Malaysia: Economic and Political Outline

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 Sectors of Industry

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.

Source: World Bank - Last Available Data.

Indicator of Economic Freedom

Score:

66.3/100

Position:

Moderately free

World Rank:

49/179

Regional Rank:

9/38

Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation

Note: The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Sources of General Economic Information

Ministries

Ministry of Finance
Ministry of International Trade and Industry
Central Bank

Statistical Office

Department of Statistics Malaysia

Central Bank

Central Bank of Malaysia

Stock Exchange

Kuala Lumpur Stock Exchange

Other Useful Resources

Buy USA Info (in English)

Main Online Newspapers

Daily Express
Kwong Wah Yit Pot (in Chinese)
Utusan Malaysia (in Malay)

Economic Portals

Business Times

Political Outline

Type of State

 Federal state with constitutional elective monarchy. 13 states which enjoy a fair amount of federal decentralization.

Executive Power

The head of state is the Paramount Ruler, commonly referred to as the King. The King is selected from nine hereditary rulers (called Sultans) of the Malay states to serve a five-year term; the other four states (which have titular Governors) do not participate in the selection. Following legislative elections, the leader of the party that wins most seats in the lower house of the parliament becomes the Prime Minister to serve a five-year term, subject to approval by the King. The Prime Minister is the head of the government and holds the executive powers which include implementation of the law and running the day-to-day affairs of the country . The Cabinet is appointed by the Prime minister from among the members of parliament with the consent of the Paramount Ruler.

Legislative Power

The legislature in Malaysia is bicameral. The parliament consists of: the Senate (the upper house) having 69 seats, out of which 43 appointed by the Paramount Ruler and 26 appointed by the 13 state assemblies to serve six-year terms; and the House of Representatives (the lower house) having 219 seats. Its members are elected by popular vote to serve five-year terms. The King can dissolve parliament if he wishes but usually only does so upon the advice of the Prime Minister. In general, more power is vested in the executive branch of government than in the legislative. The legislative power is divided between federal and state legislatures. Each state has its own government, a cabinet with executive authority, and a legislature that deals with matters not reserved for the federal parliament. The people of Malaysia have limited political rights.

Main Political Parties

Malaysia is a country with one dominant party. The UMNO (National Organization for a United Malaysia) is the largest political party in the country. It has ruled the country uninterruptedly since its independence from the UK in 1957. UMNO is known for being a major proponent of Malaysian nationalism and Islamic ideology. UMNO rules the country through a coalition called BN (National Front); its other two prominent members are:
- MCA (Malaysian Chinese Association) – a party of Chinese who are citizens or long-term residents of Malaysia;
- MIC (Malaysian Indian Congress) – representing the Indian community in Malaysia;
- Opposition parties are allowed, but are widely considered to have no real chance of gaining power.

Current Political Leaders

Paramount Ruler: King - Tuanku Abdul HALIM Mu'adzam Shah (since 11 April 2012);
Prime Minister: Mohamed NAJIB bin Abdul Razak (since April 2009) – UMNO, heading the BN coalition government.

Next Election Dates

Paramount Ruler: 2016

Indicator of Freedom of the Press

World Rank:

124/179

Evolution:

17 places up compared to 2010

Source: Worldwide Press Freedom Index 2011, Reporters Without Borders

Note: The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position is assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).