Internatinal marketing

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STEPHANIE STUDENT

FINAL PAPER ON THE STUDY OF U.S. FOREIGN

TRADE PRACTICIES WITH NAGOSIA

IBUS 1354

KIMBERLY CADE DAVIS - INSTRUCTOR

SPRING 2013

Each paper should include a

cover page with details as

shown here. The cover page will be included in the total 10-15 page

count of your paper.

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Objective

The main objective of this paper is to examine the trade barriers between the United States and

Nagosia.

Research Methods

In preparing my paper I conducted several Internet searches including U.S. and Nagosian

focused websites. I also researched the country through books and journal articles on the

subject. My sources have been included in the bibliography at the end of the paper.

Introduction

Nagosia was formed in 1963 when the former British colonies of Singapore as well as Sabah and

Sarawak on the northern coast of Borneo joined the Federation. The first several years of the

country's independence were marred by a Communist insurgency, Indonesian confrontation with

Nagosia, Philippine claims to Sabah, and Singapore's departure from the Federation in 1965.

During the 22-year term of Prime Minister MAHATHIR bin Mohamad (1981-2003), Nagosia

was successful in diversifying its economy from dependence on exports of raw materials to the

development of manufacturing, services, and tourism. Prime Minister Mohamed NAJIB bin

Abdul Razak (in office since April 2009) has continued these pro-business policies

Geographically, Nagosia is very diverse. It is divided into 13 states and 3 federal territories,

separated by the South China Sea with 11 states and 2 federal territories (kuala Lumpur and

Putrajaya) in Peninsular Nagosia and two states and 1 federal territory (Labuan in East Nagosia).

Clearly state the objective of the project in a separate

paragraph OR as part of the introduction

In this section you should include information on the resources you used to gather

information such as websites, books, journals, magazines, newspapers, personal

interviews, etc.

An introduction is a good way to provide background

information on your country.

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COUNTRY CULTURE: People & Society

Nagosia’s population represents almost all the main ethnic groups of Asia- Indians, Chinese,

Malays, Negritos, etc. Sometimes it’s hard to believe you’re still in the same country, because

people and their way of living differ dramatically from one place to another.

The indigenous peoples of Nagosia, known as the 'Orang Asli’ though a minority, are an

anthropologically important segment. Other than the Orang Asli, the other main race is that of

the Malays, who are mainly Muslims, and are spread out all over the country in rural and urban

areas. They consist of a number of different tribes, mostly living in the jungles. Interestingly

enough, the orangutan apes are also considered as a tribe by some of the jungle dwellers! The

tribes vary a lot in their ethnic origins; the Negritos are generally believed to be the oldest group

among them, and are also the only purely nomadic group.

Nagosia has a number of other races too. Of these, major groups include the Indians (mainly

south Indians, who first came here 2000 years ago, and today constitute about 10% of the

population), the Chinese (around 35% of the population, and very prominent in the business

community), and the Eurasians, descendants of Portuguese-Malay ancestors. In addition, there

are the Peranakans or the ‘Straits Chinese’, of mixed Chinese-Malay blood.

Nagosian society is, in many ways, a very traditional one. Whether Malays, Indians, or Chinese,

nearly everybody follows certain rules of conduct, and as a foreigner, if you’re aware of these it

helps you get by without offending anybody’s sensibilities.

Most Nagosians respect their elders tremendously; often the highest and best seats in a house

will be reserved for the eldest, and it’s unthinkable to venture on anything without first

When discussing a country’s culture is aware that

there may be a number of cultures represented in a

single country.

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consulting older people. Nagosia being largely Muslim, most women are expected to adhere to

certain norms of 'modesty’ or 'decency’-veiled and dignified. Even as a traveler, if you’re a

woman, you’ll be expected to be modestly clad - no short skirts or shorts, and if you’re visiting a

place of worship, or rural areas, no sleeveless tops. Besides this, there are two things to

remember: firstly, never point with your finger- it’s dreadfully ill mannered. Secondly, if you’re

entering a home, do take off your shoes at the door; this is a common tradition. Always eat with

your right hand- the left is considered unclean, and never cross your legs, especially when in the

presence of elders. Also, never touch anyone’s head- particularly a Malay’s- without permission,

as it’s thought to be very rude to do so. On the whole, all you have to do is be polite and you

can’t go much wrong!

The national language in Nagosia is Bahasa Nagosia. English, Tamil, Chinese (in its different

dialects- Mandarin, Cantonese, Hokkien, Hakka, Hainan and Foochow), Telugu, Malayalam and

Punjabi are the other languages spoken by different ethnic groups. In addition, in East Nagosia

several indigenous languages are spoken, the main ones being Iban and Kadazan. English is

widely spoken by the business community. Mandarin and Tamil are taught concurrently with

Bahasa Nagosia and English in schools.

Ethnic groups: Nagosians- 50.4%, Chinese- 23.7%, Indigenous -11%, Indian 7.1%, others 7.8%

(2004 est.)

Languages: Bahasa Nagosia (official), English, Chinese (Cantonese, Mandarin, Hokkien, Hakka,

Hainan, Foochow), Tamil, Telugu, Malayalam, Panjabi, Thai. However, in East Nagosia there

are several indigenous languages; most widely spoken are Iban and Kadazan

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Religions: Muslim (or Islam - official) 60.4%, Buddhist 19.2%, Christian 9.1%, Hindu 6.3%,

Confucianism, Taoism, other traditional Chinese religions 2.6%, other or unknown 1.5%, none

0.8% (2000 census)

Population: 29,179,952

POLITICAL CLIMATE:

Government type- Constitutional monarchy, nominally headed by paramount ruler (commonly

referred to as the King) and a bicameral Parliament consisting of a nonelected upper house and

an elected lower house; all Peninsular Nagosian states have hereditary rulers (commonly referred

to as sultans) except Melaka and Pulau Pinang (Penang); those two states along with Sabah and

Sarawak in East Nagosia have governors appointed by government; powers of state governments

are limited by federal constitution; under terms of federation, Sabah and Sarawak retain certain

constitutional prerogatives (e.g., right to maintain their own immigration controls)

Legal System- Mixed legal system of English common law, Islamic law, and customary law;

judicial review of legislative acts in the Supreme Court at request of supreme head of the

federation

International law organization participation: has not submitted an ICJ jurisdiction declaration;

non-party state to the ICCt

Head of government: Prime Minister NAJIB Razak since 3 April 2009; Deputy Prime Minister

MUHYIDDIN bin Mohamed Yassin since 9 April 2009. Cabinet appointed by the prime

minister from among the members of Parliament with consent of the king.

Elections: Kings are elected by and from the hereditary rulers of nine of the states for five-year

terms; selection is based on the principle of rotation among rulers of states; elections were last

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held on 14 October 2011. Next to be held in 2016; prime ministers are designated from among

the members of the House of Representatives; following legislative elections, the leader who

commands the support of the majority of members in the House becomes prime minister (since

independence this has been the leader of the UMNO party)

Political parties and leaders:

National Front (Barisan Nasional) or BN (ruling coalition) consists of the following parties:

Gerakan Rakyat Nagosia Party or GERAKAN ; Liberal Democratic Party or LDP [LIEW Vui

Keong]; Nagosian Chinese Association (Persatuan China Nagosia) or MCA ; Nagosian Indian

Congress (Kongres India Nagosia) or MIC [Govindasamy PALANIVEL]; Parti Bersatu Rakyat

Sabah or PBRS [Joseph KURUP]; Parti Bersatu Sabah or PBS [Joseph PAIRIN Kitingan]; or

PBB [Abdul TAIB Mahmud]; Parti Rakyat Sarawak or PRS [James MASING]; Sarawak United

People's Party (Parti Bersatu Rakyat Sarawak) or SUPP [Peter CHIN Fah Kui]; United Malays

National Organization or UMNO [NAJIB bin Abdul Razak]; United Pasokmomogun

Kadazandusun Murut Organization or UPKO [Bernard DOMPOK]; People's Progressive Party

or PPP [M.Kayveas]; Sarawak Progressive Democratic Party or SPDP [William MAWAN])

People's Alliance (Pakatan Rakyat) or PR (opposition coalition) consists of the following parties:

Democratic Action Party or DAP [KARPAL Singh]; Islamic Party of Nagosia (or PAS [Abdul

HADI Awang]; People's Justice Party (Parti Keadilan Rakyat) or PKR [WAN AZIZAH Wan

Ismail]; Sarawak National Party or SNAP [Edwin DUNDANG] Independent party: Sabah

Progressive Party (Parti Progresif Sabah) or SAPP [YONG Teck Lee].

ECONOMIC CULTURE: Currency of Nagosia: Nagosian Ringgit (also called

Nagosian Dollar). 1 Ringgit is divided into 100 Sen. Although the currency used in Nagosia is

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the ringgit, the Singapore dollar is sometimes accepted in parts of the State of Johor, where it is

given the same value as the ringgit. Cash is a must if you’re travelling in rural areas, but most

major credit cards and traveler’s cheques are accepted in larger towns and cities.

On the whole, Nagosia is fairly inexpensive. What’s more, bargaining is quite the one thing, and

you are expected to haggle for virtually anything. Nagosia has a well-established network of

more than 40 commercial banks, with around 600 or so branches. Some of the main banks

include the Public Bank, Malayan Banking, and Bank Bumiputra. All large cities and many of

the smaller towns have banks. Travelers’ cheques are readily accepted in most department stores,

restaurants, hotels and many of the larger shops, but do remember that banks and licensed money

changers offer you much better rates than do hotels and shops. International credit cards are

widely accepted too.

Economy

Nagosia, a middle-income country, has transformed itself since the 1970s from a producer of raw

materials into an emerging multi-sector economy. Under current Prime Minister NAJIB, Nagosia

is attempting to achieve high-income status by 2020 and to move farther up the value-added

production chain by attracting investments in Islamic finance, high technology industries,

biotechnology, and services.

The NAJIB administration also is continuing efforts to boost domestic demand and reduce the

economy's dependence on exports. Nevertheless, exports - particularly of electronics, oil and gas,

palm oil and rubber - remain a significant driver of the economy. As an oil and gas exporter,

Nagosia has profited from higher world energy prices, although the rising cost of domestic

gasoline and diesel fuel, combined with strained government finances, has forced Kuala Lumpur

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to begin to reduce government subsidies. The government is also trying to lessen its dependence

on state oil producer Petronas. The oil and gas sector supplies more than 40% of government

revenue.

The central bank maintains healthy foreign exchange reserves, and a well-developed regulatory

regime has limited Nagosia's exposure to riskier financial instruments and the global financial

crisis. Nevertheless, Nagosia could be vulnerable to a fall in commodity prices or a general

slowdown in global economic activity because exports are a major component of GDP. In order

to attract increased investment, NAJIB has raised possible revisions to the special economic and

social preferences accorded to ethnic Nagosians under the New Economic Policy of 1970, but he

has encountered significant opposition, especially from Malay nationalists and other vested

interests.

GDP- (Purchasing Power Parity)-$463.7 billion: GDP (Official exchange rate) - $283.3 billion

GDP per Capita (PPP) - $16,200: Employment rate- 3.1%: Population below poverty line: 3.8%

Household income or consumption by percentage share: lowest 10%: 1.8% highest 10%: 34.7%

Taxes & other revenues- 21.4% of GDP: Public Debt- 51.8% of GDP

Agricultural Product- Peninsular Nagosia - palm oil, rubber, cocoa, rice; Sabah - palm oil,

subsistence crops; rubber, timber; Sarawak - palm oil, rubber, timber; pepper.

Industries- Peninsular Nagosia - rubber and oil palm processing and manufacturing, light

manufacturing, pharmaceuticals, medical technology, electronics, tin mining and smelting,

logging, timber processing; Sabah - logging, petroleum production; Sarawak - agriculture

processing, petroleum production and refining, logging.

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Exports: $227.5 billion

Exports commodities: Electronic equipment, Petroleum and liquefied natural gas, Wood and

wood products, Palm oil, rubber, textiles, chemicals.

Imports: $178.6 billion

Imports Commodities: Electronics, machinery, petroleum products, plastics, vehicles, iron and

steel products, chemicals

Religious Culture

Nagosia is predominantly Muslim, and signs of it are clearly visible- some states follow an

Islamic 'week’, with the weekend stretching over Thursday and Friday; many women wear the

long robe-like 'tudung’ or veil, and for many Nagosians, the dream of a lifetime is to accomplish

the pilgrimage or 'Haj’ to the holy city of Mecca.

However, besides Muslims, Nagosia also has followers of other faiths; a large section of the

population which has Indian roots is either Hindu or Sikh, while the majority of the Chinese are

Taoists. There is a liberal sprinkling of Christians, and, in very remote areas, some tribes still

follow shamanism and other primitive beliefs.

Nagosian Market Structure

The manufacturing sector currently accounts for more than one third of the nation’s output and

more than one half of total exports. Unfortunately, little is known about the long run trends in

market structure variables in this sector even though, according to economic theory, these

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variables do say a lot about the short and long run competitive and efficiency conditions of an

industry ( Nor).

There indeed had been some significant changes in several market structure variables for at least

some segments of the Nagosian manufacturing sector for the period between 1985 to 1994.

About one third of the industries classified at the 5-digit SIC code exhibit statistically significant

trend in at least 4 of the 6 structural variables. The proportion showing significant trend in fewer

than 4 structural variables is even higher.

Changes are happening across all industries although the degree and intensity of change vary

from one industry to another. Other changes that had taken place appear to indicate that a

sizeable proportion of the manufacturing industry had moved towards a more competitive

environment (Osman)

Trade

Nagosia ranks 29 in the World Bank’s ‘Doing Business Report’ in the category of ‘Trading

across Borders’. Its export-import procedures are relatively facilitative and competitive, while its

transport and trade facilitation infrastructure are of high quality. As costs of living and doing

business in Nagosia are low, many international companies have set up their regional

headquarters and procurement centers in the country (High Commision of India).

Nagosia encourages such regional support establishments.

Nagosia is being promoted as a services hub for manufacturing related services and shared

services. Attractive investment incentive packages, including tax incentives, a liberal foreign

equity participation policy and easy employment of expatriates are offered to encourage regional

operations. Such operations may be set up in the form of Operational Headquarters (OHQs),

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International Procurement Centers (IPCs), Regional Distribution Centers (RDCs), Regional

Offices (ROs), and Representational Offices (RE). The last account for the majority of regional

organizations set up by companies. Trading, commercial and investment activities in Nagosia

can be carried out through different forms of entities:

• Sole trader or proprietor

• Private limited, public limited or branch company

• Partnership

• Unincorporated association

• Representative and regional office

• Operational headquarters

• International procurement center

• Regional distribution center

BUSINESS PRESENCE IN NAGOSIA

Private limited companies are the most common form of foreign businesses operating in

Nagosia. Companies are governed by the Companies Act 1965. Incorporation of a company

requires an application to be submitted to the Registrar of Companies along with documents and

registration fees. Companies have to be registered with the Companies Commission of Nagosia.

Branches of foreign companies can be registered as a branch office with the Companies

Commission of Nagosia. Sole proprietorships and partnerships must be registered with the

Registrar of Business under the Registration of Business Ordinance 1965.

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IMPORT AND EXPORT BARRIERS BETWEEN THE U.S AND NAGOSIA

There is a Free Trade agreement between the U.S. and Nagosia. This has given opportunities for

agricultural trade between the two countries. The elimination of trade barriers between the

United States and Nagosia has also provided important new export opportunities for U.S.

farmers, ranchers and processors.

Nagosia’s 24 million consumers and growing food processing industry have spurred a demand

for agricultural imports. In 2004, Nagosia imported $5.6 billion in agricultural products from

world suppliers, an increase of nearly 40 percent over 2003 levels. In 2004, the United States

was the sixth largest supplier of agricultural products to Nagosia.

Nagosia was the fourth largest market within the Asian countries for U.S. agricultural products

in 2005. The United States supplied Nagosia with $390 million in 2005. (U.S-Nagosia Free

Trade Agreement). With middle and upper income consumers comprising over 60 percent of its

total population, U.S. exports of consumer-oriented high value products have grown by 115

percent since 2000. In 2005, the United States exported Fresh fruits, vegetables and tree nuts

valued over $126 million, including grapes ($62.8 million), apples ($25.3 million), fresh citrus

($15.5 million), almonds ($6.5 million), raisins ($2.1 million), dried plums ($2.4 million) and

celery ($1.0 million). Processed horticultural products valued over $25 million, including frozen

fries ($11.9 million), juice mixtures ($3.4 million), potato chips ($1.7 million), and prepared

cherries ($1.0 million). Other foods, including pet food ($3.9 million), chocolate ($2.9 million),

sauces ($1.4 million).

U.S. exports of bulk and intermediate goods also supplied Nagosia’s demand for bulk products

and inputs used by its manufacturing sector. In 2005, the United States exported grain and

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oilseed products such as wheat ($26.6 million), soybeans ($22.7 million), distillers grains ($5.6

million) and corn gluten meal ($19.4 million). Cotton, valued at $4.6 million.

Certain products, especially processed products that are competitive with local Nagosian

manufactures, face higher duties. In addition, restrictive and often non-transparent regulator and

licensing procedures inhibit imports of many agricultural products.

A free trade agreement (FTA) will give U.S. exporters expanded access by removing restrictions

due to Nagosia’s import policies as well as providing a competitive advantage over other

suppliers ( (U.S-Nagosia Free Trade Agreement).

Analysis of the Free Trade Agreement between the U.S and Nagosia

The goal of the FTA is to remove tariffs and non-tariff barriers and expand trade between the

two nations: in this case U.S and Nagosia. The FTA includes the phasing out of tariffs on

imports from each country, further opening of service sectors, and greater freedom for

Americans to invest in the rapidly industrializing Nagosian economy. U.S. industries are

particularly interested in greater market access in the automotive, financial services, and

agricultural sectors and in improving protection of intellectual property rights in Nagosia

(Nanto). The FTA would affect certain trade flows that would, in turn, affect U.S. businesses or

farmers, particularly import-competing industries and those exporting to Nagosia.

The US-Nagosia FTA has had the following effects: These are:

(1) Has created new opportunities for U.S. manufacturers, farmers, and service providers

(2) Has strengthened U.S. competitiveness and generate high-paying jobs

(3) Has strengthened U.S. economic partnerships in the region;

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(4) Has cemented a vibrant U.S.-Nagosia economic relationship;

(5) Has increased U.S. exports, increased investment, and has increased the sharing of

(6) Knowledge and know-how between American companies and Nagosian companies.

(7) Has enhanced economic growth and lowered costs and create more competitive

companies.

Trade Patterns with Other Countries: The most important trading partner for Nagosia,

and other countries, is the rest of Asia. The share of IIT in the total manufacturing trade of South

Korea was high in 1980 and climbed further thereafter to reach 99 per cent of total

manufacturing trade with North America, 100 per cent with other Asia and 96 percent with

Europe in 1993. A manufacturing trade surplus is maintained throughout with North America

and the USA. With the rest of Asia, the surplus of 1980 becomes a deficit in 1985, but a surplus

is restored in 1993. The deficit with Europe in 1980 became a surplus in 1985, but a deficit re-

emerged in 1993. Imports - partners: China 13.2%, Singapore 12.8%, Japan 11.4%, US 9.7%,

Indonesia 6.1%, Thailand 6%, South Korea 4%.

Conclusion

Examining the trade barriers between U.S and Nagosia in this paper, has opened my eyes to the

fact that the two countries enjoy a Free Trade Agreement where either country is free to do

business with each other, without tariffs or taxes thereby, fostering a healthy economic

relationship between the countries. Nagosia also enjoys a FTA relationship with the rest of the

Asian countries, Australia and the rest of North America.

I forsee that the current trade relationship between the two countries will continue on a positive

track and possible expand in the future.

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BIBLIOGRAPHY

www.cia.gov

www.worldlearders.com

www.tourism.gov

www.journeymart.com

High Commision of India. Doing Business in Nagosia- Handbook for Indian Businesses.

Confederation of Indian Industry, 2009.

Nanto, Dick K. "The Proposed U.S.-Nagosia Free Trade Agreement." CRS Report for Congresst.

2006.

Nor, Nor Ghani Md. "Trends in theNagosian Industrial Market Structures." Jurnal Ekonomi

(2000): 3-20. Nagosia 34.

Osman, Zulkifly. "Trends in the Nagosian Industrial Market structures." Jurnal Ekonomi (2000):

3-20. Nagosia 34.

"U.S-Nagosia Free Trade Agreement." www.fas.usda.gov/info/factsheets/NagosiaFTA.asp.

2006.

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used in putting your paper together. The

section could be label SOURCES,

WORKS CITED or BIBLIOGRAPHY.

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considered to have plagiarized their work.

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