Malaysian Economy

Readers Question: Evaluate the strength of Malaysia to attract foreign investment based on the performance of Malaysia’s economic variables.

A few years ago, I had a very nice holiday in Malaysia; 2 nights in Kuala Lumpar and 3 weeks in Kuantan. However, I can’t claim to be an expert on the Malaysian economy. This is some of the more theoretical ideas based on a cursory knowledge of the economy.

From 1988 to 1997, the economy experienced a period of broad diversification and sustained rapid growth averaging 9% annually.

Growth of 9% a year suggests a very good economic performance. It helped Malaysia to become the 34th ranked country in terms of GDP in PPP. Broad diversification means the economy was able to branch out into new sectors. For example, there has been a boost in the manufacturing sector. Manufacturing share of GDP has increased to 30%. Agriculture and mining dropped as a % of GDP. Foreign investment tends to focus on manufacturing rather than agriculture which has less chance of growth

By 1999, nominal per capita GDP had reached $3,238. New foreign and domestic investment played a significant role in the transformation of Malaysia’s economy. Manufacturing grew from 13.9% of GDP in 1970 to 30% in 1999 , while agriculture and mining which together had accounted for 42.7% of GDP in 1970, dropped to 9.3% and 7.3%, respectively, in 1999. Manufacturing accounted for 30% of GDP (1999). Major products include electronic components — Malaysia is one of the world’s largest exporters of semiconductor devices — electrical goods and appliances.

Factors That Affect Investment Levels

• Wage Costs - Malaysia relatively low
• Infrastructure - Have been many infrastructure improvements such as new international airport
• Privatisation of Industries
• Skills of workforce

• Malaysian economy at Wikipedia