Energy Tax and the Downstream Palm Oil Trade Competitiveness Nexus in Malaysia: An Application of GMM Approach

Authors

  • Norashida Othman Universiti Teknologi MARA http://orcid.org/0000-0003-2461-8385
  • Zulkornain Yusop Putra Business School
  • Mohd Mansor Ismail Institute of Agricultural and Food Policy Studies
  • Syamsul Herman Mohammad Afandi

Abstract

This paper analyses the impact of energy tax imposed in European Union countries on Malaysia's downstream palm oil trade competitiveness. The competitiveness factors consist four major attributes adopted from Porter Diamond Model (PDM) framework introduced by Porter (1990) that determine the national competitiveness and analyses using the dynamic generalized method of moments (GMM) proposed by Arellano and Bond (1991). The study utilizes yearly data spanning from 2009 until 2016. The results indicate that energy taxes have positive and significant influence on Malaysia's trade competitiveness of palm oil downstream products (oleochemicals, biodiesel and palm-based finished products) and the result also suggests that all the main factors of PDM (i.e factor condition; demand condition; firm strategy and rivalry; and related supporting industry) significantly influence the competitiveness of the industry. The policy recommendation remains that, in order for Malaysia to improve the competitiveness of palm oil downstream industries, producers need to ensure that the country's palm oil production is sustainable, which is stipulated by international agreements, especially in EU countries, where environmental sustainability is their main concern.Keywords: Competitiveness, Palm Oil Downstream, Energy tax, Porter Hypothesis, DGMMJEL Classifications: A11, Q02, R11DOI: https://doi.org/10.32479/ijeep.11558

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Author Biographies

Norashida Othman, Universiti Teknologi MARA

Department of Economics and Financial Studies,Faculty of Business and Management, Universiti Teknologi MARA (UiTM), Kampus Puncak Alam,42300 Bandar Puncak Alam,Selangor Darul Ehsan,Malaysia.

Zulkornain Yusop, Putra Business School

Putra Business School43400 Serdang, Malaysia

Mohd Mansor Ismail, Institute of Agricultural and Food Policy Studies

Institute of Agricultural and Food Policy StudiesUniversiti Putra Malaysia,43400 Serdang Selangor, Malaysia

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Published

2021-08-20

How to Cite

Othman, N., Yusop, Z., Ismail, M. M., & Afandi, S. H. M. (2021). Energy Tax and the Downstream Palm Oil Trade Competitiveness Nexus in Malaysia: An Application of GMM Approach. International Journal of Energy Economics and Policy, 11(5), 593–599. Retrieved from https://mail.econjournals.com/index.php/ijeep/article/view/11558

Issue

Vol. 11 No. 5 (2021)

Section

Articles

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