PETALING JAYA: Malaysia should focus its economic strategy on the production of goods and services based on the “comparative advantage” principle, several economists told theSun.
The term refers to an economy’s ability to produce goods and services at a lower cost than that of its trade partners.
According to the Malaysia External Trade Development Corporation, the country relied on imported goods to a tune of RM849.07 billion last year, with the main imports being electrical and electronic products (29.4%), chemicals (9.5%), petroleum products (9.3%) and machinery, appliances and parts (8.7%).
Sunway University Business School professor of economics Dr Yeah Kim Leng uses the example of rice imports from our Southeast Asian neighbours to explain the concept.
“Vietnam and Thailand can produce rice at a much lower cost than us, so it would be prudent to import from them,” he said.
“We should focus our resources on the products that we can produce most efficiently and specialise in them.
“This would allow us to export these products for higher profits. This then generates higher-income jobs and increases the country’s prosperity.”
Yeah said becoming fully self-sufficient would be a sub-optimal allocation of resources.
“Maintaining an adequate level of 70% to 80% self-sufficiency is enough. We can then build up stock buffers to meet our needs during a time of crisis,” he said.
Asli Centre for Public Policy chairman Tan Sri Ramon Navaratnam urged the government to focus on making more downstream products using our natural resources.
Ramon said more research and development should be done to compete in international trade and a review of our agricultural policy is needed to sustain ourselves in terms of food supply.
“Additionally, a commission should be established to review our policies. Initially, we were too enthusiastic about policies that involved manufacturing.”
Ramon said there had been an effort in the past to be partially self-reliant to boost the agriculture sector.
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