Citation
Puasa, Ahmad Fauzi
(2005)
The Economic Impact of Sawntimber Export Levy Removal on the Peninsular Malaysia's Economy.
Doctoral thesis, Universiti Putra Malaysia.
Abstract
The global demand for wood-based products will continue to grow in line with
increasing population and economic development especially in many developing
countries. Despite this reason, the production of this primary industry has
declined slowly in the last decade. The Malaysian wood-based supply has faced
a deficit starting from 1995; from there on, wood-based products moved from a
state of resource surplus to one of deficit in Malaysia. Realizing the problem of
the supply of raw materials faced by the local furniture manufacturing industries,
the Malaysian Government has imposed an export levy on wood-based products
including sawntimber. This is to ensure an adequate supply of raw materials for
the local manufacturers. However, the imposition of the export levy has indirectly
suppressed the domestic wood market prices, which has eventually reduced the
sawmillers' income. The Government has overlooked this root problem faced by
the sawmilling industry, i.e. the suppression of domestic prices. If the
Government is not sensitive to this problem, the sawmilling industry will
eventually shrink due to insufficient supply of raw materials, in spite of the export
levy. Based on this problem, the main objective of this study is to determine the
effects of the sawntimber export levy removal and its implication on the
Peninsular Malaysian economy.
There are two types of model used for this study: an econometric model to
determine the net welfare economic impacts, and an input-output model to
investigate the total economic impacts resulting from sawntimber export levy
removal on the Peninsular Malaysian economy.
The empirical study from the econometric model shows that there is net positive
social welfare economic impact on the society resulting from the sawntimber
export levy removal. In fact, the input-output analysis manages to compute the
total output, income and employment impacts on the Peninsular Malaysian
economy as a result of the sawntimber export levy removal. Thus the removal of
sawntimber export levy contributes significantly to the Peninsular Malaysian
economy.
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