User:Udaya kuma80

ANALYZE ROLE OF THE GOVERNMENT FOR ECONOMIC GROWTH OF COUNTRY

When analyze the state contribution for Sri Lankan economy growth, here we can and compare economic growth considering another developed countries in the Asia like Malaysia, Singapore. Those countries were as colonies and received the freedom simultaneously with Sri Lanka. But these countries has come through the economics success/growth expedite way than other countries in the region. Sri Lankan economy can be compared with Malaysian economy to assess the country economics growth. Therefore here it is illustrated about Malaysia and Malaysian economy system in focusing several of profiles.

Return to Malaysia

The Malaysia is a country of geographically area: 329,749 sq. km. (127,316 sq. mi.) and its capital is Kuala Lumpur. Other cities--Penang, Ipoh, Malacca, Johor Baru, Kuching, Kota Kinabalu, Alor Setar and Shah Alam can be high lighted. Terrain: Coastal plains and interior, jungle-covered mountains. The South China Sea separates peninsular Malaysia from East Malaysia on Borneo (400 mi.).Climate: Tropical. The most of people are Malaysian and population is over (2004) 25.6 million. Annual growth rate: 2.4%.Ethnic groups: Malay 50.8%, Chinese 23.8%, Indigenous 10.9%, Indian .1%, non-Malaysian citizens 6.8 %, others 0.6%. Religions: Islam (60.4%), Buddhism (19.2%), Christianity (9.1%), Hinduism (6.3%), Confucianism (2.6%), Animism (0.8%), others (including Taoism, Sikhism, Baha'i faith -- 0.4%), none (2.8%). Languages: Malay, Cantonese, Hokkien, Mandarin Chinese, English, Tamil, indigenous. Education: Years compulsory—9. Attendance-98.5% (primary), 82% (secondary), Literacy (2002)-95%. Health: Infant mortality rate (2003)-5.8 /1,000. Life expectancy (2003)--female 75.5 yrs., male 71.0 yrs. Work force (10.6 million, 2003): Manufacturing 29.1%; other services--28.2%; agriculture--13.8%; government services—9.8%; construction-7.6%; finance-6.4%; transportation and communications--5.2%; mining and petroleum--0.4%.

Government Type: Federal parliamentary democracy with a constitutional monarch. Independence: August 31, 1957. (Malaya, which is now peninsular Malaysia, became independent in 1957. In 1963 Malaya, Sabah, Sarawak, and Singapore formed Malaysia. Singapore became an independent country in 1965.).

Malaysian Economy General Characteristics of Agricultural, Industrial, and Information Age Economic Systems. • Agricultural Age Economic Systems: feudal economic systems and earlier ancient empire economic systems based on slavery • Industrial Age Economic Systems: rise of capitalist economic systems and then socialist economic systems (as a critique of capitalism) • Information Age Economic Systems: both capitalist and socialist economic systems are being greatly restructured as they become part of a global economy; no pure systems hybrids instead, through also privatization trends world wide-including in former socialist countries Information/Data on Malaysia's Economic System, a mixture of private enterprise and soundly managed public sector, has posted a remarkable record of 8%-9% average growth in 1987-92. This growth has resulted in a substantial reduction in poverty and a marked rise in real wages. Despite sluggish growth in the major world economies in 1992, demand for Malaysian goods remained strong and foreign investors continued to commit large sums is the economy. The government is aware of the inflationary potential of this rapid development and is closely monitoring fiscal and monetary polices Conclusions on Malaysia- Malaysia is in Agricultural and Industrial age. Its economic growth has resulted in exporting rapidly the manufactured goods, and foreign investors are making difference in the country's economy. Malaysia is the worlds largest exported of natural rubber and palm oil. The Malaysian economy maintained it s momentum growing 7.1% (GPD) in 2004 after expanding 5.3% in 2003. Economic expansion was fueled by continuing strength of the manufacturing sector, particularly the electronics and chemical industries. The strength of the electronic sector maintained to enhance Malaysian export to US which Malaysian principal trade and investment partner.

Investment

U.S. is the main investor in the Malaysia. The U.S. has the largest foreign investment in the manufacturing sector with approved projects valued at US$1,641 million in 1998. Japan was second with U.S. $484 million, followed by Taiwan, with US$255 million. The three made up more than 70 percent of total foreign manufacturing investments in Malaysia in 1998. (Note: manufacturing investment only; upstream oil and gas investments not included.) 

The Malaysian Government effectiveness The Malaysian state also central bank plays major role of development of the country. When they make the policies, principle also rules, government consider based on the long term progress of the country. There are many government establishments and mostly all of those are owned by the government. To come many of investment into country, the state has mainly focused of development of infrastructures, since last few decades the Malaysian state has incurred in large scale on transport system, telecommunications, electricity also education etc. on the purpose of economy development.

Central Bank The central bank in Malaysia is called Bank Negera Malaysia. The duty of the central bank is primarily to formulate and implement monetary policy. The bank's duties also include monitoring the monetary and banking policies of its divisional banks and also many others. The Bank Negara Malaysia also serves as a tool for the central planning agencies. The Bank Negara is fully owned by the Malaysia Government, to which its profits go to improvement of the country. Therefore the Bank Negara are known to operate under government control and isn't independent of political control. The central Bank somehow is controlled by the government in good condition and is doing the country’s economic good.

Commercial banks Malaysian banking system is a highly centralized management system. There are opperating under a same set of regulation and under the instruction and inspection of the centrall bank. Individual don’t have the credit line and have no credit in the bank. But the mortgage loans are available.

Communication system The Malaysia has a well-improved extensive (There many of sources of information flows to investors/businesses.) net work of communication facilities such as the telphone, TV, radio, fax, newspapers, magazing, computer network, internet faciliities and more. Trefore Malaysia communication system is considered better.By year 2000 there were 4.6 plus million of telephones main lines. There were more than 5 million of mibile phone users in the country.

Transportation This was the critical success factor of economic groth in the Malaysia. Country has well-devoloped transpotation system and it is high standard and high managed as a result of continuing devolopmant of the country. The former Prime Minister Dr Mahathir bin Mohamad implemented intensive and productive project of developing the transportation system in the contry. Now in Malaysia, there is about a total of 1801 km of railways. And the narrow gauge of railways also 1801 km which 1000 m gauge ( 148 km electrified ) (2001). As for the road in Malaysia, there is about a total of 64672 km of highways and paved highways about 48707 km (including 1,192 km of expressways). In addition to these national and main regional roads, Malaysia has thousands of kilometers of local roads that are maintained by local jurisdictions (1999). As for the unpaved roads there’s about 15,965 km. also the waterways in Malaysia is about 7296km. As for the merchant marine, there’s about a total of 363 ships. As for the air transportation in Malaysia, there are currently now about 116 airports in Malaysia (2001). The Malaysia has many different type of airport with paved runways.

Education Malaysian education is quite high the reason is their education system mostly built on British education system. Also both government and private sector provides the school facilities in the Malaysia. The attendance to the school is compulsory between ages of 5-15. Literacy is (2002)--95%. This education system vitally helps to country growth and competes with international.

Institutional stability Most of institutional in the Malaysia is stable. Also there are stable governments which are quite good, courts, schools, stable law enforcement, businesses and many others.

Common laws Administration and implementation of the legal system in Malaysia is very uniform in all part. And also it is considered effective and is equal. The Malaysian legal system is based on English common law.

High Wages In Malaysia, the labor market condition shows dynamic improvement, at the beginning of year 2000, Malaysia unemployment rate was on 3%. That rate was around 3.2% in 1998. The government imposes a monthly per capita levy on employers of foreign workers: RM125 (US$33) on foreign construction and manufacturing workers and RM30 (US$8) on domestic and agricultural workers. There is no legal minimum wage limit. But there’s high wages and a proper income for people who’s working in the medical section such as doctors, surgeon, nurses, pharmacy and many more others. Therefore most of the working people can afford to buy consumer goods beyond basic living necessities such as likes having more than one car, spend it on expensive things and many more which helps the country’s economy.

Sri Lanka Sri Lanka Economy overview and analysis

In 1977, Colombo abandoned statistic economic policies and its import substitution trade policy for market-oriented policies and export oriented policies. When analyzing state contribution to economic growth of country. It can be highlighted on the several ways. After 1977 unto today, the governments which came to power have given major patronages of state to upgrade the manufacturing sector such as food processing, textiles apparel, food and beverage. But apart from that telecommunications, insurance and banking sector has being developed since last few decades. When Sri Lanka got the independent most contribution given on export was plantation crops (mainly tee, coconut, rubber) this situation was continued up to 1977, and the existed governments played major role on promoting plantation industry, the state allocated the considerable amount from bud-get on plantation sector. Therefore before 1977, economic growth of country depended on Tee, Coconut and Rubber and mostly labor force was utilized on plantation. But with the government which came in to power in 1977, introduced the Opened economy within last 20-30 years contribution of plantation has being declined (contribution of plantation in 1970 was 93% but in 2003 it was 15%) while garment apparel and accessories industry has increased in greatly the rate was 63% of export in year 2003. Mainly effected reasons was with free trade policies followed by previous governments (since 1977) built the Export Processing Zone in Biyagama and Katunayaka, initially targeting upgrade export and degrade the unemployment in the country. Also all governments came in to power later, followed same policies and built up and spread/speed up the export processing zone in Sri Lanka, Koggala, Seethawaka, E-kala, Wattupitiwala etc. Being established BOI (Board of Investment), the states have expected to encourage the investment and insure labor work within EPZ in the country. The companies registered under BOI can import raw material and export manufactures duty free. Most of the companies established in the EPZ are free of power cutting. Within last 10-20 years, labor force has increased in massive scale while GDP has increased based on EPZ. The rapid Mahavali development project launched by UNP government in year 1988 with foreign donation was a great help to upgrade life style of Mahavali region. Mahavali Project has upgraded fishery in the region, poverty reduction, road, street, and bazaars and greatly helped to economic growth of the region. The Victoria, Rantambe, Lakssapna and Kottmalle make huge capacity of electricity in the present. The GamUdawa project (thousand of houses project), Agrarian endemic, agrarian movements implemented by former president R. Premadhasa is can be considered as a good point of economic growth. The existed government in 2001 let rupee floated and cause to investment come into the country improved the share market and share issues. The peace agreement signed in year 2003 among Sri Lanka Government and LTTE allowed further progress on the macroeconomic stability during the first half of the year. Growth in 2003 was largely driven by the services sector (particularly telecom and tourism) and trade. Both exports and imports rose over 9% in the first 10 months. Interest rates declined. The inflation rate fell under 9%. External reserves were sufficient to cover 5.6 months of imports. But hardly effected the political continue instability to economy. Also the December 26, 2004 Indian Ocean earthquake and tsunami caused extensive damage in Sri Lanka economy. Investment discouraged and development faltered on the way.

Economic Review When comparing with Malaysia, sir Lanka inflation rate is higher, in year 2003 it was 5.8%. Again increasing that rate went up to 11.2% in year 2005. Sri Lanka economy got failed continually on maintaining the foreign exchange value. Also unstable political situation and incorrect political decision taken caused to this uncontrollable inflation rate. Lack of labour force utilizing (Huge unemployment capacity -8.4% in 2003), non-modernization education system, state inefficient management, inefficient resources utilization and political violence/corruption/bribery etc. also caused to slowly economic growth. To convert in to rapid and long term economic growth of the Sri Lanka, state should continued tsunami relief and reconstruction, continue peace process up to end with peace putting stability in the political background & political parties and continue policy reforms particularly in the area of fiscal discipline and direct management. Other focuser include diversification the country main export- garment, plantation. State policies should be set up to encourage apparel industry and manufacturing relief can be given. The previous government’s project of develop in the information and communications technology strategy to connect and service everywhere of the country. This project should be continued and implemented successfully, for taking it into the information age. Free Trade Agreement can be signed with other countries to achieve regional trading hub status. The service sector is the largest component of GDP (54%). In 2003, the service sector ca be continued its strong expansion, fueled primarily by strong growth in telecom, tourism, and financial services. Manufacturing accounts for about 16% of GDP. The textile, apparel, and leather products sector is the largest, accounting for 44% of total industrial output. The second-largest industrial sector, at 24% of total manufacturing output, is food, beverages, and tobacco. The third-largest industrial sector is chemical, petroleum, rubber, and plastic products. Agriculture has lost its relative importance to the Sri Lankan economy in recent decades. It accounts for 20.1% of GDP and provides employment to 33% of the working population. Labor force should be utilized in massive scale through these sector, plantation sector mostly importance why 70% of population are in the rural areas so unemployment can be redacted (Unemployment rate has declined in recent years at 10%). Sri Lanka has huge Labour force comparatively; it can be utilized to development in the country trough the plantation sector. Malaysian education system basically adapted on British education system and they are giving priority on English medium education, my opinion is to absorb the same education system to Sri Lanka why English medium education decline the poverty level of the country, make more employment opportunities- national and international level. To the improvement of the economic growth the state should persuade/backup to develop the infrastructure in the county. When Mahathir Mohamad former Malaysian prime minister, had come in to power, he got the major decision to build up the ways in the country. Not only the urban areas he also developed the remote area. He forecasted the future development is coming on better road system. The infrastructure is main tool of economic growth. If any country has good Road System, it invites investors to come in to countryside, agrarian’s production, services and other production can be taken in to wide market, electricity, telecommunication system can developed. This is the main way of developing the rural area. Current and future governments should concentrate in developing rural area it is the basic on economic growth in the country.