FACULTY BUSINESS MANAGEMENT

BACHELOR IN BUSINESS MANAGEMENT (HONS) BUSINESS ECONOMIC

TITLE :

MALAYSIA AND THE CHALLENGES IN GLOBALIZATION

(ECO561)

BM250 4A1

GROUP MEMBERS :

1. NUR AZZAH AZIRAH BINTI NORARIFFIN 2016595763

2. NORAZLINA BINTI ALI HASSAN 2016707089

3. MIGGEWATI MATIUS 2016718461

4. CYREL RULIN 2016564669

SUBMITTED TO

SIR AHMAD GHAZALI BIN ISMAIL

SUBMISSION DATE

19th DECEMBER 2017

Table of contents

No Main contents pages

1.0 Introduction

2.0 Challenges in globalization

3.0 Impact of globalization

4.0 Importance of globalization

5.0 Overcome the globalization

6.0 Conclusion

7.0 References
2.0 CHALLENGES OF GLOBALIZATION IN MALAYSIA

a)Education Reforms

In the last two decades or so the demand for higher education in Malaysia increased
tremendously, fueled by the rapid economic growth and prosperity. Since places in
local universities were limited Malaysia had been aggressively sending students
overseas, especially to United States and United Kingdom. However, the financial
crisis of 1997-98 had resulted in the cost of overseas education to Malaysia to be
prohibitively expensive. We were forced to consider alternative strategies. We
improved local educational infrastructure by building more universities and colleges
and upgrading existing ones. The high demand for tertiary education is being
absorbed by local universities and colleges. The need to send students overseas has
greatly diminished, except for selected disciplines. At the same time, more foreign
students, especially from developing countries, are now coming to Malaysia for their
tertiary education.

The importance of education has long been recognized by Malaysian population and
government. It is no longer adequate to possess abundance of natural wealth if the
society does not have the knowledge and know-how to add value to the raw materials.
As experienced by almost all developing countries, becoming a mere supplier of raw
materials only served to enrich the developed countries while themselves getting
minimum benefits. In order to correct the situation, developing countries need to take
a serious look at their education system, especially at the tertiary level, with the aim of
creating a knowledge-based society, capable of producing things from our own raw
materials, or imported raw materials.

In today's world of globalization, tertiary education is basic education, and should be

accessible to the masses, no longer to a selected few. This is especially true for
Malaysia with its aspiration to achieve the status of a developed country by year 2020.
In year 2000, about 25 percent of the university going age cohort enters tertiary
education.[ Ministry of Education Malaysia (2001).] This is a far cry from the
percentages for developed countries; for example USA 81%, Australia 72%, UK and
Canada 60%, Germany and Japan around 50%.[ World Bank (2002)] Our target is by
year 2020 this percentage will increase to 60 percent, which would be at par with that
of a developed country. It’s a daunting task indeed.

b) Development of Science and Technology and R&D

Malaysia considers science and technology as an important vehicle to meet the

challenges of globalization. Toward this end the government has encouraged
students to undertake science and technology in the secondary and tertiary education.
This is to increase the number of scientists, creates conducive environment for
activities in R&D, improve creativity and innovativeness, productivity and
competitiveness. The government has also emphasized the technical and vocational
training to provide sufficient number of skilled and semi-skilled labor force.

Malaysia has already achieved satisfactory level of competence in R&D in agriculture

such as in rubber and oil palm. But R&D in the industrial sector is at a low level. In
year 2000 national R&D expenditure in relation to GDP was only 0.5%, compared to
Germany 2.3%, USA 2.5%, Japan 2.8 and South Korea 2.9%. Although national
budget on R&D is on the rise, it is still a far cry compared to the amounts spent by
developed countries.

Additionally, Malaysia has also taken the initiative to upgrade the R&D facilities in the
universities and science and technology parks to provide better environment for the
R&D activities. Fiscal incentives are extended to the private sector to encourage them
to participate in education, training and R&D.
c) Development of Small and Medium Scale Industries (SMIs)

Presently, the small and medium scale industries constitute about 80 percent of the
manufacturing establishments in Malaysia and they are mostly owned and managed
by local investors. However, their investment is less than half of the total investment
while their contribution to the manufacturing sector value-added is a just a third. They
are plagued by various problems such as inadequate capital, poor managerial,
marketing, production skills, and low technology. These problems resulted in poor
quality products that are not competitive even in domestic market let alone in
international markets.

Malaysia realizes the potential of SMIs in the industrialization process and the
importance of this sector to generate business opportunities, employment, income
and reduction of poverty. Therefore Malaysia has decided to improve the capability of
SMIs to supply the intermediate inputs to the larger firms and encourage these SMIs
to export their products, especially in the light of the establishment of AFTA in 2003.
The focus of the activities of the SMIs is in the supportive industries producing parts
and components, mould and die, testing and tool making, and high quality casting and
forgings. The linkage between the SMIs and the larger firms are done through
subcontracting arrangements. The government provides infrastructure facilities to
SMIs and relocates them from the congested urban areas to the less developed
regions by building industrial complexes to promote R&D activities, improve
productivity, and competitiveness. This is necessary to increase the local content of
manufactured goods and pave the way for industrial expansion through industrial
linkages
4.0 Importance of Globalization

Globalization can be define as the interconnectedness of people and businesses

across the world that eventually leads to global cultural, political and economic
integration. It is the ability to move and communicate easily with others all over the
world in order to conduct business internationally.

There was several importance of globalization. First is on Travel and tourism,the

World Travel and Tourism (WTTC) had invested in economic impact research, which
assesses that the Travel & Tourism industry had contribution to GDP and jobs,
referred to Olovia Ruggles Brise (2012).This can be proven by the report that
proposed by United Nations World Tourism Organization (UNWTO) in 2010. It shows
that Malaysia is placed the 9th highest international tourist arrivals,also had reach up
to 24.6 million visitors to the country, increase 3.9% at the end of 2009 performance.
Second is in health improvement, according to Pim Martens(2010),due to social
and environmental changes the developing countries had experienced the health
improvement based on globalization, it more recent health improvement in developing
countries which can broadly related to health improvements knowledge transfer and
socio-cultural determinants .According to Christina Tan (2012), Datuk Seri Liow Tiong
Lai represent The Health Ministry said that they planning in continue to keep
improving the new Kluang Hospital by providing more high technology equipment and
upgrade the services of medical staff and specialists with the aim of improve the
health care system in the country and reduce the infectious diseases.
The word, globalization, is relatively new, coined in the late 1970’s. The airplane,
the telephone, and the Internet are just three inventions, which are attributable to the
spread of globalization.Business and industry have show biggest chance to get huge
profits working globally,it is due to the increased demand in the high tech industry
around the world.Globalization has become an important concept for students in
higher education for nowadays world to understand and appreciate because of the
demand in business and industry to hire people who can work with people of other
nations and cultures and if need be can travel independently internationally to
promote their business or industry.According to Anantha Raj A. (2011), the increasing
Asian countries with large populations such as China, Malaysia and Indonesia have
been moving towards by the policy on globalization of higher education. The demand
is predicted to rising from 1.8 million to 8.4 million international students in 2000.
(Referred to appendix Table 1 shows the share of tertiary foreign students in OECD
countries

5.0 OVERCOME THE CHALLENGES OF GLOBALIZATION

Associated with the developing technology, globalization as a trend being

increasingly incorporated in multinational companies leads to interdependence
among the countries. To overcome the following common challenges that this phase
includes, companies need to look for managers, with a strong awareness of and
insight into both local and international processes of the respective industry, who can
effectively turn these potential opportunities into profitable ventures within the global
economy.

Globalization has indeed facilitated the rapid growth of industrial markets globally.
Keeping in check with the safety protocols, individual governments, too, are not far
behind to continually update and enforce regulatory policies. Increasing uncertainty,
especially the environmental, energy and financial policies becomes a hurdle when
the incoming profits are affected. They may even experience a hike in costs due to
this.

Since a majority of companies are now hiring or outsourcing their individual

projects for their cost-effectiveness and specialized skills, it tends to create a shortage
in key functions. It does, in fact, create a better quality and an innovative, efficient,
and dynamic workforce. For the survival in a globalised economy, however, the
management should make sure that resources (raw materials, production, labor, and
services) are available as well as leveraged properly.

Most companies working globally rely on small inventories to avoid losses due to
uncertain demands. The planning for supply chains is further influenced by
competition for raw materials, changes in commodity rates, and from the
unpredictable weather changes. Encouraging people to be part of your
entrepreneurship, allowing local and foreign workforce to develop through constant
learning, and managing the environmental resources through proper planning can
help achieve this.
 In reality, there is an overload of information that needs to be converted into
valuable information. With strategic thinking and problem solving ensuring training
and improved communication within your global enterprise you save future
embarrassments or errors. After all, globalization should not be treated as an excuse
in the extremes of avoiding or exploiting new ways for the benefit of the industry.

6.0 CONCLUSION

Globalization is a force that increasingly touches the lives of people living in all
countries of the world.134 Country borders are metamorphosing from barriers to
bridges as a result of trade liberalization, increasing levels of education among
women and workers in developing countries, and advancements in technology.
Goods, services and labor talent are now flowing more freely across the globe than
ever before. Except for occasional protectionist flareups, these trends will likely
continue.

The opportunities are abundant, from greater efficiencies and access to new
markets for organizations to improved job opportunities and higher wages for skilled
workers. The challenges are equally copious. Organizations need to deal with an
ageing workforce; they must attract, integrate and maintain multicultural employment
pools; and they have to contend with human rights and business practices that may
be counter to the values and laws governing the organization.

Solutions that take advantage of each opportunity and rise above each challenge
become ever more complex when the global element is added. Providing hiring
incentives and developing a management and reward system that takes into account
a spectrum of societal and corporate cultures can be daunting. Organizations that
manage these challenges skillfully will find success and improve the lives of workers
throughout the world.