‐skilled foreign workers.