• Malaysia:
• Economy

Malaysia - Economy

Overview: Malaysia is rich in natural resources and its traditional economic strength lays in commodities. It is still an important source of tin and rubber, produces more than half the world’s palm oil and is a net exporter of oil and gas. During the 1980s and 1990s, however, the character of the economy changed radically as it developed into a predominantly manufacturing country focusing on export-orientated electronic and electrical equipment (manufacturing contributed 31% of GDP in 2002). Manufacturing output grew by 9.3% p.a. 1980–90 and 7.9% p.a. 1990–2004. Latterly, the services sector, too, has been growing rapidly and accounts for 46% of GDP (2005).

The long-term economic plan is to transform the manufacturing sector from the assembly of imported components to the design and production of original products, with the objective of attaining industrialised-country status by 2020. Priority areas are advanced materials, automated manufacturing, biotechnology, microelectronics/IT, and energy technology.

After a brief recession in the mid-1980s, growth was very strong until 1997, when the collapse of some South-East Asian financial markets caught Malaysia in their fall, interrupting its rapid growth and throwing the economy into recession, shrinking by 7.4% in 1998. Demand for exports collapsed, especially demand for semiconductors from Japan; several large development projects were postponed; many companies experienced difficulties; and unemployment rose.

During 1998 the government took measures to stimulate growth and the economy began to grow again in the second quarter of 1999, becoming very strong in 2000, led by manufacturing. Exports – particularly of electrical and electronic goods – soared and there was a sharp increase in interest in foreign investment. However, in 2001 the economy again stalled, as demand for the country’s exports slowed, picking up again, with rising international oil and commodity prices, to 4.4% in 2002, continuing at more than 5% p.a. during 2003–05. In April 2006 the government presented its medium-term national development blueprint, the Ninth Malaysia Plan, for the period 2006–2010. The plan focuses on advancing the manufacturing sector and expanding the country’s services industry.

Trade: Exports of goods and services account for 121% of GDP and manufactured exports for 76% of total merchandise exports (2004). Major exports are electronics equipment and components, semiconductors, electrical machinery, oil and gas, chemicals, palm oil, textiles, clothing, footwear, cars, rubber goods and timber. Major imports include semiconductors and electronic equipment, machinery, transport equipment, manufactured goods, chemicals and food. Malaysia’s main export partners are the USA, Singapore, China and Japan. Its main import partners are Japan, the USA, Singapore, China and South Korea.