Malaysia Country Report

As the world prepares to move into the twenty-first century, many nations are rapidly developing their agricultural and manufacturing sectors.  As these burgeoning industries become a larger part of the nations economy, the nation finds its population restructuring and streaming to the areas of growth.  Just as the people are trying to compete for their survival, the nation is fighting its way to center stage in the world economy. The development of these countries is tied to the worlds economy, as is evidenced by the uneven development within each of the nations.  Malaysias growing role in the world economy is likewise intertwined with the development of its industrial regions.

Malaysias economy is centered on the production of rubber, timber, tin, and petroleum. Almost all of the countrys production of rubber and palm oil is raised solely for export.  Historically, rubber was the dominant export, but now it is palm oil in terms of square miles used to cultivate it.  Rubber, like no other major commodity in the world, was subject to dramatic and rapid shifts in sources and derivation of demand (McHale, 9).  Thus, Malaysia has been moving away from its complete dependency on rubber for its income, and begun to diversify its economy.  The peninsulas forests produce approximately 1,100,000 tons of timber each year, and about two thirds of that is exported.  Up to 1965, Malaysia was producing 40% of the worlds tin supply.  However, with its quickly diversifying economy, Malaysia no longer depends on tin as a substantial part of its income.  Small amounts of other useful minerals can be found all over Malaysia, as it is a naturally abundant land.

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Its major exports are electronic equipment, machinery, petroleum, palm oil, rubber, timber, and tin.  The biggest trading partners are Japan, the United States, and Singapore. Other trading partners include the United Kingdom and Russia.  About two thirds of the land on the peninsula is devoted to the cultivation of rubber, and Malaysia produces more than a third of the worlds rubber. Tin is the second largest export, and has been mined on the peninsula since the 17th century. Since Malaysias exports are mostly raw materials, and raw materials are susceptible to wildly fluctuating market prices, Malaysias economy is easily affected by market swings.  For example, just a one cent fall in the price of rubber would decrease Malaysias export earnings by $22,000,000 in one year (Britannica Encyclopedia, 692A). Such fluctuations would damage its growing economy, and until recently Malaysia has been slow in catching up with the industrial world.

Recently, in an effort to balance the economy, Malaysia has put more emphasis on the manufacturing of semiconductors for computers in an effort to lessen its reliance on agriculture and mining.  Growing manufacturing sectors include air conditioners, cement, rubber, textiles, and food processing.  The manufacturing sector has doubled its economic impact in the last two decades, showing definite growth and progress as Malaysia grows more important to the global economy.

Major imports are food, petroleum, non-electrical machinery, electrical equipment, chemicals, steel, and textiles.  Food, drinks, and tobacco comprise a quarter of the imported goods.  Manufactured goods are another quarter, and machinery and equipment are just slightly less than twenty five percent (Britannica Encyclopedia, 692A).

The countrys economy is usually quite balancedin 1990 its exports earned $45.6 million, while its imports totaled $47.1 million.  Almost a third of Malaysias international trade passes through Singapore, the gateway of Southeast Asia.  Malaysia achieved such balance by concentrating on exports and diversifying its products to include petroleum and natural gas.  Previously, the reliance on rubber and timber was susceptible to too much market fluctuation, and Malaysia has strengthened its economic base by expanding its markets.

Malaysia has among the best economies of Southeast Asia.  From 1986 to 1990, its GDP grew at 4.2% per year.  This was because of the concentration on exports in the development of its economy.  It has also developed its palm oil exporting business to be the leader in the world.

Peninsular Malaysia is the most developed area of the nation and comprises most of the countrys GDP. However, in that prosperous region, economic and industrial development is uneven.  Most of the plantations, mines, ports, and cities are within thirty miles of the west coast. Manufacturing is concentrated in the Kuala Lumpur area. Kuala Lumpur also has the largest population of any Malaysian city938,000 as estimated in 1993. It is quite clear that Kuala Lumpurs sustained population growth is a result of a constant flow of immigrants.  The increase in manufacturing jobs is clearly the reason for such growth.

Most of the poor people in Malaysia are Malays, and the majority of the rich population is Chinese. Economic and political differences have caused trouble between the two dominating groups.  An income disparity has always existed between the urban and rural areas of Malaysia.  Generally, the Chinese live in cities andown a large proportion of Malaysias businesses.Malays live in crowded, run-down areas (Chandler, 100). Throughout history, the mean income of the Chinese as compared with that of the Malays has always been roughly about two times as much (Jomo, 90). However, the Malays control the political groups, but they desire greater economic opportunities, while Chinese and Indians want to obtain larger shares of political power without losing their cultural identities (Lin Jean Lim, 270).

Of the estimated 19 million people in Malaysia in 1994, about 80% reside on the more developed peninsula, with 50% being Malays, 35% Chinese, and 10% Asian Indians  (Britannica, 686).  It is estimated that Malaysia has the third highest standard of living in Asia. The majority of the Malays live in rural areas of the peninsula as farmers. Those farmers live in kampongs, which are rural residences with small houses made of wood.  The Malays who live in large cities mostly work in government positions. Large percentages of both groups now live in big cities because of the job opportunities available. However, throughout history, many more Chinese than Malays have lived in the cities, and the Chinese continue to participate in the booming urban economy. (Colliers)  The Chinese work in shops, banks, or business offices, while a large part of the civil service is composed of Malays. The job disparity between the Chinese and Malays has been cause for much racial strife

In Sarawak and Sabah, formerly known as East Malaysia, most of the people live on the western coastal plain. Generally, the standard of living on the eastern side is lower than on peninsular Malaysia.  The area is clearly less urbanized and the population is scattered.  A major product in this area is timber, evenly produced by both states on this eastern section of Malaysia.  The Chinese there reside in towns and urban areas, much like the peninsular Chinese.  They dominate the timber industry there.  The Malays in that region live in the inland areas where they have tiny farms. These farmers live in long houses along the rivers, and struggle to produce enough food for subsistence.

Up to the turn of the century, Malaysia saw mostly international immigration rather than internal migration. Most of the migrants came from Malays, Chinese, and Asian Indians.  Most non-Malay immigrants went to Malaysia in search of a quick fortune from the tin mines and rubber plantations, and planned to return to their homelands. However, most Malays had permanent settlement intentions and came as families.  Since about 1930, the percentage of foreign-born population has decline[d] steadily to barely one-tenth by 1970 (Lin Jean Lim, 161). This shows that Malaysia has retained most of its immigrants, and international immigrants and internal migrants outnumber migrants.

The biggest draw has been the state of Selangor, of which Kuala Lumpur is the capital.  Malaysias internal migrant patterns have remained consistentwith people streaming to developed areas such as Kuala Lumpur in hopes of finding a job, and fleeing the less developed states.  Lim states that there has been a strong gravitational pull toward the Kuala Lumpur area where the bulk of modern sector development has been located (Lin Jean Lim 168).

The migration into the Kuala Lumpur region is estimated to have increased by 30,000 per year.  One study found that an overwhelming eighty four percent of migrants to Kuala Lumpur were searching for jobs (Lin Jean Lim, 176). Firms from around the world have made substantial investments in Malaysia by relocating manufacturing plants there.  This trend has altered Malaysias role in the world economy, and it has contributed to [its] economic advance (Clark and Chan, 169). Another study showed that migrants to the area had a lower unemployment rate than the native labor force (Lim, David, 146). Clearly, the migrants to the Kuala Lumpur area were qualified workers in search of work.  The influx of immigrants to rapidly developing areas is thus unmistakably tied to the availability of jobs.

Clearly, Malaysias expanding and diversifying economy is steering it onto the world economy stage.  Malaysia stands ready to benefit from the rapidly growing manufacturing sector, and with its new economic resilience, should become stronger in the world economy.  The countrys growing involvement with manufacturing and other international businesses, along with many skilled workers streaming to those manufacturing plants, will make Malaysia successful in fully integrating with the highly competitive world economy.

Works Cited

Andaya, Leonard Y.  Malaysia.  Colliers Encyclopedia.  1997.
Chandler, David P.  Malaysia.  The World Book Encyclopedia.  1997.
Chan, Steve, and Cal Clark, eds.  The Evolving Pacific Basin in the Global Political Economy.
United States: Lynne Rienner Publishers, Inc., 1992.
Cheok, Cheong Kee and Lin Lean Lim.  Demographic Impact on Socio-Economic Development
The Malaysia Experience.  Canberra, Australia: The Australian National University,
1982.
Drabble, J.H.  Rubber in Malaya 1876-1922.  Malaysia: Oxford University Press, 1973.
Jomo, K.S.  Growth and structural Change in the Malaysian Economy.  London: The MacMillan
Press Ltd., 1990.
Lim, David, ed.  Further Readings on Malaysian Economic Development.  Malaysia: Oxford
University Press, 1983.
Lim, Lin Lean.  Population and Development: Theory and Empirical Evidence.  Malaysia:
International Book Service, 1983.
Malaysia.  Encyclopedia Britannica: Macropaedia.  1973.
McHale, T.R.  Rubber and the Malaysian Economy.  Singapore: M.P.H. Publications, 1966.
Peng, Khor Kok.  Recession and the Malaysian Economy.  Malaysia: Institut Masyarakat, 1983.
Schatzl, Ludwig H., ed.  Growth and Spatial Equity in West Malaysia.  Singapore: Institute of
Southeast Asian Studies, 1988.
Yee, Lo Sum.  The Development Performance of West Malaysia 1955-1967.  Malaysia:
Heinemann Educational Books, 1972.

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