The Malaysian Economy Strengths And Challenges

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Malaya is good endowed with natural resources such as Sn, mine, rubber natural gas and so forth. Earlier on the World War 2, Malaysia used to the taking exporter of natural stuffs and importer of makers. But during the Nipponese Occupation, the export of primary merchandise was being limited. Such state of affairs led to big countries of gum elastic plantation was abandoned, closing of mines country. The latter automatically affected the deficit of trim parts for machinery. Malaysia ‘s economic has collapsed.

After 1945, British colonial swayers returned. They rebuild export and import economic system, start over gum elastic plantation, excavation industry and other industries which has been shut down through the Japan Occupation. Within 1948-1960, the British has been driven out. Malayan federation gained independency and Malayan People ‘s Republic was set up. It was 1957.

Since Malaysia independency in 1957, the economic system grew at a rate of by and large 7 % per annum, a comparatively esteem growing rate compared to other state Meanwhile, the economic system has evolved from an agricultural-based to a manufacturing-based in the early phase of independency ( 1970-1980 ) , once more to a service-based at the ulterior period ( 1990 ) . Ultimately, at the Eve of the new millenary, enter to the knowledge-based economic system.

Within the last three decennaries, agricultural remained a primary sector in the economic system, yet the fabrication sector has appeared to be the most weighty to Malaysia since the execution of the Pioneer Industries Ordinance in 1958.Malaysian authorities has opened the economic system to inter-country trade, invites foreign investors, offer cost decreases and other commercial benefits to hike the economic growing. Surely, the economic sciences of Malaysia is expected to be more booming from now on. ( Abdulai n.d. )

Important

Foreign Direct Investment ( FDI ) plays an of import function in the development of Malaysia economic today. Attracting FDI has become an built-in portion of the economic development schemes for Malaysia as it helps maximising commercial benefits and minimising costs. By having preparation on the operation of certain concern, FDI helps developing human capital resources. Besides, the rates of involvement will be maintained at a lower degree therefore it ‘s easier for concern to borrow finance. In add-on to FDI, Malaysia is besides able to make new occupations in peculiar state, conveying in progress engineering and accomplishment, and supply chance to Malaysia to research new markets thereby generate more income and net income. ( Economy Watch n.d. )

Strengths

Economic

Currency

The pecuniary unit for Malaysia is called Ringgit Malaysia ( RM ) . Recently, RM is acquiring stronger and is likely to stay steadfast against US dollar. The local unit was quoted at 3.0913 per dollar which is the strongest degree since the fiscal crisis in 1997. The exchange rate now is 1 US Dollar against 3.1270 Ringgit Malaysia up to day of the month. ( Bank 2010 ) A stronger RM helps to take down production costs and besides conveying approximately advantages on economic growing. ( Damodaran 2010 )

GDP Rate

From 2000 – 2010, Malaysia mean Gross Domestic Product ( GDP ) growing was 1.18 per centum, which reach an historical high of 5.70 % in September 2009 and a record depression of -7.80 % in March 2009. Chart below shows Malaysia GDP growing rate from Jan 2006 to Jan 2010. ( Trading Economics n.d. )

It is strongly believed that Malayan economic system will accomplish better than 6 % GDP growing for 2010. ( Yap 2010 )

Iskandar Malaysia ( IM )

Iskandar Malaysia is the chief southern development corridor in Johor, Malaysia. This development includes amusement, environment and concern coverage. There are several immense undertaking under IM such as Legoland. This undertaking will be an outstanding landmark for Johor, and it expected to pull one million visitants yearly. ( Theme park to be completed in 2010 2010 ) Other than this, IM has attracted legion of Singapore investors. From 2006 to May 2010, there were 217 undertakings from Singapore amounting to RM3.17bil. ( Musa 2010 ) Both of the development will force frontward the economic growing. Foreign investors can look frontward to this development as this is one of the most possible development in Malaysia.

Due to an economic reappraisal, the flow of direct investing has fell from RM24.1bil in 2008 to RM5.7bil in 2009. It has declined 76.5 % . And for the domestic-owned investing has descended to RM10.5bil or 37.1 % from 2008. Likewise, the entire fabrication capital investing has besides fell 48 & A ; , which is RM 32.6bil. The entire sum of foreign investors listed for 68 % or RM22.1bil, a 52 % bead from2009. Overall, Malaysia economic is still considered optimistic compared to other state in 2010 as what is mentioned above, that Malaysia currency is acquiring stronger. It is good intelligence for possible foreign investors.

Political

Malaysia is formed by three major races, Malays, Chinese and Indians. After the incident that happened in May 1969, the races have learned to populate under a peaceable and harmony society to avoid such races conflict happened once more. Presents in Malaysia, we can see that assorted races working together in the same edifice, assisting each other or even celebrate festivals although they do n’t have a same civilization, part and live in the same country. The Malaysia authorities known as the Barisan Nasional, United Malays National Organisation ( UMNO ) , Malaysian Chinese Association ( MCA ) , and Malaysian Indian Congress ( MIC ) . ( 123 Independenc Day n.d. )

Malaysia receives a mark of +0.13 for the factor “ Political Stability ” in the World Bank ‘s Governance Indicators 1996-2008, which means Malaysia politic is ‘relatively stable ‘ compared to the other state.

Political stableness leads to economic stableness. It ‘s a cardinal attractive force to foreign investors. Foreign investors will experience more reassure to put in Malaysia.

Technology

Multimedia Super Corridor

The Multimedia Super Corridor ( MSC Malaysia ) is one of the most possible investings for information and communicating engineering ( ICT ) in Asia. This development helps Malaysia to go a cardinal participant in the Information Age and therefore to achieved Vision 2020.

Multipurpose Card

The most common Multipurpose Card in Malaysia can be known as My Kad. This card is embedded with a 64K microprocessor bit that is multifunctional across changing systems. It applications included: National ID, ATM, Touch & A ; GO, MPES Cash and so forth. These non merely brings convenient to all people in Malaysia and besides turn out to the engineering betterment in Malaysia.

Infrastructure

Malaysia has well-developed air and sea connexions among Asia states. Internal travel in Malaysia is easy as the web of main roads ( North-South Highway ) is well-structured and maintained. For air transit, more than 25 major air hoses service the international airdrome ( KLIA and etc ) throughout the state. Following by sea lane, Malaysia owns seven international ports ( Port Klang and etc ) that provided with progress seaport installings. ( Malaysia Industrial Development Authority n.d. )

What is mentioned above all is merely tip o the iceberg of Malaysia engineering development. There are still other inaugural such as E-Government, E-Business, Tele-Health and more which form the strength of engineering for Malaysia. ( All Malaysia Info n.d. )

Social and Cultural

Malaysia is a multicultural and multilingual society. There are three chief races in this state, which is the Malays, who formed a big community and play a opinion function in political, the Chinese and the Indians. The different races have their really ain traditions and imposts that give Malaysia a colorful heritage. Furthermore, Islam is the official faith in Malaysia. Religious are freely adept and so the linguistic communication. The linguistic communications, which are normally used to pass on, are Bahasa Malaysia, besides considered as national linguistic communication, English and Chinese. Important festivals of each race are being identified with a peculiar ethnic or spiritual group. They celebrate together, experienced cultural exchange regardless of background and beliefs. This makes Malaysia so different and particular among the Asia states. Lifestyle here is going more and more modern due to great exposure to the western civilization. Above all makes investors from China, India and Middle-East states more convenient to put in Malaysia. ( Kwint Essential n.d. )

Labor

Malaysia provides diligent, educated and trainable labour force. Labours in Malaysia undergo at least 11 old ages of school instruction. Malaysia is a free competitory labor market where employers and employees enjoy a harmonious and hearty work environment. The labor cost is comparatively low yet the productiveness degree considered high compared to other Asia states. In add-on, free uniforms, free conveyance, free medical intervention, insurance, one-year fillip, retirement benefits and other auxiliary benefits given to either local or foreign labors. Last, there are certain labour regulations established by Malaysia authorities to protect labors, for case Employment Act 1995, Employees ‘ Social Security Act 1969, Occupational Safety and Health Act 1967 and so forth. The protective labour statute law in Malaysia is more extended than other Asia state. Table below shows the Principal Statistic of Labour Force, Malaysia, January 2009-July 2010.

Year Month Labour

( Chief Statisticss of Labour Force, MAlaysia July 2010 2010 )

Challenges

One of the challenges that Malaysia faces is the official faith, Islamic. That ‘s a negative perceptual experience to foreign investors. One of the factors is the incident which happened at 11 Sep 2001 in USA. Due to the catastrophe, aliens are keeping utmost positions to those Islamic states. This cause the investors will believe twice earlier enter the market in Malaysia. Harmonizing to the 2010-2011 Global Competiveness Report, Malaysia was placed 26th among 139 economic systems, from 24th out of 133 states in the old study. Malaysia ‘s place has dropped in the past three old ages since 21st place in 2008-2009. Furthermore, Malaysia New Economic Policy stated, 30 % of the company portions must be given to bumiputra ( the Malays ) . As a consequence, foreign companies do non hold the same chances as some local companies to vie for contracts. In most instances, foreign companies are required to take on a local spouse before their commands will be considered. Finally, foreign investors are non allowed to impart out their money, this has stopped most of the foreign investors to put in Malaysia.

Recommendations

To work out the challenges, Malaysia can turn negative perceptual experience into positive by reconstructing the image of Malaysia through keeping exhibition. For illustration, Shanghai Expo 2010. The exhibition has displayed the feature of a state that allow others to understand more of the state. This can alter the position of Malaysia in foreign investor ‘s head, so that they feel more reassure to put in Malaysia. Next, authorities possibly can let foreign investors to convey out certain sum of money alternatively of wholly prohibited them from imparting out the net income which they gained in an investing. Last, Malaysia New Economic Policy should cut down the portion rate of bumiputra ( the Malays ) or wholly get rid of the jurisprudence which is unjust to the investors to organize a partnership.

Decision

Above all, Malaysia is a possible investing market in Asia state. The political stableness, optimistic economic growing, peaceable and harmony society, advanced technlogy and of class cheap but extremely educated labour force are the strength of Malaysia to pull foreign investors from China, India and Middle-East. Besides, by conveying in more foreign investors, it besides helps the development of Malaysia and to accomplish the Vision 2020.