Heavy Reliance on Electrical and Electronics Exports in Malaysia's Economy PDF

HEAVY RELIANCE ON ELECTRICAL AND ELECTRONICS EXPORTS IN MALAYSIA’S ECONOMY Malaysia's economy depends greatly on the export industry, mainly electrical and electronics. Economic development calls for a trade balance between exports and imports. Fluctuations in global demand and other exter...

HEAVY RELIANCE ON ELECTRICAL AND ELECTRONICS EXPORTS IN MALAYSIA’S ECONOMY Malaysia's economy depends greatly on the export industry, mainly electrical and electronics. Economic development calls for a trade balance between exports and imports. Fluctuations in global demand and other external forces play a significant role in the country's performance. There is a need to have personal financial planning to undertake economic risks, uncertainties, and resources. Protective measures against such vagaries are the diversification of income and expenditure in inflation-hedged assets. In general, it will be mainly dependent on how the export industry is functioning about employment levels, income rates, and inflation, which will determine a person's financial stability. The pressure of rising costs due to expensive imports arising from the global supply chain disruptions and currency exchange results in an expensive livelihood because of the inflationary pressure. 5.1.1 CAUSES 5.1.1.1 ECONOMIC DEPENDENCE ON EXPORTS For economies that highly depend on exports, economic shocks make them very vulnerable because of the volatility in both export earnings and economic growth associated with economic shocks (UNDP, 2024). It then follows that a recession in a critical trading partner country or the setting up of trade barriers or import quantitative limits by such a country will invariably reduce the export earnings income of the exporting country. This would affect national income and reduce government spending on public services, reducing personal financial stability. Take, for example, the job losses that may follow when an export-oriented industry closes its doors. Such industrial shutdowns typically ripple through economies, reducing household incomes usually with a corresponding increase in personal financial insecurity among individuals and families. 5.1.1.2 IMPORT COST Countries that import most of their daily needs, such as food, fuel, and raw materials, will suffer dramatic effects if global prices and exchange rates adjust (UNCTAD, 2023). High import costs lead directly to an increase in the price of goods and services, therefore hurting personal budgets. For example, the increase in tariffs and, hence, in shipping costs, together with the depreciation of the national currency, usually results in the transfer of the added costs to consumers. It increases the cost of living for the commoner by reducing disposable income. An economy with higher import costs pressures inflation further and deteriorates the purchasing power and financial security of individuals. Businesses that heavily rely on imports are also bound to suffer from high operational costs and may, at the end of the day, lay off their employees or close down their businesses (World Bank, 2022). 5.1.2 IMPACTS 5.1.2.1 INCREASED UNEMPLOYMENT RATES Export activities have a significant effect on the level of employment. High export activities require increased production, thus more labour, and hence low levels of unemployment. An example would be those manufacturing sectors with more exporting tendencies and, therefore, having a huge available amount of labour. When demand for such exports goes down, it will result in low production and retrenchments, again compounding unemployment rates. That heavy reliance on exports makes most of these industries usually experience a humongous layoff whenever the globe experiences a downturn in the economic situation (Chang-Xin Zhao, 2021). More importantly, the ripple effect of layoffs would manifest within other industries and lead to a more general economic decline. Likewise, reduced employment would directly be linked to reduced consumer spending, which will contribute to economic sadness. 5.1.2.2 HIGHER INFLATION When a country's import is high, cheap goods from other countries infiltrate domestic markets, thus increasing the power of pricing and products in the hands of the consumer and causing prices of the goods to go down. On the other hand, where a country highly depends on imports for essential goods, even a rise in import costs leads to inflationary pressure. To some extent, export activities contribute to inflation if they generate a high demand for domestic goods and increase prices. Further, solid growth in exports would be able to lift levels of income, which increases consumer spending, hence higher inflation (Mary Amiti, 2024). This dual impact of import and export activities in generating inflation underlines the complexity of the interaction of international trade with domestic economic stability. 5.1.3 IMPLICATIONS 5.1.3.1 DIVERSIFICATION OF EXPORT MARKETS AND PRODUCTS Malaysia depends too much on electronic exports, so the exogenous pressures are bound to be felt in the economy. The structure of Malaysia should change towards more equal and robust diversification of industries. Tourism development related to its rich cultural history and natural beauty will earn revenue and create jobs. Its modernization in agriculture, due to its fertile land, will be able to ensure food security and employment in rural areas. The infrastructural development and investment in education and technology would help in nurturing a skilled workforce to supplement a booming services sector. Diversification would bring about innovation and lessen the vulnerability of external factors while providing stability in employment and sustainable growth, thus enhancing national well-being. 5.1.3.2 SUBSIDIES AND PRICE CONTROL Subsidies and price controls are the form of escape routes that cushion the population of Malaysia from high inflation. These consumers can buy these essential commodities at a much-reduced price than they would have had to pay for them at market value; it is handed out in the form of direct payment or tax breaks. It can only help in the protection of the affordability of essentials, then, about how much could be charged by sellers with such a measure. More than that, temporary relief is provided in these measures: it helps in maintaining purchasing power while, at the same time, avoiding price gouging, which would go a long way toward social stability and economic well-being against inflation. It is, therefore, quite important that such measures also be made parallel to long-term strategies that assure increased productivity and declining reliance on imports. 5.1.4 RECOMMENDATIONS FOR INDIVIDUALS 5.1.4.1 INDUSTRY AWARENESS Industry awareness is about staying updated on market trends and how the industry is re-engineering itself. Knowledge sharing and facilitation in all support areas begins when one is engaged with professional organisations, seminars, and conferences, or one is involved with networking groups. Through networking events, a person gets to meet new people, exchange ideas, and create relationships. Strategic planning and skill development in strategy is aided by being in contact with industrial news, noticing ever-changing market trends, and being in the mode of proactivity toward change. Professionals can develop solid networks that might bring out trends and opportunities when developing market intelligence. More often than not, it is this solid professional network from which collaborations and partnerships are born, with one finding mentors and peer support for adequately navigating the vicissitudes of one's career. 5.1.4.2 INVEST IN ASSETS THAT OFFER PROTECTION AGAINST INFLATION Inflation is the rise in the cost of goods and services, which, in the long run, could erase purchasing power and affect one's standard of living. It is for these reasons that people should consider investing their resources in asset classes that offer a hedge against inflation. The prominent ones among the asset classes are real estate, inflation-linked bonds, and precious metals commodities. Real estate assures long-term capital appreciation and the security of rental income, whereas securities guarantee safe porting with assured interest. For example, in Malaysia, this is done through instruments such as MGS, which are indexed for inflation. The commodities presumed to be safe from inflation are gold and silver, as well as precious metals. Additionally, investment in equities diversified, more so for companies with good pricing power, can serve as a hedge against inflation. 5.1.5 RECOMMENDATIONS FOR FINANCIAL PLANNERS 5.1.5.1 ONE-ON-ONE COUNSELLING The one-to-one aspect of counselling in financial planning indicates advice at the individual level, with regular touch points to adjust to clients' changing needs. In such meetings, planners analyse clients' financial situations, incomes, expenses, debts, and assets, considering clients' goals to arrive at tangible, actionable recommendations. For example, a young professional may receive advice on student loan pay-down and investing, while for a retiree, it might focus on maximising retirement income. Planners assist clients in articulating their life goals, setting realistic financial goals, and developing plans, including saving plans, investment approaches, and budgeting techniques. Periodic reviews, either quarterly or once a year, help the planners track the progress, review the financial health, and effect any changes if life events occur, such as an increment in salary. Continuous support keeps the clients on track and enables them to answer questions or new financial opportunities when they arise. A long-term relationship developed over time with regular personal interaction generates a high level of trust and confidence that allows proactive financial management for success. 5.1.5.2 LEVERAGE GOVERNMENT PROGRAMS AND INCENTIVES Financial planners can further enhance the economic stability and growth of clients by making effective use of government programs and incentives. They must educate clients about government grants, low-rate loans, and entrepreneurship support, including startup grants and incubator programs for new business ventures and expansion. Advising on subsidies for skill development and workforce development initiatives helps clients upgrade their skills. Financial planners should also highlight R&D incentives and export assistance programs to foster business innovation and market expansion. Additionally, they should guide clients on tax-efficient investment strategies, such as retirement accounts and educational savings plans, and ensure the use of tax breaks and incentives like investment tax allowances and reinvestment allowances. Optimising tax strategies, including income-splitting, expense deductions, and charitable donations, further maximises clients' financial benefits, promoting resilience and sustainable growth.