The Haze - How it has affected our economy

 The haze, it is something every Malaysian has to go through annually. Every middle of the year, our country is overcome by smokey dust-filled air caused by the open burning in Indonesia intended to clear land for oil palm plantations. The haze not only clouds our long-distance vision, but also has negative impacts towards our health. Exposure to the haze can irritate the eyes, cause breathing difficulties, sore throat, coughing, and decreased lung function among many others. Thus, when the haze came in to Malaysia, citizens ran to protect themselves and their families, purchasing surgical masks to filter the air they breathe. 

surgical mask

 

Days after the haze began, the demand for these surgical masks surged upwards as Malaysians rushed to buy them.

 shift in the demand curve of surgical masks 

As the demand continued to increase for these surgical masks, a shortage occurred in Malaysia, mainly around Kuala Lumpur and Selangor. 

N95 mask

However, after the information that the surgical masks were ineffective against the haze, and that the N95 masks were more effective, the demand for the surgical masks gradually decreased but still maintained at a high level.

On the other hand, the demand for the N95 mask began to increase , but not at a drastic rate, this is mostly because the N95 mask was high-priced (RM6 at average), as compared to the surgical masks which only cost a fraction of the N95 masks (RM0.70-RM1.0 at average).

However, these are not the only effects the haze had on our economy. On a larger scale, studies have shown that, based on the value of gross national income per capita per day, it works out to an average of RM18,848 per month or RM628 per day, or RM11,900 per hazy day during a haze event on average. This causes a decrease in our national GDP and should be cause to worry.

At this point, tourism, leisure and restaurant businesses stand to lose the most business as most Malaysians opt to stay indoors as much as possible and eat out as little as possible. This causes the income for these businesses to decrease, contributing to a decrease in our national GDP. Furthermore, small vendors such as fruit stall owners, and vegetable sellers who do business in the open are also losing a lot of business as people prefer to shop in an enclosed environment such as grocery stores and shopping malls in order to avoid the haze.

Written by : Keeve Wong Weikit (0315620)

References :

http://www.thestar.com.my/News/Nation/2013/06/25/N95-masks-give-better-protection-says-expert.aspx

http://www.thestar.com.my/News/Nation/2013/06/29/Group-Haze-expected-to-worsen.aspx

http://blissair.com/health-effects-of-haze.htm

http://www.fz.com/content/weighing-economic-impact-haze

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