Economy of Malaysia  

Contents

1  Introduction  1

2  The Country  2

3  History  3

3.1  The Premodern Economy  3

3.2  The Time after WorldWar II  3

4  The New Economic Policy  4

4.1  National Development Policies from 1970 2000  4

4.1.1  Reducing Poverty  4

4.1.2  Economic Growth  5

4.2  Contemporary Policies  5

5  Malaysia Today  6

5.1  Economic Power and Growth  6

5.2  Business Enviroment  8

5.3  Supportive Government Policies  8

5.4  High Education  9

5.5  Infrastructure  9

6  Summary  9

7  Bibliography  11

I

1 Introduction

Malaysia has been a trade centre for centuries. In the premodern history traded goods were in particular spices, tin and rubber. But the long-term colonial rule and the occupation of the Japanese in World War II didn’t let the economy rise. On the contrary the economy was in a disasterous situation.

But Today Malaysia can be regarded as one of the most successful asian countries which achieved a really effective transition into a modern economy. The most important reason for this change were the consequent policies of the Malaysian government since the 1970s. It was able to integrate the ethnic outsider, the Malay, into the society and economy. Through its development programs it was possible to get rid of the high poverty rate, to built up much more equality in the society and create a well working economy with annual growth rates.

Malaysia became a export nation which traded in the last decades mostly textile or rubber products. But in nower days Malaysia also has got a high share of exports in the electronic and high tech branche. Government policy has generally accorded a central role to foreign capital, while at the same time working towards more substantial participation for domestic, especially bumiputera, capital and enterprise.

The current plan “Vision 2020” aims to reach a fully developed industrialized economy in 2020.

The first point in the essay is a short background information about the country Malaysia. I continue with the economic history from the premodern history up to the era after the Second World War. The third chapter dicusses the policies of the government; the policies of the transition as well as the contemporary policies. Finally the essay points out the present economic system and why it is so successful.

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2 The Country

In 1963 the Federation of Malaysia, consisted of Malaysia, Singapore, Sarawak and Sabah, was founded. But after political conflicts Singapore was obliged to leave the Federation in 1965. Before the foundation of the Federation these areas were ruled by Great Britain. Malaysia reached its independence in 1957, Sarawak and Sabah in 1963 and Singapore its full independence in 1965. Malaysia is now known as Peninsular Malaysia, and the two other territories on the island of Borneo as East Malaysia.

The territory of Malaysia is situated between 2 and 6 degrees north of the equator. A big part of the country consists of plain coasts and mountains in the interior. Originally the country was capped by rainforest, but for commercial and agricultural reasons much of it has been removed. The tropical climate creates a good condition for the agriculture. 1

Malaysia counted about 23.9 million inhabitants in July 2005. 57% percent of the population are “buniputera” which means Malays or other indigenous people, 24% are Chinese, 7% Indians. 2

The Federation of Malaysia is a constitutional elective monarchy, a legacy of the British rule. The Federation is headed by a king which is choosen through rotation every five years out of the rows of the sultans. At the moment it is Yang di-Pertuan Agong. The head of the

¹ EH.Net, Encyclopedia, [WWW document].

² ASEAN, [WWW document].

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