Greece's Deficit

Greece is facing debt crisis and serious budget deficit problems. In Greece, the Eurozone finance ministers are going for another round of talk to seek a plan to bring closer the financing gap which was created by the two-year extension of Greece's bailout program.

100 billion for three eggs during hyperinflation in Zimbabwe

In year 2009, Zimbabwe was in the late stages of hyperinflation which landed Zimbabwe's currency in a dire state. If Greece does not implement any more policies or structural reforms, it may result in a repeat of history of what happened in Zimbabwe.

Hyperinflation will also cause an uncontrolled increase in the price within a short period of time which gradually leads towards the drop in the value of Greece's currency. The extensive fall in the value of Greece's currency may be serious until it destroys the currency's function as the medium of exchange. In 2009, the value of Zimbabwe's currency cut by half against US Dollars every few days. It is a very serious matter as the economy would be in a serious recession and the purchasing power of the nation will be near to zero.

Moreover, following the matter of value drop in Greece's currency, foreign investors will lose hope in Greece's economy and may draw back the investment or stop investing which will push Greece's economy into a deeper recession. It will cause a negative growth of Greece's economy.

However, the Eurogroup would be discussing on the ways how to restore Greek debt sustainability by 2020 to restore faith of the investors in this single currency.

Personally, the budget deficit may occur due to poor policies and planning. If the value of Greece's currency continue to fall, it may result in the suffering of the country's nation. They would have problems purchasing products due to the hyperinflation because of budget deficit. Besides that, the government could improvise their fiscal policies. However, the Eurogroup and finance ministers are doing their best to help Greece in financing and bail-out which would hopefully bring a happier ending for Greece. The consequences will be dire if the debt deficits are left unsettled for a longer period.

Reference: http://online.wsj.com/article/SB10001424052970204002304576626430653206132.html

Written by Xue Ying
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REDtone International Bhd is a well-known company since the early days in 1996. It pioneers in discounted calls and due to the rapid change in the telecommunications industry, it had brought down the company. As such, the company made a lot of changes and had a hard time before thriving back in 2009. The discounted calls service are still their core business.

In this industry, the technology plays a big part in affecting the products and services offered by the companies. Hence, REDtone had repositioned its company to accomodate the consumer's demand for broadband and data plans. However the discounted call business is still ongoing and receiving a revenue of 30% from their total profits.

REDtone's Low Price Plan

The continuous success of this discounted call business is due to the price elasticity concept. Making calls is one of the basic thing that everybody does in this new era. However, the cost of making calls is high especially for the business people. However, when the price is lowered, the demand for the telecommunication service for REDtone will have a higher increase, the company will reap revenue from the increase in demand. This means that the percentage of increase in demand for the service by REDtone is large due to the small change in price.

I feel that REDtone could focus on the small, medium and government enterprises or agencies to reap more profit. When they reduce their price by a little it will increase the demand for their products and services. The responsiveness of the consumers to the price change is a key to REDtone's success in discounted call business and also their newly penetrated market, the broadband and data provider. Besides REDtone, all the other companies in this industry are also manipulating the price elasticity theory to generate revenue. Furthermore, the price elasticity will benefit both the company as they will still get profit while the consumers are able to get their products and services at a lower price.

Reference: http://biz.thestar.com.my/news/story.asp?file=/2012/11/17/business/12322072&sec=business

Written by Chen Nan
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Iskandar Malaysia is located in Johore, which is the southern gateway to Peninsular Malaysia, was set to turn into Southern Peninsular Malaysia's most developed region, where entertainment, lifestyle and business will converge within a vibrant metropolis. Besides that, the government had also allocated RM6.83 billion to Iskandar Malaysia, which is not a small figure. Iskandar Malaysia is the largest single development project ever to be undertaken in that region. Due to its strategic location and accessibility to leading Asian countries like Singapore and a range of attractive fiscal incentives, Iskandar Malaysia is set to attract foreign and high-level corporate investments.

Iskandar Malaysia is Malaysia's first international theme park: Legoland was finally launched on the 15th of September 2012. According to the statistics, within the first one-and-a-half months since the official launch, Legoland had managed to garner as much as 250,000 visitors which is an overwhelming figure. LEGOLAND Malaysia is still maintaining their target to reach one million visitors in its first year of operation.

LEGOLAND Malaysia

By the overwhelming amount of visitors within a short period, it is suffice to say that LEGOLAND might attract more and more visitors when all the rides and attractions are fully launched. There is an increase of tourists from Singapore and from other districts in Johor as well as other parts of Malaysia. Reports of shops extending their opening hours had been reported in the newspapers as the shop owners made a claim that the revenue will increase due to the tourism attractions that had been mushrooming around the area in NusaJaya.

The opening of LEGOLAND had increased job opportunities which decreased the amount of unemployment in the country. Besides that, the private consumption of the nations and foreigners will increase the GDP eventually. It could be an opportunity for our country to have an economic growth by the end of 2012.

Besides LEGOLAND, Puteri Harbour family theme park was also launched in November. It features the Japanese cartoon character, Hello Kitty and is also poised to attract investors to Iskandar Malaysia.

Marlborough College

Putting the entertainment hubs aside, Iskandar Malaysia is also moving into the education industry. The British school Marlborough College had also set up their first overseas branch in Iskandar Malaysia. This sets the view of another potential area for investment.

The development agency announced that Iskandar Malaysia has drawn investments worth about USD 30 billion since 2006. So far, the largest foreign investors in Iskandar Malaysia with a total of RM4.5 billion as of December 2011 is Singaporean companies.

Iskandar Malaysia

According to statistics and the prospects of Iskandar Malaysia, I feel that Iskandar Malaysia will be the highlight of Malaysia for the coming years. Iskandar Malaysia is equipped with the state-of-the-art infrastructures and strategic location. Personally, I feel that Iskandar Malaysia will result in an increase in our country's GDP for the coming years due to the investments from our own country and foreign investors. It will also improve the lives of our own nation as the growth of Iskandar Malaysia will also lead to more job opportunities and could decrease the unemployment rate. However, the government should also implement the discretionary fiscal policy to manipulate the real domestic output and employment to prevent inflation from occurring while stimulating economic growth.

Reference:

http://www.freemalaysiatoday.com/category/business/2012/09/11/iskandar-malaysia-the-next-big-thing/

Written by Xue Ying
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After the United States, China and Japan's operations are the second and third largest economies in the world. China and Japan trade about $350 billion worth of goods and services to the other party every year. This makes them as one of the biggest trade partner relationship in the world. In recent years, China's economic growth promotes economic, and external countries try various devices to participate in merging and acquisition.

Japan and China as neighboring countries

In addition, Japan is also very interested in the goods and services and is a potential new class of consumers in China. The most obvious reason is that China having the largest population of more than 1.3 billion. By contrast, Japan is a small island, with a population of just around 127 million. However, the Japanese population has high qualifications and is listed in the  first ten of the world's largest population of citizens with good qualifications. The Japanese's interest is building a factory in China to produce Honda and Toyota. The Japanese yen is still a strong currency against other currencies, this makes the Japanese goods more expensive, and allowed the decline in exports of the country. In order to overcome this obstacle, Japan tried to produce its automobile and electronic products directly in the overseas market. This decrease the cost of production and make the price more reasonable for potential customers.

Japan

This connection had resulted in a strong bond between Japan and China. Japan is China's largest trading partner concerning import. In 2011, Japan accounted for 11.2% of China's total imports. Surprisingly, only 7.8% of the Chinese exports to Japan which qualifies China as Japan's third largest trading partner compared against the United States (17.1%) and Hong Kong (14.1%). Even though Japan is not a big country, it is China's largest import and export trade partner. China accounts for 21.5%, of the total amount of the imports from Japan in 2011 and 19.7% of the total export.

China

The relationship between Japan and China had resulted in a high net export of China and it is seen as a good sign due to the benefits that both side had been able to receive. Japan was able to produce and sell their products at a lower cost while China had earned from net exports.

In my opinion, the relationship between Japan and China is not to be underestimated. The country are considered one of the few countries with the largest economy in the world and mutually interdependent. It is a good thing for countries to cooperate to generate the economic growth of each country.

Reference: http://www.economywatch.com/economies-in-top/?page=full

Written by Yeong Quan
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Referring to an article published on the 23rd October 2012, by Christine Legrand of the Guardian Weekly, the president of Uruguay plans to legalize marijuana. The sale, possession and transfer of this substance is currently illegal in Uruguay but the domestic black market for this good is valued at $75 mil, according to the minister. Roughly 8% of Uruguay's population consumes this drug occasionally.
What happens to the domestic economy when the drug is legalized?

Marijuana Leaf

Currently, the only way to obtain this drug is through the black market. A black market is an underground economy performed by criminals. According to the United Nations (UN) drug report 2012, the value of marijuana in Uruguay is USD 0.7 per gram during the year 2010. When the drug is legalized, the amount of supply will have a sudden rise because there are no penalties for its production, thus businessman who sees the great profit of this market will start to grow their own Cannabis.This will cause the price of marijuana to fall tremendously to the cost of production. The Uruguayan government will commence laws to make sure the production of this good is regulated to prevent the price to fall too low.

Demand and Supply Graph

When this drug is legalized, the demand of the good rises too because the risk of being prosecuted by the law is eliminated. Both the supply and demand curve will shift to the right, lowering the price equilibrium (as shown in the graph).

Personally I feel that the legalization of marijuana has huge economic benefits to Uruguay. The excess profit from this market can be transferred to the government instead of criminals and these profits can be used to improve social welfare. However, health issues will arise, but to be fair, marijuana is not as dangerous as tobacco and alcohol. Furthermore, the government has control over the consumption by increasing or decreasing tax. Of course there is a limit whereby if the tax is too high, black markets will still occur. My final opinion is that, if the government keeps a close eye to control production and price, legalizing marijuana shouldn't be a problem.

Reference:

http://www.guardian.co.uk/world/2012/oct/23/jose-mujica-uruguay-legalise-cannabis?newsfeed=true

Written by Kar San
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Flying is the means of transportation when it comes to long distance and time saving. In Malaysia, we have two main well-established airlines, which are Airasia and Malaysia Airline (MAS). AirAsia is a leading airline company in providing low cost airline services while MAS is more towards providing high quality airline services.

Air Asia Airline

MAS Airline

AirAsia and MAS act as the leaders in the Malaysia airline market. Besides that, they also face a dilemma, which whether should they compete or cooperate. However, they chose to compete rather than to cooperate. Both of the companies have their own strategy, which is low cost airline and high quality airline. AirAsia started sharing the airline market since 2002 by using the low cost airline strategy to penetrate the market. It provides an alternative of airline services for consumers with average income to be able to enjoy airline services at a valued price for long distance journeys. However, MAS provides high quality airline services for the consumers who prefer to have a comfortable situation. In addition to that, MAS also provides package deals, which are free foods and drinks for the travelers and even souvenirs for the children.

Firefly Airline

Both of these airlines contain the characteristic of the oligopoly as the smaller firms in the airline industry of Malaysia abide to their price. Nevertheless, the large firms (AirAsia and MAS) are mutually interdependent. The package deals that AirAsia promote will be monitored closely by MAS, vice versa. They would be competing against each other to gain the most profit. On the other hand, the smaller airline firms in the airline industry of Malaysia for instance, Firefly and Sabah Air airline companies, would have to abide to the price set by the dominant firms which are AirAsia and MAS due to the incapability to compete with the larger firms. However, these small firms will operate as perfect competitive firms and will still generate revenue.

In my opinion, it is good that both the airline companies refuse to cooperate as it would result in a cartel. Cartel is the collaboration of oligopolies to set the price for the market like a monopoly. However, cartel is also illegal and if cartels are formed, it will result in the decrease of consumer surplus. Oligopolies will compete with each other so the price of the products and services will eventually be controlled and will be good for the economy of the country.

Reference: http://biz.thestar.com.my/news/story.asp?file=%2F2012%2F11%2F3%2Fbusiness%2F12263921&sec=business

Written by Wei Hang
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