Economics for Managers

Running head: ECONOMICS FOR MANAGERS
Economics for Managers
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1ECONOMICS FOR MANAGERS
Table of Contents
Part A: The ball is in China’s court............................................................................................2
Main economic issues of the article.......................................................................................2
Impact of unfair Chinese investment deals on Malaysian economy..........................................3
Economic effects of ECRL projects on Malaysian economy....................................................3
Part B: Fiscal policy in Malaysia...............................................................................................6
Introduction................................................................................................................................6
Background of the Study........................................................................................................6
Literature review........................................................................................................................7
Contribution of Fiscal policy to the Malaysian economy..........................................................7
Conclusion and Recommendation..............................................................................................7
References..................................................................................................................................8

2ECONOMICS FOR MANAGERS
Part A: The ball is in China’s court
Main economic issues of the article
The article summarizes current relationship state of China and Malaysia and its
consequences on both China’s and Malaysian economy. The recent visit of Malaysian’s
prime minister, TUN Dr Mahathir Mohamad has turned to be a failure. The Prime Minister
has recently announced cancellation of three of the mega infrastructural projects that involved
state owned Chinese enterprise. The main reason behind cancellation of these projects is
fiscal constraint faced by the Malaysian government. The fiscal constraints refers to the
budget constraint of government resulted from cost burden in excess of revenue. The
Malaysian government assures that the project will be resumed when government can
possibly afford the cost. The meeting with Chinese leaders raises the hope that government
may proceed with the multiproduct pipeline project named East Coast Rail Line (ECRL). The
discussion with China’s leader was expected to have a positive effect regarding the
investment project. No joint press conference however has been held after official meeting
between Xi and Mahathir. The former BN minister has suggested that of Mahathir from
Malaysia to China is unable to meet expectation of Malaysia and further jeopardise economic
relation between China and Malaysia.
Whether the prime minister’s trip to Malaysia was a failure or not that depends on
several other circumstances. The trip and meeting with Chinese leaders are considered as a
failure as it fails to prevent cancellation of ECRL projects. Any large-scale project has long-
standing consequences on the economy. Associated with the projects several new jobs are
created. This helps to create new employment opportunities and lower unemployment rate.
Infrastructural projects also contribute to economic development of a nation and help to
attract more investment within the economy. Cancellation of the project is thus is considered