Individual Assignment 1
[Weightage 30%]
Instructions:
Answer all questions. Marks are allotted in brackets.
Submission deadline: 11.55 pm Malaysian time 23 August 2024 [Week 5].Requirement: Turn it in report to be submitted together with assignment for only question 1, 2, 3 and 4. Turn it in similarity index should not exceed 20%. However, turn it in report is not required for question 5.
Font size: Times News Roman 12 and double spacing. There is no word limit for this assignment.
Referencing style.: APA.
Lectures tested: Lecture 1, 2 and 3. Learning outcomes: 1, 2 and 5.
Unit Weightage: 30%.
Submission mode: Online submission into assignment 1 box folder. Penalty for late submission: 5% penalty per day up to 7 days.
Estimated return date: 10 working days from the due date.
AI statement: Generative AI cannot be used for any assessment component for BFM 5014. In this unit, you MUST not use generative artificial intelligence (AI) to generate ANY content or materials in relations to any component assessment in BFM 5014.
Note: You are required to retain a copy of the assignment until the results are finalized.
[Total: 100 marks]
Question 1. [20 marks]
Based on the following case study give a critical evaluation on the impact of seizing Russian sovereign reserves by Western government. Discuss the impact from the perspective of:
(a) US dollar as an international reserve currency [10 marks]
(b) Stability of the financial markets [10 marks]
EU state warns against seizing Russian money
Confiscating Moscow’s assets runs unpredictable legal and financial risks, according to Belgium’s finance minister
EU state warns against seizing Russian money
© Global Look Press / Philipp von Ditfurth / dpaBelgium does not support the seizure of Russian assets that have been frozen by the EU as part of Ukraine-related sanctions, the country’s Finance Minister Vincent Van Peteghem said on Friday, highlighting the mounting risks related to the move.The West froze nearly 280 billion of this sum is held in the EU, primarily in the Belgium-based depositary and clearinghouse Euroclear.“First of all, for our country there are two elements that are important: we did not touch the assets themselves, as the ownership title change would yield consequences both on the legal side and financial side that are unknown,” Van Peteghem said during a press conference after the bloc’s ECOFIN meeting in Luxembourg.
“And second, of course, risk sharing, that I think is important in the rollout of the instruments and is a crucial element of all discussion,” the minister added.Earlier this month, the G7 nations announced that they had reached an agreement on using interest from frozen Russian assets to finance a 18bn in imported Chinese goods including steel and aluminium, semiconductors, electric vehicles, critical minerals, solar cells and cranes, the White House said. The EV figure, while headline-grabbing, 代 写BFM 5014 Individual Assignment 1
may have more political than practical impact in the US, which imports very few Chinese EVs.The US imported 148bn to the world’s number-two economy, according to the US Census Bureau, a trade gap that has persisted for decades and become an evermore sensitive subject in Washington.US Trade Representative Katherine Tai said the revised tariffs were justified because China was stealing US intellectual property. But Tai recommended tariff exclusions for hundreds of industrial machineries import categories from China, including 19 for solar product manufacturing equipment.
The tariffs come in the middle of a heated campaign between Biden and Trump, his Republican predecessor, to show who’s tougher on China.Asked to respond to Trump’s comments that China was eating the US’s lunch, Biden said of his rival, “He’s been feeding them a long time.” The Democrat said Trump had failed to crack down on Chinese trade abuses as he had pledged, he would do during his presidency.
China’s BYD overtook Tesla as the biggest seller of electric vehicles [File: VCG/VCG via Getty Images]
Analysts have warned that a trade tiff could raise costs for EVs overall, hurting Biden’s climate goals and his aim to create manufacturing jobs.Biden has said he wants to win this era of competition with China but not to launch a trade war. He has worked in recent months to ease tensions in one-on-one talks with Chinese President Xi Jinping.Both 2024 US presidential candidates have departed from the free-trade consensus that once reigned in Washington, a period capped by China’s joining the World Trade Organization in 2001. Trump’s broader imposition of tariffs during his 2017-2021 presidency kicked off a tariff war with China.As part of the long-awaited tariff update, Biden will increase tariffs this year from 25 percent to 100 percent on EVs, bringing total duties to 102.5 percent, from 7.5 percent to 25 percent on lithium-ion EV batteries and other battery parts and from 25 percent to 50 percent on photovoltaic cells used to make solar panels. Some critical minerals will have their tariffs raised from nothing to 25 percent.More tariffs will follow in 2025 and 2026 on semiconductors, as well as lithium-ion batteries that are not used in electric vehicles, graphite and permanent magnets, as well as rubber medical and surgical gloves.A number of lawmakers have called for massive hikes on Chinese vehicle tariffs or an outright ban over data privacy concerns. There are relatively few Chinese-made light-duty vehicles being imported now.
The United Auto Workers, a politically important union that endorsed Biden, said the tariff moves would ensure that “the transition to electric vehicles is a just transition.”
Question 3. [10 marks] Country A is facing a persistent current account deficit in both merchandise and services account. To address this trade balance problem, the government decides to devalue its currency by 20% against all major currencies in the world. However, after one year since its implementation, country A’s current account deficit continues to increase. As a chief economist advising the government, give an assessment of this situation and propose measures to improve this policy, where applicable. [10 marks]
Question 4. [20 marks]
Based on the case study below answer the following questions: -
(a) Identify the agency problem in Serba Dinamik [10 marks]
(b) Propose new measures of corporate governance to Securities Commission of Malaysia to ensure that this agency problem do not happen again in the future [10 marks]
Serba Dinamik Executives Charged For Falsifying Financial Statements By Editor -December 29, 2021Further to the recent revelations of Serba Dinamik Chief Executive Officer and his cohorts being charged in court, the Securities Commission has confirmed that the charges on CEO Dato’ Dr. Ir. Ts. Mohd Abdul Karim Abdullah was for submitting false statements to Bursa
Malaysia Securities Berhad. This is an offence under section 369(a)(B) of the Capital Markets and Services Act 2007.According to the Commission, the charge filed at the Kuala Lumpur Sessions Court is in relation to the revenue figure of RM6.014 billion contained in Serba Dinamik’s Quarterly Report on the Consolidated Results for the Quarter and Year ended 31 December 2020. The company listed on the main market along with a director and two senior officers were charged by SC on 28 December 2021 for the same offence which, if convicted, are facing prison terms not exceeding 10 years and or a fine of not less than RM3 million.Sessions Court Judge Sabariah Othman fixed bail at RM500,000 with two sureties, CEO Dato’ Karim is also required to report to the SC on terms to be decided by the commission. Also charged is Muhammad Hafiz Othman, Vice President of Accounts Finance for falsifying the accounting records of its subsidiary Serba Dinamik Sdn Bhd. He was directly involved in instructing the preparation of false documentation relating to the sales of Serba Dinamik Sdn Bhd, an offence under section 368(1)(b)(i).
He claimed trial to the charge filed against him and was granted bail of RM200,000 with two sureties if convicted could be facing 10 years imprisonment.
Question 5. [30 marks] Based on the following items prepare a complete BOP for this country. Give a brief
assessment on the country’s: -
(a) Current account [12 marks]
(b) Financial account [12 marks]
(c) Official reserves account [06 marks]
(i) Export [ million]
Goods 2467.3
Services 445.78
(iii) Primary income [ million]
Inflow 130.5
Outflow 445.2
(v) Foreign direct investment [$ million]
Inflow 155.4
Outflow 78.2
(vi) Equities
Inflow 350.5
Outflow 229.5
(vii) Debt
Inflow 175.2
Outflow 85.2
(viii) Statistical discrepancies are 20.4
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