Malaysia Essay

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Malaysia is located in southeastern Asia on a peninsula bordering  Thailand to the  north,  the  northern one-third of the island of Borneo bordering  Indonesia, Brunei, and the South China Sea, south of Vietnam. The country is slightly larger than New Mexico. The capitol of Malaysia is Kuala Lumpur.

Great Britain established colonies and protectorates  in the  area of current  Malaysia during  the late 18th and 19th centuries.  During World  War II Malaysia was occupied by Japan from 1942 to 1945. In 1948, the  Federation  of Malaya was formed  on the Malay peninsula, which became independent in 1957. Malaysia joined the  United  Nations  on September  17 of that  year. The present  day Federation of Malaysia was formed with the merger of the former British colonies of the East Malaysian states of Sabah and  Sarawak on the  northern coast of Borneo; Singapore joined Malaya in 1963. The first years of Malaysia were volatile; there  was a communist insurgency, a confrontation from Indonesia, Filipino claims to Sabah, and Singapore’s expulsion from the federation in 1965. From 1981 until 2003, under the longest-serving prime minister, Mahathir bin Mohamad, Malaysia successfully diversified its economy by reducing its dependence  on exports of raw materials  and  expanding  into  manufacturing,   services, and tourism.

Some of Malaysia’s natural  resources  include tin, petroleum,  timber, copper, iron ore, natural gas, and bauxite. Its estimated population in 2008 was approximately 27 million. The dominant  religion is Islam, followed by Buddhism and Hinduism.  The country’s official language is Bahasa Malaysia.


The government  of Malaysia is a constitutional monarchy, and the heads of the states are either hereditary sultans or appointed governors. The constitution was ratified on August 31, 1957, and has been amended many times since. The most recent amendment to the constitution was in 2007. The position of the king is largely ceremonial; the current  king is Sultan Mizan Zainal Abidin, who has acted in that  capacity since December 13, 2006.

The cabinet  is appointed  by the  prime  minister from among the members of Parliament with consent of the king. Kings are elected for five-year terms  by and from the hereditary  rulers of nine of the states. The last election was held on November, 3 2006 and the next will be held in 2011. The prime minister  is selected from the house of representatives. When the legislative elections have concluded,  the leader who commands the support of the majority of members in the house becomes prime minister. It has been tradition since independence that the leader of the UMNO party becomes prime minister.

The  bicameral  Parliament   or  Parlimen  consists of the  house  of representatives,  known  as Dewan Rakyat, and  the  senate,  which is known  as Dewan Negara. This upper house contains 70 seats, with 44 appointed  by the king and 26 elected by 13 state legislatures. These senators serve three-year  terms with a limit of two terms. The house of representatives  or Dewan Rakyat is made up of 222 seats. The members are elected by popular  vote to serve five-year maximum  terms.  Elections for the  house  of representatives were held on March 8, 2008, and are also scheduled for June 2013. Citizens must be 21 years of age or older in order to vote.

There  are a variety of sharia  and  civil courts  in Malaysia. Civil courts include the federal court, court of appeal, high court of Malaya on peninsular Malaysia, and the high court of Sabah and Sarawak in the states of Borneo (judges appointed by the king on the advice of the prime minister).  Sharia courts  include sharia appeal court, sharia high court, and sharia subordinate  courts at the state level, and deal with religious and  family matters  such  as custody,  divorce, and inheritance,  but only for Muslims. Decisions of sharia courts cannot be appealed to civil courts.


Malaysia today is an emerging multi-sector economy. However, in the 1970s it was a producer of raw materials. When  Prime Minister  Abdullah Badawi came into  office in 2003, he tried  to  shift the  Malaysian economy farther up the value-added production chain in several ways. Foremost,  he attracted  investments in  high-technology  industries,  medical  technology, and pharmaceuticals,  which has largely contributed to the nation’s successful diversification strategy. Electronics exports remain a significant driver of the economy, but the government is continuing efforts to boost domestic demand to wean the economy off of its dependence  on  exports.  Malaysia profited  from the higher world energy prices of 2008 since it is an oil and gas exporter. However, the rising cost of domestic gasoline and diesel fuel forced Kuala Lumpur  to reduce government subsidies.

The country  was hit hard by the Asian Currency Crisis in 1996–97 but recovered by 2000. Inflationary pressures  began to build in 2007 and in 2008 inflation stood at nearly 6 percent, even though Malaysia  “unpegged” the ringgit from the US dollar in 2005 and the currency  appreciated  6 percent  per year against the dollar 2006–08. This has helped to hold down the price of imports.

The government  presented  its five-year national development agenda in April 2006 through the Ninth Malaysia Plan, which outlined  the  national  budget for 2006–10. Prime Minister Abdullah unveiled a series of development  plans  for several regions  of Malaysia that have faced the challenge of attracting business investment.  Under Prime Minister Abdullah’s leadership  real gross domestic  product  (GDP) growth  has averaged about  6 percent  per year, but regions outside of Kuala Lumpur and the manufacturing hub of Penang have not seen such gains.

The Malaysian central bank has maintained healthy foreign exchange reserves and the regulatory regime has limited  Malaysia’s exposure  to riskier financial instruments and the global financial crises. So while these  steps may spare Malaysia some of the  brunt of the economic  financial crisis that began in 2008, decreasing worldwide demand  for consumer  goods is expected to hurt economic growth.

Malaysia’s estimated Purchasing Power Parity per capita for 2008 was $15,700. Purchasing Power Parity in general for 2008 was $397.5 billion (estimated). The GDP composition  by sectors is as follows: agriculture, 9.7 percent; industry, 44.6 percent; services, 45.7 percent. The estimated  unemployment rate for 2008 was 3.7 percent, but that rate was expected to rise as demand for consumer  goods decreases. Estimated  public  debt  for 2008 was about  43 percent and the federal budget had a deficit of approximately $10 billion.

In terms of agriculture products, peninsular Malaysia primarily  produces  rubber,  palm oil, cocoa, and rice. The Sabah region primarily produces subsistence crops, rubber, timber, coconuts, and rice and the Sarawak area produces rubber, pepper, and timber.

In terms of industries, peninsular  Malaysia hosts rubber  and  palm  oil  processing  and  manufacturing,  light  manufacturing,   electronics,  tin  mining and smelting, logging, and timber processing. Sabah hosts  logging and  petroleum  production and  Sarawak hosts  agriculture  processing,  petroleum  production, and refining, and logging.

Sabah and Sarawak are located in the Eastern portion  of Malaysia. Some major  ports  and  terminals are Bintulu, Johor Bahru, Kuantan, Labuan, George Town (Penang), Port Kelang, Tanjung and Pelepas.

The Strait of Malacca and South China Sea are the principal bodies of water surrounding  Malaysia and are high-risk areas for piracy and armed  robbery of ships. There  have been  numerous  reports  of commercial vessels that have been attacked and hijacked both at anchor and while underway. The vessels that are hijacked  are often  disguised and  their  cargo is diverted to ports in east Asia. Their crews are usually murdered  or cast adrift.

Regional Issues

Malaysia is one of several nations that have asserted sovereignty over the Spratly Islands. China, the Philippines, Taiwan, and Vietnam have also asserted sovereignty over these islands in question.  In 2002 the “Declaration on the Conduct  of Parties in the South China Sea” eased tensions between the nations  over the  Spratly Islands, but  it is not  legally binding. In March  2005 a joint  accord  among  the  national  oil companies  of China,  the  Philippines,  and  Vietnam was established  regarding  marine  seismic activities in the Spratly Islands. However, Malaysia was not a party to the accord.

Other  disputes  continue  over deliveries of fresh water  to  Singapore  and  Singapore’s land  reclamation, bridge construction, and maritime  boundaries in the Johor and Singapore Straits. The International Court  of Justice has even gotten  involved and held public hearings in 2007 in response to the Memorials and Countermemorials filed by the parties in 2003 and  2005 over sovereignty of Pedra  Branca Island/ Pulau Batu Puteh,  Middle Rocks, and South Ledge. The Court awarded Ligitan and Sipadan Islands, also claimed by Indonesia and the Philippines, to Malaysia but  left maritime  boundary  and  sovereignty  of Unarang  rock in the  hydrocarbon-rich Celebes Sea in dispute.  In September  2008 Brunei and Malaysia agreed to resolve their  offshore and deepwater  seabed dispute, resume hydrocarbon exploration, and renounce any territorial claims on land.

Malaysia is a major center in human trafficking of women  and  children  for the  purpose  of commercial sexual exploitation, and men, women, and children  for forced labor. Those who migrate  willingly from south  and southeast  Asia to work usually go to  Malaysia, and  some  are  essentially  involuntary servants  of Malaysian employers  in the  domestic, agricultural, construction, plantation, and industrial sectors. Malaysia enacted  ant trafficking legislation to combat  this problem  in July 2007, but it did not take action  against exploitative employers  or labor traffickers. Additionally, the government had not ratified  the  2000 UN Trafficking in Persons  (TIP) Protocol as of 2008.


  1. James S. Ang, Financial Development and Economic Growth in  Malaysia  (Routledge,  2008);
  2. CIA, “Malaysia,” World  Factbook, (cited  February 2009);
  3. Federation of International Trade Associations, “Malaysia Information,” (cited March 2009);
  4. Ruzita Jusoh  and  John    Parnell,  “Competitive  Strategy and  Competitive  Performance  Measurement in  the Strategy Malaysian Context: An Exploratory Study,” Management Decision (v.46/1–2, 2008);
  5. Malaysia Ninth  Economic Development Plan 2005–2010 Handbook (International Business Publications  USA, 2008);
  6. Mohamed  Ariff Syed Mohamed,  Capital Markets in Malaysia: Corporate Finance, Investment Management, Banking and Corporate Governance (McGraw-Hill Malaysia, 2008);
  7. Joan M. Nelson, Jacob Meerman, and Abdul Rahman Embong, Globalization & National  Autonomy: The Experience of Malaysia (Institute  of Southeast  Asian Studies, 2008);
  8. Jeff Tan, Privatization  in Malaysia: Regulation, Rent-Seeking and Policy Failure (Routledge, 2008);
  9. Tuck Cheong Tang and Hock Tsen  Wong,  Malaysia’s International  Trade  Issues: An Impressionistic View (Pelanduk Publications, 2008).

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