Business Environment in Malaysia
The growth rate of GDP remained high until the first half of 2008 (6% in average), after that, it suffered the effects of the global crisis and was strongly reduced in 2009 (-1.7%). The effects of the crisis were softened by a important budgetary stimulus plan. The growth, estimated at 6.7% of the GDP, bounced back in 2010, with the support of the dynamic private consumption and the recovery of domestic investment.
The budgetary deficit has a tendency to increase, mainly due to the need of compensating the weakness of private investment and also because the public debt has highly increased. To face this problem, the government has launched a program to perform a progressive revision of subventions in order to reduce its expenditures. The objective is to bring the budget deficit to 3% of GDP by 2015. In addition, the "New Economic Model" (NEM) intended to promote innovation and to increase production profits, was launched together with the tenth five-year plan (2011-2015).
Malaysia has one of the highest living standards in South-East Asia and a very low unemployment rate. However, the objective of NEM is to double the income per capita from now until 2020. Despite the government's long-term efforts to improve the economic situation of native Malays, the population of Chinese origin continues to maintain its traditional dominance.
|GDP (billions USD)||192.96||237.96e||247.78e||267.75e||288.98|
|GDP (Constant Prices, Annual % Change)||-1.7||7.2e||5.5e||5.2e||5.1e|
|GDP per Capita (USD)||6,917||8,423e||8,624||9,164e||9,725|
|General Government Balance (in % of GDP)||-5.8||-5.6e||-5.6e||-4.9||-4.6|
|Inflation Rate (%)||0.6||1.7e||2.8||2.5||2.4|
|Unemployment Rate (% of the Labor Force)||3.6||3.3e||3.2e||3.1e||3.0e|
|Current Account (billions USD)||31.99e||32.77||33.67e||34.72||-|
|Current Account (in % of GDP)||16.7||15.4e||14.7||14.0e||-|
Source: IMF - World Economic Outlook Database
Note: (e) Estimated Data
Main Sectors of Industry
Agriculture employs around 15% of Malaysians and contributes to 10% of the GDP. Malaysia is ranked amongst the world's main producers of palm oil, cocoa, and rubber. The country is also one of the main exporters of tropical wood. Malaysia has successfully developed its economy based on raw materials (the export of rubber and tin, significant reserves of oil and gas, copper and bauxite).
Industry contributes to around 40% of the GDP. Malaysia is one of the world's largest exporters of semi-conductor devices, electrical goods and appliances, and the government has ambitious plans to make of Malaysia the main producer and developer of high-tech products, including software. Malaysia is a major outsourcing destination for components manufacturing after China and India. The country has attracted significant foreign investments which have played a major role in the transformation of Malaysia's economy.
The tertiary sector accounts for nearly half of the GDP, which is due mainly to the tourism sector. Malaysia has become one of South-East Asia's major tourist destinations.
|Breakdown of Economic Activity By Sector||Agriculture||Industry||Services|
|Employment By Sector (in % of Total Employment)||14.8||28.5||56.7|
|Value Added (in % of GDP)||9.5||44.3||46.2|
|Value Added (Annual % Change)||0.4||-6.6||1.9|
Source: World Bank - Last Available Data.
|Malaysian Ringgit (MYR) - Average Annual Exchange Rate For 1 USD||3.79||3.67||3.44||3.34||3.52|
Source: World Bank
Indicator of Economic Freedom
- Moderately free
- World Rank:
- Regional Rank:
Foreign Trade in Figures
Malaysia is well known for its openness to international trade. Foreign trade represents more than double of the country’s GDP.
The trade balance is structurally positive. The global economic crisis, even if it caused a reduction in exports, it did not affect the trade balance since imports also dropped on a larger proportion than exports.
The country mainly exports electric and electronic equipment, machinery, mineral fuels and hydrocarbons, animal and vegetable oils and fats, wood and charcoal. The country mainly imports electric and electronic equipment, machinery, fuels and oils, plastic products, iron and steel. Its main trade partners are the United States, Singapore and Japan, followed by China and the European Union.
|Foreign Trade Indicators||2006||2007||2008||2009||2010|
|Imports of Goods (million USD)||131,152||146,982||156,896||123,832||164,733|
|Exports of Goods (million USD)||160,676||176,211||199,516||157,433||198,801|
|Imports of Services (million USD)||23,421||28,475||30,060||27,257||32,040|
|Exports of Services (million USD)||21,572||29,375||30,283||28,727||32,478|
|Imports of Goods and Services (Annual % Change)||8.1||5.9||2.2||-12.3||-|
|Exports of Goods and Services (Annual % Change)||6.6||4.1||1.6||-10.4||-|
|Imports of Goods and Services (in % of GDP)||93.9||89.4||80.3||74.9||-|
|Exports of Goods and Services (in % of GDP)||116.5||110.0||103.3||96.4||-|
|Trade Balance (million USD)||37,441||37,727||51,261||40,253||-|
|Trade Balance (Including Service) (million USD)||35,472||37,880||51,313||-||-|
|Foreign Trade (in % of GDP)||210.5||199.4||183.6||171.3||-|
Source: WTO - World Trade Organization ; World Bank
Main Partner Countries
(% of Exports)
|United Arab Emirates||1.8%|
|Other partnersClose extended list||47.7%|
(% of Imports)
|United Arab Emirates||1.4%|
|Other partnersClose extended list||45.3%|
Sources of General Economic Information
Ministry of Finance
Ministry of International Trade and Industry
- Statistical Office
Department of Statistics Malaysia
- Central Bank
Central Bank of Malaysia
- Stock Exchange
Kuala Lumpur Stock Exchange
- Search Engines
- Economic Portals
- Executive Power
- The head of state is the Paramount Ruler, commonly referred to as the King. The King is selected from nine hereditary rulers (called Sultans) of the Malay states to serve a five-year term; the other four states (which have titular Governors) do not participate in the selection. Following legislative elections, the leader of the party that wins most seats in the lower house of the parliament becomes the Prime Minister to serve a five-year term, subject to approval by the King. The Prime Minister is the head of the government and holds the executive powers which include implementation of the law and running the day-to-day affairs of the country . The Cabinet is appointed by the Prime minister from among the members of parliament with the consent of the Paramount Ruler.
- Legislative Power
- The legislature in Malaysia is bicameral. The parliament consists of: the Senate (the upper house) having 69 seats, out of which 43 appointed by the Paramount Ruler and 26 appointed by the 13 state assemblies to serve six-year terms; and the House of Representatives (the lower house) having 219 seats. Its members are elected by popular vote to serve five-year terms. The King can dissolve parliament if he wishes but usually only does so upon the advice of the Prime Minister. In general, more power is vested in the executive branch of government than in the legislative. The legislative power is divided between federal and state legislatures. Each state has its own government, a cabinet with executive authority, and a legislature that deals with matters not reserved for the federal parliament. The people of Malaysia have limited political rights.
- Main Political Parties
- Malaysia is a country with one dominant party. The UMNO (National Organization for a United Malaysia) is the largest political party in the country. It has ruled the country uninterruptedly since its independence from the UK in 1957. UMNO is known for being a major proponent of Malaysian nationalism and Islamic ideology. UMNO rules the country through a coalition called BN (National Front); its other two prominent members are:
- MCA (Malaysian Chinese Association) – a party of Chinese who are citizens or long-term residents of Malaysia;
- MIC (Malaysian Indian Congress) – representing the Indian community in Malaysia;
- Opposition parties are allowed, but are widely considered to have no real chance of gaining power.
- Current Political Leaders
- Paramount Ruler: Sultan MIZAN Zainal Abidin (since 13 December 2006)
Prime Minister: Mohamed NAJIB bin Abdul Razak (since April 2009) – UMNO, heading the BN coalition government
- Next Election Dates
- Paramount Ruler: December 2011
Indicator of Freedom of the Press
- World Rank:
- 1 place up compared to 2008
Indicator of Political Freedom
- Partly Free
- Political Freedom:
- Civil Liberties:
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