Balance Of Payment Essay

1239 words - 5 pages

| 2012 | 2013 | 2014 |
Current Account Goods Services Maintenance and repairs Services Transport Travel Construction Insurance and pension services Financial Services Charges for the use of intellectual property Telecommunications, computer and information services Other business services Personal, cultural & recreational services Government goods & service Primary income Secondary incomeCapital Account Acquisitions/disposal of non-produced non-financial assets Capital transfersFinancial Account Direct investment Portfolio investment Financial derivatives Other ...view middle of the document...

The table shows the BOP for Malaysia for years that are from 2012 to 2014. The balance of payment are divided into four categories. The first is current account. The current account is used to mark the inflow and outflow of goods and services into a country. Earnings on investments, both public and private, are also put into the current account. In 2012, the current account totalled RM57,348 Million. The figure drops to RM39,907 Million in 2013 and then rises to RM49,508 Million in 2014. The major contribution from the current account comes from Goods, which in 2013, the figure totalled of RM125,614 Million. The figure reflects that Malaysia experienced trade surplus where export are greater than import, which also happens in 2013 and 2014. Otherwise, there’s a lot of sectors under services, like maintenance and repair services, transport and travel agency. Unfortunately, there’s no data or information acquired for 2013 and 2014 which divided figures to these sectors, but as a whole totalled of services. Interestingly, the services shows negative figures which reflects more outflow of services from foreign than inflow of services from Malaysia.
Another components under current account is primary income. Investment income refers to any income made from investing abroad, and includes profits, such as those from business activities of subsidiaries located abroad; interest received from foreign financial investments and loans abroad, and dividends from owning shares in overseas firms. The transfer payment arising from gifts between residents of different countries, donations to charities abroad, and overseas aid falls under secondary income. Both primary and secondary income shows deficit amount in the current account.
The second categories in balance of payment is the capital account. The capital account is where all international capital transfers are recorded. This refers to the acquisition or disposal of non-financial assets such as land, and non-produced assets, which are needed for production but have not been produced, like a machine that use for producing goods and items. The capital account for 2012 shows positive figures at RM159 Million, which explains that Malaysia experienced inflow income in these area. The figures drops to negative RM20.9 Million in 2013 and increase tremendously to RM280.6 Million in 2014.
Next, will be a financial account. In the financial account, international monetary flows related to investment in business, real estate, bonds and stocks are documented. Also included are government-owned assets such as foreign reserves, gold, special drawing rights (SDRs) held with the International Monetary Fund (IMF), private assets held abroad and direct foreign investment. Assets owned by foreigners, private and official, are also recorded in the financial account. The financial account consist of...

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