The Economy

Over the last decade, the Malaysian economy has undergone rapid expansion, with the emphasis shifting from agriculture to manufacturing.  More changes are envisaged for the millennium with the nation set to move from the industrial into the information age.  The year 2020 is being projected as the target for the nation to achieve the “developed-nation” status.

Malaysia has long been a leading producer and exporter of commodities such as natural rubber, palm oil, cocoa, timber, pepper and tin, and is a net exporter of petroleum and natural gas.

Today, Malaysia is recognised as one of the world’s leading exporter of electronic semiconductors, room air-conditioners, audio-visual equipment, and products based on the country’s natural resources such as rubber-dipped products (gloves, threads, catheters), palm oil products (soaps, margarine, oleo-chemicals) and timber products (plywood, mouldings, furniture).

During the past two decades form 1971 to 1990, the Malaysian economy grew at an average rate of 6.7% annually.  Growth was especially impressive during 1995 – 1997, with growth rates averaging 8.7%.  Inflation was at the same time kept down to between 3% to 4% yearly.

The Malaysian Ringgit (RM) is issued in notes from RM100 to RM1, and coins from RM1 to one sen.  Major credit cards are accepted in cities and large towns.

A. Manufacturing

The manufacturing sector is the star performer of the Malaysian economy with a growth rate of 14.5% in 1995 and contributions of 33.1% to GDP and 79.6% to total exports.  This sector provided the main impetus for growth during the past two decades and is expected to expand at a rate of 10.5% annually during the 1990s.  This rate of growth would raise its share in GDP to 37.2% by the year 2000 while manufactured exports are projected to account for 81.8% of total exports.

The country’s current emphasis is on high technology, capital-intensive and skills-oriented industries.  The government encourages direct foreign investment with its advantages of capital inflow, technology and marketing know-how.  At the same time, it is promoting the development of an indigenous industrial base for long-term sustainable industrialisation.

B. Agriculture

Agriculture, the traditional mainstay of the Malaysian economy, is still a major sector accounting for 13.6%of GDP and 13.1% of exports in 2000.  The sector is projected to grow at 3.5% annually during the first ten years of the new millennium.  Agricultural development is now geared towards commercial cultivation, the production of high value food crops (especially fruits and vegetables), floriculture, livestock and fisheries the further development of agro-based industries, and the expanded integration of agriculture with the manufacturing sector.  The National Agriculture Policy promotes the generation of new high yielding varieties, clones and breeds, and new products and processes; and increased mechanisation of farming activities.

C. Construction

The construction sector recorded its seventh year of double-digit growth in 1995 with an increase in value added of 15.0%.  This reflected strong expansion in construction activities with the implementation of several on-going and new large infrastructure projects as well as the continued expansion in the construction of residential, commercial and industrial buildings.

1995 saw the continued implementation of several large on-going projects such as the Kuala Lumpur International Airport, Second Link to Singapore, Shah Alam Expressway, Light Rail Transit and Commonwealth Games Village.  Construction work has started on Putrajaya, the federal government’s new administration centre located 25 km south of Kuala Lumpur.  The RM20 billion Putrajaya project covers 4,400 hectares and is expected to be developed over the next 10 years.

Other projects in the pipeline are the Bakun Hydroelectric Dam. Express Rail Link Project, East-West Highway and South Klang Value Expressway.

D. Oil And Gas

The oil and gas sector has emerged as the nation’s top primary commodity export earner since Malaysia’s fields began production in 1978.  The country’s proven reserves of oil stand at 3.3 billion barrels, while its proven gas reserves total 67.7 trillion standard cubic feet.  Malaysia’s first LNG plant, located in Bintulu Sarawak, has expanded its capacity to 14 million tonnes a year, making it the world’s largest LNG complex.  A second plant will be commissioned in Bintulu in 1996 with a capacity to produce 7.8 million tonnes of LNG yearly.

E. Vision 2020

Malaysia aspires to become a fully developed country by the year 2020.  Priorities have been set and the development path mapped out by the government to make sure the objectives of Vision 2020 are met.

The manufacturing sector is expected to spearhead the drive to fulfil this vision.  The challenge will be for the private and public sectors to work together to establish a strong national entrepreneurial base that will carry the nation forward into the 21^st century.  The main thrusts would be to:

·         Develop a strong science and technology base to enhance industrial competence and competitiveness

·         Develop indigenous technology by increasing the nation’s capability to adopt. Adapt and improve technology through R&D

·         Develop a pool of skilled manpower capable of handling new and emerging technologies

·         Ensure that environmental conservation and protection are built into the overall economic development process

Develop a positive culture based on integrity, discipline and diligence to equip Malaysians for high productivity and commitment to quality.