The Singapore Economic Review

The recent Malaysian attempt to introduce the Goods and Services Tax (GST) was thwarted by public concerns about: (i) its impact on the price level; (ii) its regressivity; (iii) the possibility of the rate increases once the tax is in place; and finally, the disincentive large revenues from the GST would be in addressing the underlying causes of wasteful public expenditures and leakages. The experiences of countries that have implemented a similar tax are surveyed to assess these concerns. It is concluded that within the Malaysian context, all the concerns are well-founded and measures are therefore suggested to ameliorate them.

This study reexamines the relationship between energy consumption per capita and real GDP per capita for Indonesia, Malaysia, the Philippines, Singapore and Thailand using both panel data causality which is taking into account cross-sectional dependence and heterogeneity among the countries and time series causality tests for the period 1971–2009. The findings indicate that taking into account cross-sectional dependence has a substantial effect on the achieved results. The conservation hypothesis is supported for Indonesia, Malaysia and the Philippines. Although a bidirectional relation is found in the case of Thailand, since there is no positive effect of energy consumption on GDP, the conservation hypothesis is supported. In the pattern of Singapore, the neutrality hypothesis is supported. In addition, the increase in investment and labor force lead to more energy consumption in Indonesia, Malaysia and Thailand.

This paper uses special features of Vietnam's health insurance system to separately estimate the effects of moral hazard and adverse selection. Traditionally, the estimation of those effects is ad hoc due to the endogeneity of insurance status. Due to a special fact in Vietnam that there exist a great deal of people who are under the compulsory scheme but get no insurances, we are able to estimate the effects of moral hazard and adverse selection using a matching estimator technique. Our results show that with outpatient services, moral hazard and adverse selection are very severe in Vietnam for old people, and not for young people; and that for inpatient service, the effects are insignificant. The results can be used in the construction of the health insurance policy for Vietnam toward universal insurance as stated in the Law of Health Insurance 2008.

This paper examines the club-convergence and conditional convergence of economic growth of the major 15 states in India over the periods from 1993–1994 to 2004–2005 by using dynamic fixed effect growth models. The result finds that there is club-convergence within the middle income states. There is also evidence of the convergence of per capita income among Indian states by conditioning private investment and public investment along with other factors of economic growth. This paper is innovative in separating the significance of private investment from the public investment in the long-run dynamics of income in Indian states. This paper suggests that regional disparity in income can be reduced by equitable allocation of private investment and equitable distribution of public investment.

This paper examines the extent to which the Indonesia's currency crisis can be accounted for by macro and micro economic fundamentals by employing Markov-switching approach under cross-generation crisis models. In order to represent the speculative attack in the economy, the study utilized one of the measures that is most widely adopted to signal the breakup of a crisis, the Exchange Market Pressure Index (EMPI). This paper found the following. First, liquidity (DC), real exchange rate (RER2) and ratio of banking credit to GDP (BCred) were found to significantly influence the EMPI, indicating that the behavior of EMPI has the characteristic that is predicted by the first, second, and third generation of crisis model found to significantly influence the EMPI, indicating that the behavior of EMPI has the characteristic that is predicted by the first, second and third generation of crisis models. Second, the LR test showed that regime switching dynamic model is more robust than ordinary dynamic model in explaining the EMPI, suggesting that speculative attacks tend to have the characteristics of multiple equilibria. Third, the transition probability matrix results showed that the tranquility regime was more persistent than the volatile regime.

The traditional theoretical analysis of tax evasion fails to explain the empirical finding that declared income decreases with the tax rate. We show that one of the reasons for this result is that many such studies overlook advance tax payments in their analyses. Furthermore, we investigate how advance tax payments influence the extent of tax evasion. We conclude that the influence of advance tax payments on the extent of tax evasion depends on whether an individual's preference is based on expected utility theory or prospect theory.

This paper explores various non-tariff measures (NTMs) that co-exist in China and that directly influence imports into the country. Given the intensity and scope of technical measures imposed by China, the directional impacts of technical barriers to trade (TBTs) on bilateral Association of Southeast Asian Nations (ASEAN)-China exports are investigated empirically using an augmented gravity model. The results imply that Chinese TBTs do have some trade depressing effects from the ASEAN perspective. However, sectoral trade effects of TBTs are important as dual effects exist even within some TBT intensive product groups. This informs the policy debate on the effects of NTMs from the ASEAN-China perspective more specifically, and the "South–South" context more generally on two fronts. First, the identification of specific trade restricting measures for the affected sectors will assist in determining policy priorities within the ASEAN-China context. Second, trade facilitation measures that increase the business costs to the ASEAN exporters also warrant attention in addressing the scale of market access issues in China.

This study examines the real exchange rate determination in Malaysia. The result of the autoregressive distributed lag approach shows that an increase in the real interest rate differential, productivity differential, the real oil price or reserve differential will lead to an appreciation of the real exchange rate in the long run. The real oil price and reserve differential are important in the real exchange rate determination. The dynamic ordinary least squares (DOLS) estimator shows about the same conclusion of the autoregressive distributed lag approach. The result of the generalized forecast error variance decomposition shows that the real interest rate differential, productivity differential, the real oil price and reserve differential are generally important to the real exchange rate determination.

This paper examines how socio-demographic and health-lifestyle factors determine participation and duration of leisure-time physical activity in Malaysia. Based on the Malaysia Non-Communicable Disease Surveillance-1 data, Heckman's sample selection model is employed to estimate the probability to participate and duration on physical activity. Results indicate that gender, age, years of education and family illness history are significant in explaining participation probability in leisure-time physical activity. Gender, income level, smoking-status and years of education are significant in explaining the weekly duration conditional on participation, whereas smoking-status and years of education are significant in determining the unconditional level of leisure-time physical activity.

Managers are faced with increased complexity and unexpected risks. This article raises some reasons for the increase in complexity and risks. It also describes the tools and approaches used to anticipate some of these risks and how to mitigate against them. The usefulness of the scenario planning process is also indicated. The type of behavioral biases that makes risk identification difficult is also explained.