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Homework answers / question archive / Due to rapid spread of covid-19, Malaysian government has banned exports of face masks to ensure sufficient supply for Malaysians during current pandemic and also announced that the price of the three-ply face masks increased at RM2 instead of 80 sen per piece
Due to rapid spread of covid-19, Malaysian government has banned exports of face masks to ensure sufficient supply for Malaysians during current pandemic and also announced that the price of the three-ply face masks increased at RM2 instead of 80 sen per piece. While, Top Glove as the world’s largest natural rubber glove maker, its sales has dramatically increased as orders stream in from countries affected by the pandemic. You are required to evaluate current export circumstance of protective stuff (e.g. masks & gloves)
In the context of covid-19, explain the reasons why Malaysian government embargoes exporting of face masks and also intervenes the retail price of 3-ply masks in local market.
Case Specifics: -
The Covid 19 has had its impact on most economies as the governments try their best to make sure that the economy is not impacted any further and the recession which has already begun on a global level can be contained as far as possible.
In Malaysia, there is a sudden surge in the local demand for face masks which are used as a protective gear to fight the disease. As demand goes upwards, the supply tries to catch up with demand. As a measure to increase the suppliers that currently exist in the market place, the prices of the face mask have been increased to RM2 from 80 sense so that suppliers get additional profits and increase in size and have an added incentive to invest money into producing the same, such that the local demand can be met.
Further, the reason for the government to place an embargo in the current situation which is a ban on exports of goods which are produced in the country is the fact that these goods have become scarce within the country as demand for them far exceeds the supply and the resultant of which is that people are finding it difficult to find them in the markets while producers are exporting them at higher prices to foreign countries and earning higher profit margins.
Thus, to avoid this, and to ensure that local demand is met in the best possible way and manner, it has become important for Malaysia to apply an embargo wherein the country does not permit export of face masks so that domestic people do not suffer from lack of supply.
Conclusion: -
This is a clear intervention in the market by the government which has been taken by keeping in view the harmful effects of the Corona Virus Pandemic. It increases profits for suppliers who then produce goods in larger numbers on one hand and do not need to sell the same good in foreign countries at a higher profit margin.
Other measures such as an embargo which means a block on exports of the item is done so that each produced mask reaches local population which is vital for fighting the disease and helps in increasing the supply even further and correcting the market type.
