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BORNEO
REVIEW - VOLUME XIV (JUN 2003 - DEC. 2004)
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THE RANDOM WALK
BEHAVIOUR OF MALAYSIAN SECOND BOARD STOCKS
Kian-Ping Lim and Venus Khim-Sen Liew
Abstract
This
paper examines the price behaviour of stocks traded on the Second Board of
Kuala Lumpur Stock Exchange in light of the random walk hypothesis. With a new
and powerful statistical tool, namely the Brock-Dechert-Scheinkman (BDS) test,
it is possible to detect a more complex form of dependencies in series of
financial returns that often appear completely random to standard statistical
tests, such as serial correlation tests, non-parametric runs test, variance
ratio test and unit root tests. The BDS test results reveal that all the Second
Board stocks under study do not follow a random walk process. This conclusion
holds even when the sample period is broken down into four meaningful
sub-periods.
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THE CONTRIBUTION OF
THE SMALL AND MEDIUM INDUSTRIES (SMIs) TOWARDS THE GROWTH OF THE MANUFACTURING
SECTOR IN SARAWAK
Annie Wong Muk Ngiik
Abstract
Over
the last two decades, the rapid growth of the manufacturing sector has led Sarawak to
emerge as a rapidly industrialising state in the country. However, this sector
is dominated by a few large industries mainly in the petrochemical and
wood-based sectors. Heavy reliance on these sectors would place the economy in
an unenviable position over the long run. As the majority of the manufacturing
establishments in the State are small and medium-scale industries (SMIs),
hence, their roles and contributions cannot be overlooked. This paper examines the performance of the
State’s SMIs between 1991 and 2000 in several key areas, namely employment
creation, value-added contribution and productivity growth. Presently, SMIs constitute
the majority (89.6 per cent) of the manufacturing establishments in Sarawak
and employ about one-quarter of total manufacturing workforce. Despite their
dominance in numbers and employment creation capability, their involvement in
low-tech or no-tech activities which are high in labour content but low in
value-added indicates that they are inefficient and unproductive. This problem
needs to be addressed in order to enhance the roles and contributions of SMIs
to the economy in the long run.
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A NON-PARAMETRIC
COINTEGRATION TEST OF PURCHASING POWER PARITY: THE CASE OF MALAYSIA
Hock-Ann Lee,
Kian-Ping Lim and M. Azali
Abstract
This
study employs the Johansen and Juselius (1990) cointegration test and the
recently proposed Bierens (1997) non-parametric cointegration methodology to
test the purchasing power parity (PPP) hypothesis for the Malaysian economy,
with respect to her major trading partners – the United
States, Japan
and Singapore.
The Bierens’s non-parametric cointegration method is utilized in view of the
superiority of non-parametric method at detecting cointegration when the data
generating process is non-linear. Using the Johansen and Juselius cointegration
approach, the evidence does not support the PPP proposition for all cases under
investigation. Further analysis using the Bierens’s method, however, provides
strong support for the PPP hypothesis for the Malaysian economy, with respect
to its trading partners – U.S., Japan
and Singapore.
Since the Bierens’s method allows for non-linearity in the data generating
process, the discrepancy between the findings of both techniques is interpreted
as a consequence of significant non-linearity in the real exchange rate
adjustment to PPP.
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DOES PURCHASING POWER
PARITY REALLY HOLD IN INDONESIA? THE NON-LINEAR PERSPECTIVE
Khim-Sen Liewa, Ahmad
Zubaidi Baharumshaha
and Kian-Ping Lim
Abstract
The
Purchasing Power Parity (PPP) literature on Indonesia
has generally reported mixed results, creating a debate among policy makers on
the usefulness of the empirical findings. One possible explanation for this
contradicting empirical evidence is that earlier studies generally make an
implicit assumption that exchange rate behaviour is linear in nature. This
paper empirically investigates the underlying dynamics of the adjustment
process of the Indonesian exchange rate from the long-run equilibrium level as
suggested by the well-known purchasing power parity (PPP) hypothesis. To
accomplish this task, we estimate the standard linearity test statistics as
suggested by Lukkonen, Saikkonen and Teräsvirta (1988), against the Exponential
Smooth Transition Autoregressive (ESTAR) model. Using quarterly data series,
our results reveal that the bilateral Indonesian rupiah-U.S. dollar (IDR/USD)
adjust non-linearly towards the PPP equilibrium level. Another interesting
insight from this study is the relationship between the adjustment process and
the recent Asian Financial Crisis. The results reveal that the IDR/USD is
characterized by low speed of adjustment and this explains its tremendous
plunge in value during the 1997 crisis.
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MEDIA’S CONTRIBUTION
TOWARDS RESOLVING CONFLICT: THE CASE OF WEST KALIMANTAN
Timo Kivimäki
Abstract
This
article discusses media’s positive and negative influences on conflicts. It
looks at how media sometimes fuels conflict, while at other times helps to
prevent it. Media is sometimes used to mobilize armed violence, while at other
times it can deter hostilities by exposing potential threats. Discourses on the
relationship between the media and conflict are applied to Indonesia,
especially in the case of communal violence in West Kalimantan Province, Borneo.
The main conclusion is that greater media freedom generally contributes to peace, and this also applies to Indonesia and
West Kalimantan. A
free media can incur political costs (e.g. loss of votes) to violent groups and
governments. However, even a free media can be problematic to peace; for
example uncritical approach to ethnic labelling and framing individual offences
as communal may lead to group retaliation and escalation of hostilities.
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