Modelling Economic Effects of Reducing Non-Tariff Measures in the Food Processing Sector of Malaysia Using Computable General Equilibrium

  • Vickie Siew-Hoon Yew University of Malaya
  • Abul Quasem Al-Amin Universiti Tenaga Nasional
  • Evelyn S Devadason University of Malaya

Abstract

The import intensive food processing sector in Malaysia is highly regulated with non-tariff measures (NTMs) from the import side. However, the ad-valorem equivalents (AVEs) of those NTMs vary substantially across the subsectors of food processing. To assess the trade costs or plausible protection effects associated with NTMs, the computable general equilibrium (CGE) model is employed with partial removal of NTMs from the baseline scenario with NTMs. The disaggregated impact of a reduction in NTMs indicate disproportionate gains in trade (both imports and exports) across the various subsectors, with highest gains derived by the subsectors with relatively high AVEs, namely dairy products, bakery products and animal feeds. The simulation findings further show that the overall impact of a reduction in NTMs on trade is larger in the long run relative to the short run, suggesting slow responses to such policy changes, as NTMs present themselves as a package and not as an instrument.

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Author Biographies

Vickie Siew-Hoon Yew, University of Malaya

Faculty of Economics & Administration

Abul Quasem Al-Amin, Universiti Tenaga Nasional

Institute of Energy Policy and Research

Evelyn S Devadason, University of Malaya

Faculty of Economics & Administration

Published
2020-12-14
How to Cite
YEW, Vickie Siew-Hoon; AL-AMIN, Abul Quasem; DEVADASON, Evelyn S. Modelling Economic Effects of Reducing Non-Tariff Measures in the Food Processing Sector of Malaysia Using Computable General Equilibrium. Malaysian Journal of Economic Studies, [S.l.], v. 57, n. 2, p. 167-199, dec. 2020. ISSN 1511-4554. Available at: <https://mjes.um.edu.my/article/view/27603>. Date accessed: 22 apr. 2021. doi: https://doi.org/10.22452/MJES.vol57no2.1.
Section
Articles