3. Discuss culture of the county: norms
What is culture? Among hundreds of meaning
of culture, we will use the definition suggested by the world’s prime
cross-culture expert, Geert Hofstede. He explains culture as the collective
programming of the notice which distinguishes the member of one group or
category of people to form another. Besides, what are norms? Norms are value,
beliefs, and action of a related player that encouragement the focal individuals
and firms. Next, what is the value? Value represents the degree of importance
of something or action, with the object of defining what actions are greatest
to do or what way is best to living (normative ethics) or to define the
significance of diverse actions.
Under culture, there is high context
culture. In high context cultures such as Malaysia’s meaning are often more
clear and less direct than in many Western cultures. This means that less
important words and more attention should be given to additional forms of
communication such as tone of voice, body language, eye contact and facial
expressions. In Malaysia, because business is personal and based on trust,
building relationships instead of changing facts and information is the primary
purpose of communication. It is also related to the values of Malay culture
that respect, tolerance, harmony and face. Direct answers, especially those
that are negative, are avoided to avoid disputes and maintain harmony; two
important aspects of Malaysian culture.
Moreover, fatalism is another matter under
culture. Malaysia’s culture centers on various values of Hinduism, Buddhism,
and Islam and therefore depends largely on the concept of fatalism. Fatalism is
the belief that achievements, failures, opportunities, and accidents arise from
the fate or will of God. In the context of business, when formulating the ideas
and decisions of the Malays, most Muslims, may not depend on empirical evidence
or harsh facts, but the desire to be guided by subjective feelings combined
with Islamic beliefs. Your Chinese and Indian colleagues will also take the
relevant approach because feelings and emotions play an important role in their
business culture. Hence, negotiations may take longer than Malaysia’s estimates
and complement you will see the decision making more clearly.
In addition, under the culture, there is
also a language. Businesses in Malaysia want to interact with Malaysian
government officials, ensuring all communication takes place in Bahasa Malaysia.
A large number of transactions and correspondence with the Malaysian business,
however, are usually carried out in English.
In addition, under the culture, there is
also a social structure. Once scheduled a business meeting in Malaysia, one should
take into consideration the importance of praying time in this country,
especially Muslims. Friday is the most religious day of the week and if
meetings may not need to be scheduled for this time. Second, the attitude
toward timeliness depends on your citizenship with business. The Chinese, for
example, look forward to timeliness, while both Malay and Indian ethnic
entrepreneurs have a more relaxed attitude towards time. As a general rule, you
are expected to be timely; therefore, it is advisable to get to business
appointments on time.
Culture is also related to working
relationships in Malaysia. The honor of Malaysians against the authorities is
clear in most business dealings. The relationship between their subordinates
and their superiors is different and very formal. Malaysians did not overtake
their boss by their first name but using titles such as “Mr.” and
“Madam” followed by their form of honor. As a last resort, the
relationship between Malaysian counterparts is based on mutual respect and,
consequently, the same procedure used when handling their superiors is also
applied to their Malaysian counterparts.
Next is about the norm. One of the norms in
Malaysia is the enforcement of the law. Levels of transparency in Malaysian
courts are high enough. The legal system is seen as a support that is quite
supportive of investors as it provides sufficient opportunity to achieve fair
compensation in the event of a dispute. Cases involving foreign investors are
Secondly, Norma in Malaysia is a labor
regulation. According to the World Bank’s Employment Law Index, Malaysian labor
is somewhat under control. There is no standard throughout the country or the
entire industry for fixed pay rates, and there is no legitimate minimum wage. Spanking
is very rare in Malaysia because trade union rights are limited and the strike
is actively discouraged.
In addition, under labor regulations also
pensions. The Employees Provident Fund (EPF) is responsible for retirement
benefits. EPF membership is compulsory to work in Malaysia, and at least 11
percent of the monthly salary of each member is transferred. Employers are
obliged to make an additional contribution of at least 12 percent of their
employees’ salaries. 55 years old retirement age; Individuals can then withdraw
all their EPFs and stop working, though many continue to be consultants in
their respective areas of expertise.
As a conclusion, Malaysia has to follow
all the norms and values to enhance the country. By doing so, Malaysia can be a
5. Benefits of trading International
International trade is the exchange of
goods and services between countries. For example, if you go to local Malaysian
supermarkets and can buy groceries from other countries, you are experiencing
the impact of international trade. International investment is also widely
available. It involves the purchase of assets or securities originating from
Movements of goods or services from a nation
are known as exports whereas imports are the movement of goods or services into
the nation. In addition, openness to international trade has many benefits. It
allows us to develop our market for both goods and services that otherwise
would not be offered to us. This is the aim why we can select between Japanese,
German or American cars. In addition, global trade gives our users and our
country the opportunity to be exposed to goods and services not offered in
their own nation. Practically every kind of product can be originate in
international markets for example food, dress, spare parts, oils, jewelry,
wines, stocks, currencies, and water. Services are similarly traded as tourism,
finance, consulting and transportation.
By allowing free trade, Malaysia has taken
the risk that there may be any gains or losses made. If more exports leave the
country than imports, this is known as a trade surplus. It is represented by
the flow of money back into the country as income. However, if there is more
import compared to exports, it is known as a deficit in the balance of
payments. It is represented by the flow of money from a country.
Finally, trade in the country to get goods
and services because they cannot produce themselves. For example, Malaysia
imports machinery and electrical equipment from the EU. In return, Malaysia
exports rubber, plastic and oil types such as crude oil, palm oil, and
lubricants to them. These countries trade with each other to receive the goods
they lack and by doing so they can maintain a mutually beneficial relationship.
The story of the success of Malaysia’s
transformation from agro-based economy to a middle-income economy with strong
holdings in the manufacturing sector is well-recorded. This transformation is
clearly reflected in the state revenue contribution. The manufacturing sector,
on the contrary, has made substantial growth from less than one-fifth to more
than one quarter over the same period. Malaysia has enjoyed strong growth over
the last three decades but the slowdown in growth momentum. This was reflected
by the annual growth rate of 9.2 percent for 1991-1997 while for 2001-2009 the
rate was only 4.3 percent. With this slowdown, the share of GDP is projected to
fall to the lowest since the 1990s to 26.7 percent in 2010 from 30.9 percent in
2006. Manufacturing, especially E & E, continues to dominate exports.
Moreover, the Asian economy, mainly China,
has become a main export destination. Exports are estimated to remain an
important contribution to economic development and are expected to raise at a
rate of 10.6 percent by year for the next five years from 2011 to 2015. The
growth is largely comprised of manufactured products increasing at 10.8 percent
by year, accounting for 78.8 percent of the overall exports by 2015. Exports of
agriculture and mining parts are estimated to develop by 11.0 percent and 9.4
percent by year, driven mostly by higher export prices.
In terms of sub-sector provision for gross
exports of manufactured goods, electronic and electrical products continued to
dominate its contribution from 72.5 percent in 2000 to 57.3 percent in 2009.
This sub-sector recorded a decline of 1.0percent from 2000 to 2003, an increase
of 10.41 percent in 2004 to 2006 and again down 6.4 percent from 2007 to 2009.
Other emerging sub-sectors in the last ten years were textiles, metal
manufacturing, and petroleum products with a contribution of about 5 percent
each to total gross exports.
III. Absolute advantage
advantage defined as the economic advantage one nation enjoys that is absolutely
superior to other nation.
Countries also trade to take advantage of the
absolute advantage. Whenever a country produces more good units or services
using quantity of resources provided or producing good quantities or services
that use a few source units, the country has an absolute advantage over others.
Absolute profit is where the country is better at producing products than other
Additionally, as countries have the
advantage of being more productive in producing products, other countries
prefer to trade with them, to a cheaper and more reliable way to get those
items. Countries can also get goods and services at cheaper prices than they
can produce themselves with the trade. From trading with the European Union,
Malaysia can actually produce its own electrical machinery and equipment.
However, it takes a lot of time and money for long-term investment. It’s also
not practical because time and money can be used for something else. For
example, improve infrastructure.
In addition, it is easier to trade with
other countries specializing in the production of certain goods and services
and receive it easily. Countries also trade to increase options for their
users. Rather than just selling local items from Malaysia, supermarkets put a
number of different products from different places to increase diversity for
consumers and match consumer demand. Products from different countries differ
in taste, fashion, price, and quality, allowing users to choose what they want
IV. Comparative advantage
Comparative advantage defined as a
relative advantage in one economic activity that one nation enjoys in
comparison with other nation.
In addition, trading countries also
enhance market competitiveness. With more competition, there are more
manufacturers in the market so local companies are working to do their best to
attract consumers. Competition promotes efficiency, lower prices, and better
Moreover, the countries that trade also
earn income. Trade takes place in two ways, with 2 countries advancing from
trade. If Malaysia is trading with other countries, other countries will also request
Malaysian products such as palm oil. Palm oil is one of the most multipurpose
raw materials in the world. It can be used in the food, cosmetics, and
pharmaceutical industries and to produce energy.
Additionally, rising global competition
urges Malaysia to identify products that have comparative advantages.
Comparative advantage is the ability of a country to offer goods at lower
prices than other countries and therefore should concentrate on making good
where it has comparative advantages.
In addition, for the export of Malaysian
commodities, many studies have evaluated the pattern of comparative advantage
in exports. Additionally, the advantages of comparing wood products in the
European market. Additionally, high comparative advantage products are
secondary processing products and mass market products. The reduced comparative
advantage is largely dependent on quantities traded, high quantities do not
show a high comparative advantage. There are many factors that influence
comparative advantages such as abundant resources, communication and
technology, production costs and demand patterns.
Finally, the export competitiveness of
Malaysia’s electrical and electronic (E & E) products. It analyzes the
extent of export competition between Malaysia and other competitor countries.
The RCA results show that Malaysian E & E products are only fully
functional in the US market for almost all SITCs. Indonesia has monopolized
Singapore and Hong Kong markets dominated by China. Malaysia’s E & E exports
to the world generally have advantages over other competitors namely Indonesia,
Thailand, and China.