Malaysia Economy

Malaysia Economy

Key Points About Malaysia Economy

Hi! Edwin here to discuss the Malaysian Economy.

Malaysia Economy Then and Now

“One small factory with atap (zinc) shade, under two coconut tree”. No kidding on this one. This was actually an impression made by some of my foreign associates. “Where is Malaysia?” is another comment made by most Americans. Not any more! When they toured a state-of-the-art factory owned by a Malaysian Public listed company, “Wow” was their understatement on how Malaysia has progressed and how little their know about Malaysia (largely due to non-existence of genuine information websites such as Malaysia Information Site).

Natural Resources

Malaysia is the 28th largest economy in the World in 2008. As a matter of fact Malaysia produces and sells both petroleum oil and palm oil. Mind you, Malaysia is the largest producer of palm oil (albeit most plantation acreage is situated in Indonesia and Thailand (our neighbours). Malaysia is also well know for its rubber industry as they are the third largest rubber producing country behind Malaysia’s neighbours again- Thailand and Indonesia. Plenty of sunshine and never a drought. Water supply is of abundance. Excellent for agriculture and a secret to a thick virgin Rainforest for Malaysia ecotourism!

Malaysia Oil and Gas Industry

Malaysia is blessed with plenty of oil reserves. Malaysian oil and gas is mainly run by the national oil company, Petroliam Nasional Berhad (Petronas). Petronas profits are paid to the Malaysian Government as a source of Malaysia Federal Government revenue which represents 40-50% of total Malaysia Federal Governement revenue. Major multi-national companies such as ExxonMobil and Royal Dutch Shell are involved in production sharing contracts with Petronas.

Privatization of State Owned Entities

Malaysia’s rapid economy growth is largely credited to privatisation of inefficient state owned enterprises. These big enterprises are called Government-linked Companies (GLC) and they control palm oil production, airline, airports, telecommunication, electricity, gas as well as cars. These Malaysian privatised companies are Public listed on the Malaysian Stock Exchange (also known as Bursa Malaysia) and most of them are profitable. I have made a list of these companies on the Malaysian Stock Market section on this Malaysia Information Site.

1997 Asian Financial Crisis

It is important to remember the 1997 Financial Crisis which hit Malaysia because the 1997 Financial Crisis has caused drastic changes to Malaysia financial policies. It is soon learnt that speculative short selling if the Ringgit was the culprit (the Ringgit was freely traded around the world at that time) and this loophole is prevented when the Ringgit is pegged against the US Dollar. This fixed exchange rate was later abandoned in 2005 in favour of a managed floating system. Today, the Malaysia Forex Trading is highly regulated and only licensed banks are authorised.

Subsidies and Price Controls

Price of essential goods are regulated to control inflation as well as the liveability of people resident to Malaysia. Malaysian subsidised and price controlled goods include cooking oil, petrol, flour, rice and sugar.

Doing business in Malaysia

According to World Bank, Malaysia ranks 3rd in the World in getting credit or funds and 24th in Ease of doing business in Malaysia. The current Government lead by Prime Minister Dato’ Sri Najib Razak has established special task forces aimed to simplified the procedures and ease business restrictions to attract foreign investments. Highlights include easing restriction and requirement to hire expatriates who intend to work in Malaysia

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