The Impact of Price Subsidy on Rice Self-Sufficiency Level in Malaysia: A System Dynamics Approach

Farah Hanim Abdul Rahim*, NurulNazihahHawari and Norhaslinda Zainal Abidin
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Farah Hanim Abdul Rahim*: Universiti Utara, Malaysia
NurulNazihahHawari: Universiti Utara, Malaysia
Norhaslinda Zainal Abidin: Universiti Utara, Malaysia

The Journal of Social Sciences Research, 2018, 801-806 Special Issue: 6

Abstract: The Malaysian government had targeted for the rice industry in the country to achieve 100% rice self-sufficiency where Malaysia’s rice self-sufficiency level (SSL) is currently at 65% to 75%. Thus, the government had implemented few policies to increase the rice production in Malaysia to meet the growing demand of rice. This paper focus on analyzing the impact of price subsidy on the rice production system in Malaysia using a system dynamics modelling approach. Scenario analysis was conducted using the developed system dynamics model by making changes on the price subsidy and observe the impact of the changes on the rice production and rice SSL. The developed system dynamics model offers better understanding of the effect of price subsidy on the rice self-sufficiency level. Based on the scenario analysis, the result shows that a 50% increase in the price subsidy leads to a substantial increase in demand as the rice price drops. Accordingly, the local production increases by 15%. However, the SSL slightly decreases as the local production is insufficient to meet the large demand.

Date: 2018
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