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Malaysia Economy
 
 
 

General

Malaysia is a relatively open state-oriented and newly industrialised market economy. The state plays a significant but declining role in guiding economic activity through macroeconomic plans. Malaysia has had one of the best economic records in Asia, with GDP growing an average 6.5% annually from 1957 to 2005. In 2010 the GDP (PPP) was $414,400 billion, the 3rd largest economy in ASEAN and 29th largest in the world.

In the 1970s, the predominantly mining and agricultural-based economy began a transition towards a more multi-sector economy. Since the 1980s the industrial sector has led Malaysia's growth. High levels of investment played a significant role in this. The economy recovered from the 1997 Asian Financial Crisis sooner than neighbouring countries, and has since recovered to the levels of the pre-crisis era with a GDP per capita of $14,800. Inequalities exist between different ethnic groups. The Chinese make up about one-third of the population but accounts for 70% of the country's market capitalisation.

International trade, facilitated by the adjacent Strait of Malacca shipping route, and manufacturing are key sectors of the country's economy. Malaysia is an exporter of natural and agricultural resources, the most valuable exported resource being petroleum. The national oil company, Petronas, provides about 40% of the federal budget in taxes, dividends and royalties. The oil company ranked 121 in Fortune Global 500 list of companies in 2007. It also ranked 18 in the industry of the same list.

Petronas is also the custodian of oil and gas reserves for Malaysia. Hence, all oil and gas activities are regulated by Petronas. Malaysia encourages foreign oil company participation through production sharing contracts, in which significant amount of oil will be given away to the foreign oil company until it reaches a production milestone. Currently, many major oil companies such as ExxonMobil, Royal Dutch Shell, Nippon Oil and Murphy Oil are involved in such contracts. As a result, 40% of oil fields in Malaysia are developed.

Malaysia and Thailand has a wedge shaped area 150 km from Kota Bharu (Kelantan) and 260 km from the shores of Songkhla, Thailand which is jointly developed by Petronas and its Thailand counterpart. The area, which is called Malaysia-Thailand Joint Development Area, has 4.5 trillion cubic feet (130 cubic km) of proven reserves.

At one time, it was the largest producer of tin, rubber and palm oil in the world. Manufacturing has a large influence in the country's economy, although Malaysia’s economic structure has been moving away from it. Malaysia remains one of the worlds largest producers of palm oil.

In an effort to diversify the economy and make it less dependent on exported goods, the government has pushed to increase tourism to Malaysia. As a result, tourism has become Malaysia’s third largest source of income from foreign exchange, although it is threatened by the negative effects of the growing industrial economy, with large amounts of air and water pollution along with deforestation affecting tourism.

The country has developed into a centre of Islamic banking, and is the country with the highest numbers of female workers in that industry. Knowledge-based services are also expanding.

Science policies in Malaysia are regulated by the Ministry of Science, Technology & Innovation. The country is one of the world's largest exporters of semiconductor devices, electrical goods, and information and communication technology products.

In an effort to create a self-reliant defensive ability and support national development, Malaysia privatised some of its military facilities in the 1970s. This has created a defence industry, which in 1999 was brought under the Malaysia Defence Industry Council. The government continues to try and promote this sector and its competitiveness, actively marketing the defence industry


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