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Malaysia - Overview

Contents extracted from the comprehensive atlas of international trade by Export Entreprises

Introduction

Capital:: Kuala Lumpur
Area:: 331 km2
Total Population:: 27.468
Annual growth rate:: 2.00%
Density:: 84.00/km2
Urban population:: 71%
Population of Kuala Lumpur (1.300), Kelang (630), Johor Bahru (630), Ipoh (570), Petaling Jaya (440)
Official language: Malay
Other languages spoken: The Chinese speak Cantonese, Hakka and Hokkien. Most Indians speak Tamil. English is an inter-ethnic link, especially in the middle classes. The Dayaks use many dialects.
Business language: English
Ethnic Origins:: Malays 50.4%, Chinese 23.7%, Natives 11%, Indians 7.1%, Others 7.8%.
Beliefs: Muslims 52.7%, Buddhists 16.7%, Christians 6.8%, Hindus 6.7%, Others 17.1%.
Telephone codes:
To make a call from: 0
To make a call to: +60
Internet suffix:: .my
Type of State::
 Federal state with constitutional elective monarchy. 13 states which enjoy a fair amount of federal decentralization.
Type of economy::
Upper-middle-income economy, Emerging Financial Market
A country specialized in the export of electronic goods and components.

Economic overview

The growth rate of GDP remained high until the first half of 2008 (6% in average), after that, it suffered the effects of the global crisis and was strongly reduced in 2009 (-1.7%).  The effects of the crisis were softened by a important budgetary stimulus plan.  The growth, estimated at 6.7% of the GDP, bounced back in 2010, with the support of the dynamic private consumption and the recovery of domestic investment. 

The budgetary deficit has a tendency to increase, mainly due to the need of compensating the weakness of private investment and also because the public debt has highly increased.  To face this problem, the government has launched a program to perform a progressive revision of subventions in order to reduce its expenditures.  The objective is to bring the budget deficit to 3% of GDP by 2015.  In addition, the "New Economic Model" (NEM) intended to promote innovation and to increase production profits, was launched together with the tenth five-year plan (2011-2015). 

Malaysia has one of the highest living standards in South-East Asia and a very low unemployment rate.  However, the objective of NEM is to double the income per capita from now until 2020.  Despite the government's long-term efforts to improve the economic situation of native Malays, the population of Chinese origin continues to maintain its traditional dominance.

Main industries

Agriculture employs around 15% of Malaysians and contributes to 10% of the GDP. Malaysia is ranked amongst the world's main producers of palm oil, cocoa, and rubber. The country is also one of the main exporters of tropical wood. Malaysia has successfully developed its economy based on raw materials (the export of rubber and tin, significant reserves of oil and gas, copper and bauxite).

Industry contributes to around 40% of the GDP.  Malaysia is one of the world's largest exporters of semi-conductor devices, electrical goods and appliances, and the government has ambitious plans to make of Malaysia the main producer and developer of high-tech products, including software. Malaysia is a major outsourcing destination for components manufacturing after China and India. The country has attracted significant foreign investments which have played a major role in the transformation of Malaysia's economy.

The tertiary sector accounts for nearly half of the GDP, which is due mainly to the tourism sector. Malaysia has become one of South-East Asia's major tourist destinations.

Foreign trade overview

Malaysia is well known for its openness to international trade. Foreign trade represents more than double of the country’s GDP. 

The trade balance is structurally positive.  The global economic crisis, even if it caused a reduction in exports, it did not affect the trade balance since imports also dropped on a larger proportion than exports. 

The country mainly exports electric and electronic equipment, machinery, mineral fuels and hydrocarbons, animal and vegetable oils and fats, wood and charcoal. The country mainly imports electric and electronic equipment, machinery, fuels and oils, plastic products, iron and steel. Its main trade partners are the United States, Singapore and Japan, followed by China and the European Union.

FDI

Global FDI inflows into Malaysia increased a lot in the 1990's, but the net flows of FDI have been negative since 2006, this is a reflect of the policies encouraging the internationalization of companies and the mistrust of investors regarding the profit repatriation earned by foreign enterprises. It seems that the re-investment of profits from the existing multinationals, which are already installed in Malaysia, constitutes the essential components of the FDI income.  The authorities want to make of Malaysia a foothold access to the ASEAN market and in order to promote this, the country offers various incentives to foreign companies, notably the status of pioneer company and tax reductions associated to the investment.  The country benefits from a high-skilled and English speaking workforce.  However, the government maintains a large discretionary power for authorizing investment projects and uses it to obtain the maximum profit from foreign participation and demands agreements that are advantageous in matters of transferring technologies or creating joint ventures.

 

 

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