Economic Overview
Malaysia economy was affected significantly by the 1997 Asian economic crisis, the government reacted promptly to try and revive the damaged economy. Unorthodox methods, such as pegging the currency against the US dollar, alongside strong ICT exports saw a steep climb in the economy. A global economic slowdown edged the Malaysian economy towards a recession in 2001. But government actions, high oil and commodity prices, began and maintained an increase in economic growth. Malaysia has also been endeavouring to improve banking and financial systems. The primary task Malaysia now needs to tackle is increasing its value up against China and other lower cost manufacturing economies. The economy’s growth is now becoming more sustainable and positive growth is expected across all sectors. The manufacturing industry has progressed due to an increased demand for electronic products, and the services sector remains strong due to a stable influx of tourists to the country. Changes have been made to reform financial and political accountability, but also Malaysia is seeking to improve its competitiveness in sectors such as biotechnology.
Malaysia and the UK benefit from strong commercial and investment links. The UK is one of the largest investors in Malaysia, as they have invested over £20 billion in the country during the past 30 years. UK exports to Malaysia amounted to £996 million, which means that Malaysia is classified as the UK’s second largest export market in Southeast Asia.
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Opportunities • Oil and gas GDP: US $130.8billion |
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Top ten UK exports to Malaysia (£ thousands)
1. Electrical Machinery, apparatus and appliances 128,574
2. Road Vehicles 42,065
3. Other Transport equipment 38,413
4. Professional, scientific and control instruments 32,020
5. Power generating machinery and equipment 28,857
6. General industrial machinery and equipment 20,954
7. Office machine and ADP equipment 19,723
8. Iron and steel 16,377
9. Metal ores and metal scrap 16,067
10. Specialised industrial machinery 15,838
Top ten UK imports from Malaysia
1. Electrical machinery, apparatus and appliances 263,177
2. Office machines and ADP equipment 207,174
3. Telecommunications and sound recording and reproducing apparatus 119,111
4. Miscellaneous manufactured article 67,822
5. Furniture (bedding, mattresses, supports, cushions) 65,706
6. Articles of apparel and clothing accessories 61,879
7. Cork and wood manufacturers (excl. furniture) 30,339
8. Other transport equipment 24,951
9. Professional, scientific and control instruments 23,248
10. Feeding stuff for animals 21,487
| Top Export Partners: US 18.8% Singapore 18% Japan 10.1% China 6.7% Hong Kong 6% Thailand 4.8% |
Top Import Partners: Japan 16.1% US 14.6% Singapore 11.2% China 9.9% Thailand 5.5% Taiwan 5.5% South Korea 5% Germany 4.5% Indonesia 4% |
UK relations and investment
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The relations between the UK and Malaysia are well developed and provide a solid foundation for the positive trade links between the two countries. The countries organise regular official visits and business missions to improve and establish new trade links. The successful relationship lies in the areas of trade, investment, and education. Over 11,000 Malaysian students are studying at numerous UK universities, and over 20,000 are studying for British degrees at Malaysian universities. The English language is an important connection between the two countries and is used widely throughout Malaysia. The British Council has offices and English teaching centres in Kuala Lumpa and education promotion centres in Sabah and Sarawak. Leading UK companies are increasingly becoming situated in Malaysia, and Britain is now one of Malaysia’s largest investors. Company names include Shell, BP, Tesco, Jardines, Hanson, Glaxo Smithkline, and Dyson. Also in December 2004, Rolls-Royce won a £215 million order to supply engines for Malaysian Airlines. |
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International Trade Relations
Malaysia is actively involved in maintaining and developing international relations. It focuses a large proportion of its resources on ASEAN, of which it became a member in July 2005; Malaysia is a popular host for a number of international summits, including the ASEAN summit and East Asia summit in December 2005. The countries large Muslim population (55% of the total population) places the country in the position of being an important Islamic representative; Malaysia sees itself as a leader of the Islamic community.
Human Rights
Basic principles of Malaysia’s human rights that are preserved in the Federal Constitution are the right to life, freedom of movement, freedom of speech, assembly and association, freedom of religion and rights concerning education. Since the 1990’s Malaysia has been a dynamic member of the United Nations Commission on Human Rights (UNCHR). Tan Sri Musa, as leader of the Malaysian delegation to the UNCHR, first initiated the concept of Malaysia developing is own independent Human Rights institute. Specific departments were set up to deal more efficiently with the development of human rights, education, law reform, social and cultural rights, and complaints and enquiries are among some of the departments established within the human rights Commission.
Assistance
The World Bank is providing Malaysia with technical assistance and develops, with each country it deals with, a Country Assistance Strategy (CAS); this is a an action plan to help the country reduce poverty and promote economic development. The World Bank provides loans, grants, active projects and advisory assistance, among other services. In 2005 the bank provided the Southeast Asian region with US $2.9billion ($1bn interest-free IDA loans and $1.8bn in low interest loans). These funds are used by the country to buy goods, equipment and to obtain technical services.
Political History
| Like other Southeast Asia countries, Malaysia has seen different occupation since the 19th century. Its is interaction with so many different foreign powers can be partially attributed to its strategic position in between the South China Sea and the Indian Ocean. The eventual product that would build the basis for Malaysian independence was called the Federation of Malaya, which achieved independence in 1957 under its first Prime Minister, Tunku Abdul Rahman. Further changes occur and the Federation of Malaya evolves to encompass more areas previously under British colonial rule. Once Malaysia achieves independence the country needs to develop its own culture and ethnic balance. It also has to tackle immediate hostility from its neighbour, Indonesia. Relations, especially between these two countries, are healed due to the establishment of the ASEAN, of which Malaysia is a founding member. |  |
Timeline
1826 Malacca, Penang, and Singapore form the Colony of Straits Settlements.
1942-1945 The Japanese occupy Malaysia during the Second World War.
1948 The Malayan territories that are under British rule unify to establish the Federation of Malaya.
1957 Federation of Malaya becomes totally independent from Britain, with Tunku Abdul Rahman as their first Prime Minister.
1963 The Federation of Malaya expands to form the Federation of Malaysia as British colonies of Sabah, Sarawak and Singapore join. (Malaysia immediately faces hostility from Indonesia)
1965 Singapore withdraws itself from Malaysia that is now reduced to 13 states.
1967 The hostility between Malaysia and Indonesia that had been known as the period of ‘Confrontation’ begins to subside and improve thereafter. The ASEAN is founded in 1968, which helps to further improve relations between the two countries.
1969 There are inter-racial riots staged in the country as Malays begin to become frustrated by the economic success of the ethnic Chinese. These riots lead to the induction of the 20-year New Economic Policy (NEP), its aim is to help alleviate the cause of frustrations by enhancing Malays economic positions.
1971-present The country has now started to experience rapid economic growth.
1981 Dr Mahathir Mohamad becomes Prime Minister.
1997 The Asian financial crisis strikes the region and halts the rapid period of economic growth the country has seen since 1971.
1998 Prime Minister sacks his deputy, Anwar Ibrahim on charges of sexual misconduct and he is later charged in 2000 and sentenced to nine years in prison which is added onto a six year jail sentence he receives in 1999 for corruption.
2001 There are more ethnic clashes and dozens are arrested after tension erupts between Malays and ethnic Indians.
2003 Mahathir Mohamad steps down as Prime Minister after 22years in office. Abdullah Ahmad Badawi takes over as Prime Minister.
2004 In December the Tsunami disaster hits Malaysia and many people lose their lives.
Current Government
Head of State: Tuanku Syed Sirajuddin
Prime Minister: Abdullah Ahmad Badawi
Deputy Prime Minister: Najib Razak
