The Effect of Biodiesel Blend Mandate on Malaysian Natural Rubber Market: A Simultaneous Equation Approach

• Main Authors: Md Ludin, Nur Hazirah, Applanaidu, Shri Dewi, Abdullah, Hussin
• Format: Conference or Workshop Item
• Language: English
• Published: 2016
• Subjects: HG Finance
• Online Access: http://repo.uum.edu.my/25162/1/ECoFI2016%20337-342_1.PDF; http://repo.uum.edu.my/25162/

The objective of this study is to examine the effect of biodiesel blend mandate on the Malaysian natural rubber market. The implementation of biodiesel blend mandate in Malaysia expected to intempt the natural rubber industry. This is due to the competition of land between these two commodities. Malaysia natural rubber market model where consist of production, import, domestic consumption, export, domestic price and world price equations. The models were closed using domestic and world stock identity. Annual data h m year 1985 to 2014 used in two stage least squares (2SLS) estimation method. The result revealed that biodiesel blend mandate has a significant effect on the natural rubber market model. Thus, it is important to determine the appropriate blend of biodiesel without interrupt Malaysian natural rubber industry.