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Introduction • Malaysia-Indonesia-Philippines relations can be seen
from 2 different perspectives
– Macro – state to state relations – mostly negative representations
– Micro – people to people relations – mostly in harmonious terms
• However most of the researchers focuses on the macro/structural level – ignoring the micro level.
• This paper aims to look into one of the component at the micro level by looking at barter trading and its implications to Malaysia’s socio-economic condition, in particular Sabah.
Malaysia’s Economic Cooperation
• Malaysia’s regional economic cooperation:
– Bilateral – involving only 2 sovereign states
– Multilateral – involving more than two states. Eg. AFTA, BIMP-EAGA
• In Sabah, Barter trade is part of the arrangements under BIMP-EAGA.
Barter Trade in Sabah • Barter trade is an old concept referring to the act of two or
more parties trading goods/services without the use of money.
• In Sabah, barter trade activities have existed for 2 centuries - Warren (1985) demonstrated existence of trade relations between Mindanao, Sulawesi and other localities in Sabah, eg Sandakan & Tawau before/during the colonial era.
• Sabah’s strategic location made it one of the site for barter trade in this region (Hamzah & Ongkili 1988).
• After the formation of Malaysia, barter trading continued, albeit more formally, regulated by the government – Semporna was permanently ceased in 1976.
New Concept of Barter Trade • The new concept of barter trade cannot be
understood or equated with the old concept.
• Formal – supervised and monitored by the KDRM together with Lembaga Pelabuhan, Jabatan Laut etc.
• Sandakan and Tawau as the major ports.
• In practice, the trader will;
– survey the needs and prices
– contact the suppliers – bargaining process
– If agreement is reached, dealer will order the items needed - pay some amount of money to their counterparts in Indonesia to get the goods and then it will send it to barter trade ports in Sabah.
• The buyer have to complete several forms (K1, K2 etc.) to obtain the permission before items sent to Malaysia.
– to avoid contraband items (subsidized goods such batik, petrol, diesel etc).
• Goods will not be sold to individual.
• Imported items include sugar, marine products, fruits, forest product etc.
• Exported items include snacks/instant foods, various bicarbonate drinks, Milo etc.
Physical Development of the underdeveloped area
• Government-private initiative
• Pulau Sebatik for example, a marginalized area which can be developed into barter trade hub.
– To catch up with development of other region
• Previously Pulau Sebatik developed by private initiative, namely North Borneo Timber (NBT)
Economic Development • Hilmi Yahya, Finance Ministry parliamentary sec.
while proposing tax-free status for Sebatik; ‘This will
help to boost the revenue of the Government .. It will certainly reap enormous commercial benefits to the country through
trade activities’ (BP, 1.7.04).
• During economic crisis 1997 barter trade
– played a major role in the recovery of Malaysia – in the second quarter of 1998, the value of barter trade reached RM1 bilion (BT, 20.2.99)
– Tan Shu Kiah, Sabah Ministry – ‘greatly aided the state during the economic crisis… the govt managed to control currency inflow’ (DE, 27.8.98)
• With various taxes and duties imposed, activity generated considerable amount of income for the government.
– Taxes and duties collected between 2000-05 amounted more than RM6 million.
Job Opportunities • Indirectly provided job opportunities to the local
population.
• In Sandakan for example, 60% of the workers are Malaysian (based on the registered name) (Senisia, 2014).
• In Tawau, study shows that barter trade activities had encouraged more women to be involve in small business – with small capital they can set up new business (Sabturiana, 2014).
- Improve their socio-economic status.
Provide Cheap Consumer Goods • It provide a relatively cheap price for several items
especially marine products.
Regional Cooperation
• Diplomacy at the low level – people to people.
• Interdependence - harmony
• Encourage sub-regional development – ASEAN Framework for regional development.
Illegal immigrants
• Sometimes, the boats used for barter trade are also used by illegal immigrants.
• If such situations are left unchecked, it will encourage others to follow suit and used barter trade as a channel for illegal entry into Malaysia.
Smuggling • Subsidized goods such as sugar, petrol, rice.
• Illegal shipment of firearms and contrabands items.
• Several methods of smuggling are conducted and barter trade is used most commonly used.
• Tax evasion through smuggling resulting in losses for the government.
Conclusion • How should the government promote barter trade and
regional development, while at the same time contain undesirable elements which are detrimental to national well being.
• Two crucial issues;
– Enforcement agencies need better equipment and infrastructure
– To educate local people (esp. those on islands and coastal areas) about the dangers of illegal activities and its negative implication for the country.