The economy is also influenced by the government through agencies such as the Economic Planning Unit and government-linked wealth funds such as Khazanah Nasional Berhad, Employees Provident Fund and Permodalan Nasional Berhad. The government's development plans, called the Malaysian Plan, currently the Tenth Malaysia Plan, started in 1950 during the British colonial rule.
During the first half of 2000, US exports totalled US$5 billion, while US imports from Malaysia reached US$11.6 billion. == Agriculture sector == Agriculture is now a minor sector of the Malaysian economy, accounting for 7.1% of Malaysia's GDP in 2014 and employing 11.1% of Malaysia's labour force, contrasting with the 1960s when agriculture accounted for 37% of Malaysia's GDP and employed 66.2% of the labour force.
The Overnight Policy Rate (OPR) is their policy instrument, and is used to guide the short term interbank rates which will hopefully influence inflation and economic growth. ===Affirmative action=== Tun Abdul Razak, who was then the Prime Minister, implemented the affirmative action policy named as New Economic Policy soon after 13 May Incident in 1969.
Malaysia is also the world's largest Islamic banking and financial centre. In the 1970s, Malaysia began to imitate the four Asian Tiger economies (South Korea, Taiwan, Hong Kong and Singapore) and committed itself to a transition from being reliant on mining and agriculture to an economy that depends more on manufacturing.
In the 1970s, the predominantly mining and agricultural based Malaysian economy began a transition towards a more multi-sector economy.
After 40 years of the program, bumiputra equity ownership rose to 23% worth RM167.7 billion in 2010 against 2.4% in 1970. The NEP is accused of creating an oligarchy, and creating a 'subsidy mentality'.
Through NEP, the Bumiputeras majority are given priority and special privileges in housing developments, scholarship admission and also for ownership of publicly listed companies. The Malaysian New Economic Policy was created in 1971 with the aim of bringing Malays a 30% share of the economy of Malaysia and eradicating poverty amongst Malays, primarily through encouraging enterprise ownership by Bumiputeras.
It was only in 1972 that petroleum and natural gas took over from tin as the mainstay of the mineral extraction sector.
Since the 1980s the industrial sector has led Malaysia's growth.
Malaysia consistently achieved more than 7% GDP growth along with low inflation in the 1980s and the 1990s. In 1991, former Prime Minister of Malaysia, Mahathir bin Mohamad outlined his ideal, Vision 2020 in which Malaysia would become a self-sufficient industrialised nation by 2020.
Malaysia was once the world's largest producer of tin until the collapse of the tin market in the early 1980s.
Malaysia consistently achieved more than 7% GDP growth along with low inflation in the 1980s and the 1990s. In 1991, former Prime Minister of Malaysia, Mahathir bin Mohamad outlined his ideal, Vision 2020 in which Malaysia would become a self-sufficient industrialised nation by 2020.
Malaysia consistently achieved more than 7% GDP growth along with low inflation in the 1980s and the 1990s. In 1991, former Prime Minister of Malaysia, Mahathir bin Mohamad outlined his ideal, Vision 2020 in which Malaysia would become a self-sufficient industrialised nation by 2020.
One such fund is Khazanah Nasional Berhad which was established in 1993, and as of 31 December 2013 has US$41 billion worth of assets.
Malaysian life expectancy, relatively high level of schooling, and above average fertility rate will help in its rapid expansion." Viktor Shvets, the managing director in Credit Suisse, has said "Malaysia has all the right ingredients to become a developed nation." ==Economic policies== ===Monetary policy=== Prior to the 1997 Asian financial crisis, the Malaysian ringgit was an internationalised currency, which was freely traded around the world.
As of 10 March 2020, the Ringgit is traded at MYR 4.19 at the US dollar. The ringgit has not been internationalised since September 1998, an effect due to the 1997 Asian financial crisis in which the central bank imposed capital controls on the currency, due to speculative short-selling of the ringgit.
As of 10 March 2020, the Ringgit is traded at MYR 4.19 at the US dollar. The ringgit has not been internationalised since September 1998, an effect due to the 1997 Asian financial crisis in which the central bank imposed capital controls on the currency, due to speculative short-selling of the ringgit.
As a part of series of capital controls, the currency was pegged between September 1998 to 21 July 2005 at MYR 3.80 to the dollar after the value of the ringgit dropped from MYR 2.50 per USD to, at one point, MYR 4.80 per USD. In recent years, Bank Negara Malaysia has begun to relax certain rules to the capital controls although the currency itself is still not traded internationally yet.
In 1999, two-way bilateral trade between the US and Malaysia totalled US$30.5 billion, with US exports to Malaysia totalling US$9.1 billion and US imports from Malaysia increasing to US$21.4 billion.
The average household income of Malaysia increased by 18% to RM5,900 a month, compared to RM5,000 in 2012. According to a HSBC report in 2012, Malaysia will become the world's 21st largest economy by 2050, with a GDP of $1.2 trillion (Year 2000 dollars) and a GDP per capita of $29,247 (Year 2000 dollars).
During the first half of 2000, US exports totalled US$5 billion, while US imports from Malaysia reached US$11.6 billion. == Agriculture sector == Agriculture is now a minor sector of the Malaysian economy, accounting for 7.1% of Malaysia's GDP in 2014 and employing 11.1% of Malaysia's labour force, contrasting with the 1960s when agriculture accounted for 37% of Malaysia's GDP and employed 66.2% of the labour force.
In 2002, Proton helped Malaysia become the 11th country in the world with the capability to fully design, engineer and manufacture cars from the ground up.
The Ringgit became non-internationalised and a traveller had to declare to the central bank if taking out more than RM10,000 out of the country and the Ringgit itself was pegged at RM3.80 to the US dollar. The fixed exchange rate was abandoned in favour of the floating exchange rate in July 2005, hours after China announced the same move.
As a part of series of capital controls, the currency was pegged between September 1998 to 21 July 2005 at MYR 3.80 to the dollar after the value of the ringgit dropped from MYR 2.50 per USD to, at one point, MYR 4.80 per USD. In recent years, Bank Negara Malaysia has begun to relax certain rules to the capital controls although the currency itself is still not traded internationally yet.
Kearney, a global management consulting firm, Malaysia was ranked 15th in the 2014 Foreign Direct Investment Confidence Index, 9th in 2012, 16th in 2007 and 21st in 2010.
The Ringgit continued to strengthen to 3.18 to the dollar by March 2008 and appreciated as low as 2.94 to the dollar in May 2011.
When the Democratic Action Party was elected in the state of Penang in 2008, it announced that it will do away with the NEP, claiming that it "... breeds nepotism, corruption and systemic inefficiency". Wolfgang Kasper, a professor of economics at University of New South Wales, and once an adviser to Malaysia's Finance Ministry, criticised the NEP, saying that "NEP handouts (are) making Malays lazy, corrupt & swell-headed.
Malaysia has been China's top trading partner within ASEAN for five years in a row since 2008.
In 2009, the PPP GDP was US$383.6 billion, about half the 2014 amount, and the PPP per capita GDP was US$8,100, about one third the 2014 amount. In 2014, the Household Income Survey undertaken by the government indicated that there were 7 million households in Malaysia, with an average of 4.3 members in each household.
Worst of all, it keeps them poor." He also criticised the Federal Government giving cash-handouts and financial aid instead of providing equal access to education to help the marginalised poor to lift their income status. On 21 April 2009, the prime minister Najib Tun Razak has announced the liberalisation of 27 services sub-sector by abolishing the 30% bumiputera requirement.
According to the premier, many more sectors of the economy will be liberalised. On 30 June 2009, the prime minister announces further liberation moves including the dismantling of the Bumiputera equity quotas and repealing the guidelines of the Foreign Investment Committee, which was responsible to monitor foreign shareholding in Malaysian companies.
As of 2009, 22 per cent of government expenditures were subsidies, with petrol subsidies alone taking up 12 per cent. Since 2010, the government has been gradually reforming Malaysia's subsidy system, via a series of reductions in subsidies for fuel and sugar to improve government finances and to improve economic efficiency.
As of 2009, irrigated land covers 3,800 km².
After 40 years of the program, bumiputra equity ownership rose to 23% worth RM167.7 billion in 2010 against 2.4% in 1970. The NEP is accused of creating an oligarchy, and creating a 'subsidy mentality'.
As of 2009, 22 per cent of government expenditures were subsidies, with petrol subsidies alone taking up 12 per cent. Since 2010, the government has been gradually reforming Malaysia's subsidy system, via a series of reductions in subsidies for fuel and sugar to improve government finances and to improve economic efficiency.
According to the Bank Governor, the ringgit will be internationalised when it's ready. In September 2010, in an interview with CNBC, Dato' Seri Najib Tun Razak, who is the then Prime Minister of Malaysia and also held the position of Finance Minister then, said that the government is open to open up the ringgit to off shore trading if the move will help the economy.
Kearney, a global management consulting firm, Malaysia was ranked 15th in the 2014 Foreign Direct Investment Confidence Index, 9th in 2012, 16th in 2007 and 21st in 2010.
Moreover, social welfare benefit with direct cash benefit transfer called Cost of Living Assistance has also been in place since 2011.
The Ringgit continued to strengthen to 3.18 to the dollar by March 2008 and appreciated as low as 2.94 to the dollar in May 2011.
As of 2011, the percentage arable land in Malaysia is 5.44%.
Total renewable water resources make up 580 cubic km as of 2011. Tin and petroleum are the two main mineral resources that are of major significance in the Malaysian economy.
Though Indonesia produces more palm oil, Malaysia is the world's largest exporter of palm oil having exported 18 million tonnes of palm oil products in 2011. In March 2019, the European Commission concluded that palm oil cultivation results in excessive deforestation and its use in transport fuel should be phased out by 2030.
The average household income of Malaysia increased by 18% to RM5,900 a month, compared to RM5,000 in 2012. According to a HSBC report in 2012, Malaysia will become the world's 21st largest economy by 2050, with a GDP of $1.2 trillion (Year 2000 dollars) and a GDP per capita of $29,247 (Year 2000 dollars).
In response, Mahathir alleged that the European Union is at risk of starting a trade war with Malaysia regarding its "grossly unfair" policies geared towards decreasing the use of palm oil, which Mahathir stated was "unfair" and an example of "rich people…[trying] to impoverish poor people". ==Industry sector== Malaysia's industrial sector accounts for 36.8%, over a third of the country's GDP in 2014, and employs 36% of the labour force in 2012.
Total international tourist receipts increased by 3.9% to RM60.6 billion (US$19 billion) in 2014. United Nations World Tourism Organisation (UNWTO) listed Malaysia as the 10th most visited country in 2012. Malaysia is rich with diverse natural attractions which become an asset to the country's tourism industry.
Kearney, a global management consulting firm, Malaysia was ranked 15th in the 2014 Foreign Direct Investment Confidence Index, 9th in 2012, 16th in 2007 and 21st in 2010.
One such fund is Khazanah Nasional Berhad which was established in 1993, and as of 31 December 2013 has US$41 billion worth of assets.
The current rate of SST is at 6% while disposal of property is subject to a schedule of period holding the property. ==External trade== In 2013, Malaysia's total external trade totalled US$424 billion, made up of US$230.7 billion of exports and US$192.9 billion of imports, making Malaysia the world's 21st largest exporter and the world's 25th largest importer. Malaysia's largest trading partner is China.
The two-way trade volume between China and Malaysia in 2013 reached $106 billion, making Malaysia China's third-largest trade partner in Asia, just behind Japan and South Korea and eighth largest overall.
The industrial sector mostly contributed by the electronics industry, automotive industry and construction industry. === Electrical and electronics === The electrical & electronics (E&E) industry is the leading sector in Malaysia's manufacturing sector, contributing significantly to the country's exports (32.8 per cent) and employment (27.2 per cent) in 2013.
To date, there are more than 50 companies, largely MNCs producing semiconductors devices in Malaysia. ==== Photovoltaics ==== Malaysia is a major hub for solar equipment manufacturing, with factories of companies like First Solar, Panasonic, TS Solartech, Jinko Solar, JA Solar, SunPower, Hanwha Q Cells, and SunEdison in locations like Kulim, Penang, Malacca, Cyberjaya and Ipoh. In 2013, Malaysia's total production capacity for solar wafers, solar cells and solar panels totalled 4,042 MW.
Customers are connected to electricity through the National Grid, with more than 420 transmission substations in the Peninsular linked together by approximately 11,000 km of transmission lines operating at 132, 275 and 500 kilovolts. In 2013, Malaysia's total power generation capacity was over 29,728 megawatts.
Tan Sri Nor Mohamed, a government minister, said Malaysia could attain developed country status in 2018 if the country's growth remains constant or increases. Malaysia experienced an economic boom and underwent rapid development during the late 20th century and has GDP per capita (nominal) of US$11,062.043 in 2014, and is considered a newly industrialised country.
In 2009, the PPP GDP was US$383.6 billion, about half the 2014 amount, and the PPP per capita GDP was US$8,100, about one third the 2014 amount. In 2014, the Household Income Survey undertaken by the government indicated that there were 7 million households in Malaysia, with an average of 4.3 members in each household.
As a result, in December 2014, the government officially ended all fuel subsidies and implemented a 'managed float' system, taking advantage of low oil prices at the time, potentially saving the government almost RM20 billion ringgit (US$5.97 billion) annually. ===Sovereign wealth funds=== The government owns and operates several sovereign wealth funds that invest in local companies and also foreign companies.
The fund invests in major companies in Malaysia such as CIMB in the banking sector, UEM Group in the construction sector, Telekom Malaysia and Axiata in the communications industry, Malaysia Airports and Malaysia Airlines in the aerospace industry, as well as Tenaga Nasional in the energy sector Another fund that is owned by the Malaysian government is the Employees Provident Fund which is a retirement fund that as of 31 March 2014, has an asset size of RM597 billion.
=== Energy resources === Malaysia holds proven oil reserves of 4 billion barrels as of January 2014, the fourth-highest reserves in Asia-Pacific after China, India, and Vietnam.
Malaysia's benchmark crude oil, Tapis Blend, is a light and sweet crude oil, with an API gravity of 42.7° and a sulphur content of 0.04% by weight. Malaysia also holds 83 trillion cubic feet (Tcf) of proven natural gas reserves as of January 2014, and was the third-largest natural gas reserve holder in the Asia-Pacific region after China and Indonesia.
On 31 May 2014, during Najib Razak's visit to China where he was welcomed by China's Premier Li Keqiang, China and Malaysia pledged to increase bilateral trade to US$160 billion by 2017.
During the first half of 2000, US exports totalled US$5 billion, while US imports from Malaysia reached US$11.6 billion. == Agriculture sector == Agriculture is now a minor sector of the Malaysian economy, accounting for 7.1% of Malaysia's GDP in 2014 and employing 11.1% of Malaysia's labour force, contrasting with the 1960s when agriculture accounted for 37% of Malaysia's GDP and employed 66.2% of the labour force.
In response, Mahathir alleged that the European Union is at risk of starting a trade war with Malaysia regarding its "grossly unfair" policies geared towards decreasing the use of palm oil, which Mahathir stated was "unfair" and an example of "rich people…[trying] to impoverish poor people". ==Industry sector== Malaysia's industrial sector accounts for 36.8%, over a third of the country's GDP in 2014, and employs 36% of the labour force in 2012.
Total international tourist receipts increased by 3.9% to RM60.6 billion (US$19 billion) in 2014. United Nations World Tourism Organisation (UNWTO) listed Malaysia as the 10th most visited country in 2012. Malaysia is rich with diverse natural attractions which become an asset to the country's tourism industry.
In 2014, Malaysia was ranked the world's best destination for medical tourism by the Nomad Capitalist.
Malaysia was also included in the top 10 medical tourism destinations list by CNBC. In 2014, Prince Court Medical Centre, a Malaysian hospital, was ranked the world's best hospital for medical tourists by MTQUA. The Malaysian government targets to hit RM 9.6 billion (US$3.2 billion) in revenue from 1.9 million foreign patients by 2020. ===Oil and gas=== Malaysia has a vibrant oil and gas industry.
The national oil company, Petronas is ranked the 69th biggest company in the world in the Fortune 500 list in 2014, with a revenue of over US100.7 billion and total assets of over US$169 billion.
In 2014, it was the world's 13th busiest airport by international passenger traffic, recording over 25.4 million international passenger traffic.
Kearney, a global management consulting firm, Malaysia was ranked 15th in the 2014 Foreign Direct Investment Confidence Index, 9th in 2012, 16th in 2007 and 21st in 2010.
The Malaysian economy is highly robust and diversified with the export value of high-tech products in 2015 standing at US$57.258 billion, the second highest after Singapore in ASEAN.
Malaysia also provides tax incentives to technology-based businesses through the MSC (Multimedia Super Corridor) body. In 2015, Malaysia was the 6th most attractive country for foreign investors, ranked in the Baseline Profitability Index (BPI) published by Foreign Policy Magazine. The government is moving towards a more business friendly environment by setting up a special task force to facilitate business called PEMUDAH, which means "simplifier" in Malay.
Malaysia is behind Singapore, Hong Kong and New Zealand in investor protection category of the survey. The 2016 edition of the World Bank's 'Ease of doing business' report ranks Malaysia at 18 in the world, and the second in SE Asia - behind Singapore, but ahead of other regional powerhouses such as Thailand (49th in the world) and Indonesia (109th in the world).
On 31 May 2014, during Najib Razak's visit to China where he was welcomed by China's Premier Li Keqiang, China and Malaysia pledged to increase bilateral trade to US$160 billion by 2017.
Government stepped up measures to increase revenue by introducing the Sales and Service Tax (SST) at 6% rate to reduce deficits and meet federal debt obligations in 2018. ==History== As one of three countries that control the Strait of Malacca, international trade plays a very significant role in Malaysia's economy.
Tan Sri Nor Mohamed, a government minister, said Malaysia could attain developed country status in 2018 if the country's growth remains constant or increases. Malaysia experienced an economic boom and underwent rapid development during the late 20th century and has GDP per capita (nominal) of US$11,062.043 in 2014, and is considered a newly industrialised country.
According to the Global Competitiveness Report 2019, the Malaysian economy is the 27th most competitive country in the world. Malaysian citizens enjoy affluent lifestyle compared to almost all other ASEAN countries, in which only Singapore and Brunei managed to rival over.
Small quantities of gold are produced. In 2019, the country was the 11th largest world producer of manganese; the 11th largest world producer of tin, the 12th largest world producer of bauxite.
Though Indonesia produces more palm oil, Malaysia is the world's largest exporter of palm oil having exported 18 million tonnes of palm oil products in 2011. In March 2019, the European Commission concluded that palm oil cultivation results in excessive deforestation and its use in transport fuel should be phased out by 2030.
The economy of Malaysia is the fourth largest in Southeast Asia according to the International Monetary Fund 2020.
Malaysia exports the second largest volume and value of palm oil products globally after Indonesia. Despite government policies to increase income per capita in order to hasten the progress towards [income country] by 2020, Malaysia's growth in wages has been very slow, lagging behind the OECD standard.
Malaysia consistently achieved more than 7% GDP growth along with low inflation in the 1980s and the 1990s. In 1991, former Prime Minister of Malaysia, Mahathir bin Mohamad outlined his ideal, Vision 2020 in which Malaysia would become a self-sufficient industrialised nation by 2020.
It offers capital guaranteed mutual funds such as Amanah Saham Bumiputera and Amanah Saham Wawasan 2020 which are open only to Malaysian and in some cases, Bumiputeras. ===Government influence=== Although the federal government promotes private enterprise and ownership in the economy, the economic direction of the country is heavily influenced by the government through five years development plans since independence.
As of 10 March 2020, the Ringgit is traded at MYR 4.19 at the US dollar. The ringgit has not been internationalised since September 1998, an effect due to the 1997 Asian financial crisis in which the central bank imposed capital controls on the currency, due to speculative short-selling of the ringgit.
Malaysia was also included in the top 10 medical tourism destinations list by CNBC. In 2014, Prince Court Medical Centre, a Malaysian hospital, was ranked the world's best hospital for medical tourists by MTQUA. The Malaysian government targets to hit RM 9.6 billion (US$3.2 billion) in revenue from 1.9 million foreign patients by 2020. ===Oil and gas=== Malaysia has a vibrant oil and gas industry.
As of 2021, Malaysia is one of the major producers of solar panels for the international market, but paradoxically it has yet to fully capitalize on this for domestic electricity generation. Malaysia is ranked no.
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