APPLICATION OF ECONOMIC THEORY
CHAPTER THREE
APPLICATION OF ECONOMIC THEORY
3.1 CURRENT SENARIO
Commodities industry is one of the main contributors to the national economy. Oil palm, rubber and timber industry has been generating employment, source of income for smallholders and contributes 14.9% of total export earnings. The government recognised the importance of palm oil and rubber industries in 2013 as one of the National Key Economic Area (NKEA) which is under Economic Transformation Programme (ETP). Government Transformation Plan (GTP) and Economic Transformation Programme (ETP) are national transformation to drive vision 2020 towards high income and advanced economy. I had assigned to figure out the issues and challenges that will be facing by commodities industry on the way towards the year 2020. To go over, economics analysis attempts to play its role.
3.2 ISSUES AND CHALLENGES
Economics is the science that deals with the allocation of limited resources to satisfy unlimited human wants. Think of human wants as being all the goods and services that individuals desire. However, to produce goods and services, we need resources, including labour, land, entrepreneur, capital and technology. Resources are said to be scarce because their supply is limited. In the next five years, the challenges faced by the commodities industry are not only from the industry itself but also threat from other industries. 3.2.1 Land use
Concept of land in economy refers to natural resources in this world. Land supply is constant. Commodity is a land and labour incentive sector. The expansion of commodity plantation will affect other economic activities such as the development of residential and commercial areas and agriculture. However, the growth of population requires more land for residential and commercial area. Moreover, the total land area which is suitable for agriculture is reaching its saturation point. To figure out issues of land, I am using theory of production which is production possibility
APPLICATION OF ECONOMIC THEORY
3.1 CURRENT SENARIO
Commodities industry is one of the main contributors to the national economy. Oil palm, rubber and timber industry has been generating employment, source of income for smallholders and contributes 14.9% of total export earnings. The government recognised the importance of palm oil and rubber industries in 2013 as one of the National Key Economic Area (NKEA) which is under Economic Transformation Programme (ETP). Government Transformation Plan (GTP) and Economic Transformation Programme (ETP) are national transformation to drive vision 2020 towards high income and advanced economy. I had assigned to figure out the issues and challenges that will be facing by commodities industry on the way towards the year 2020. To go over, economics analysis attempts to play its role.
3.2 ISSUES AND CHALLENGES
Economics is the science that deals with the allocation of limited resources to satisfy unlimited human wants. Think of human wants as being all the goods and services that individuals desire. However, to produce goods and services, we need resources, including labour, land, entrepreneur, capital and technology. Resources are said to be scarce because their supply is limited. In the next five years, the challenges faced by the commodities industry are not only from the industry itself but also threat from other industries. 3.2.1 Land use
Concept of land in economy refers to natural resources in this world. Land supply is constant. Commodity is a land and labour incentive sector. The expansion of commodity plantation will affect other economic activities such as the development of residential and commercial areas and agriculture. However, the growth of population requires more land for residential and commercial area. Moreover, the total land area which is suitable for agriculture is reaching its saturation point. To figure out issues of land, I am using theory of production which is production possibility