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Market Power and Instituitions :
The State of Competitiveness in Malaysia's Services Sector

Speaker : Professor Dr. Rajah Rasiah
First Holder of Khazanah Nasional Chair
Date : Tuesday, 25 June 2013
Time : 3.00 pm – 5.00 pm
Venue : Lecture Hall 3,
Faculty of Economics & Administration,
University of Malaya
Fee : Free Admission (RSVP before 21 June 2013)

Abstract: Competition policy is typically targeted at establishing and monitoring anti-monopoly instruments in several countries to ensure that undesirable business practices arising from market power do not undermine competitiveness of economic activities so as to reduce deadweight losses in consumer and producer benefits. Recognizing its role in influencing economic competitiveness, stimulate good business practices and to protect consumer welfare, the Malaysian government enacted the Competition Act in 2010. Competition policies are generally formulated to stimulate actual or potential rivalry among firms in the marketplace for the patronage of customers, but strictly prohibit economic agents from using unfair trade practices that can reduce consumer welfare. In doing so, competition policy discourages the abuse of market power that creates destructive asymmetries against customers. Thus, competition policy seeks to stimulate competition to impact positively on the business environment so that fair trade practices are not compromised in the entry and exit of new businesses, derivation of prices, licensing and technology among other factors. It is this context that this public lecture analyzes changes in concentration levels in Malaysia’s services sector, which has been the leading sector in Malaysia’s economy for several decades. The contribution of services to Malaysia’s GDP rose from 39.6% in 1970 to 42.5% in 1990 and 47.9% in 2011. We deploy the quantitative measures of four-firm concentration ratio, Herfindahl-Hirschman index and rivalry index to examine latent market power in the services sector over the census years of 2000, 2005 and 2010. Because of limitations in the measurement instruments and the presence of scale economies in some sub-sectors, we have classified an industry as too concentrated when all three measurement instruments show excessive contraction. The quantitative measures show that train services, postal services, sub-urban passenger transport services, highway, bridge and tunnel operation services, port operation services, passenger airlines and advertising are overly concentrated. Since many of the service industries lack competition from external businesses, a cluster and value chain mapping study can help confirm if indeed any of these concentrated industries lack competitive business practices. 


3:00 pm
Arrival of guests and registration
3:15 pm
Arrival of YBhg Tan Sri Dato’ Mohd Sheriff Mohd Kassim,
President of Malaysian Economic Association (MEA)
3:30 pm
Welcome speech by YBhg Tan Sri Dato’ Mohd Sheriff Mohd Kassim
3:45 pm
Introduction of speaker
lecture titled “Market Power and Institutions: THE STATE OF COMPETITIVENESS IN MALAYSIA’S SERVICES SECTOR”
by Professor Dr. Rajah Rasiah,
First Holder of Khazanah Nasional Chair of Regulatory Studies

Q & A Session

5:00 pm



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