Political Factor That Might Affect Dairy Industries

Political Factor that might affect Dairy Industries

There is an expected change in labour law in Malaysia in 2016 if the Trans-Pacific Partnership Agreement was approved (Martin, 2016).  Malaysia will have to create and maintain certain laws if Malaysia decided to sign the agreement and it will definitely affect all the industries. The changes on minimum wages will eventually increase the labour cost and pull down total revenue. In dairy industry, labours is one of the most important factor. Hence, if the minimum wages affected, the industry might face problem of layoff as they have to reallocate all their resources in terms of cost.

Besides, dairy industries are very sensitive in reputation and health. For example, many famous dairy industries face a drop of sales in 2008 when the China Milk Scare arise (Adiwira, 2008). Listed industries normally got tied up with rules and regulation as they were supervised by the government according to Bursa Malaysia. Therefore, industries have no right to refuse the announcement given by government from removing their dairy product at that time. Unpredictable panic attack even from the other countries may also affect our nation’s industries because consumers are fear of rumours spread around and they will stop consuming dairy product just to keep away from situation.

 In addition, Malaysia has imposed level six alert to stop importing dairy product from China after this incident. Nowadays Malaysia mainly import dairy products from Australia, New Zealand, India and other more. This also forces all the dairy price to jack up as no cheaper dairy product imports from China.  Many believes that Goods and services tax (GST) might increase in year 2017. However, the government claims that there will be no increment for GST currently. In fact, if GST do increase in the following year, all of the industries may be affected and new born industries will not even survive in this.