Malaysia Country Report

As the world prepares to move into the twenty-first century, many nations are rapidly developing their agricultural and manufacturing sectors. As these burgeoning industries become a larger part of the nation’s economy, the nation finds its population restructuring and streaming to the areas of growth. Just as the people are trying to compete for their survival, the nation is fighting its way to center stage in the world economy. The development of these countries is tied to the world’s economy, as is evidenced by the uneven development within each of the nations. Malaysia’s growing role in the world economy is likewise intertwined with the development of its industrial regions.
Malaysia’s economy is centered on the production of rubber, timber, tin, and petroleum. Almost all of the country’s production of rubber and palm oil is raised solely for export. Historically, rubber was the dominant export, but now it is palm oil in terms of square miles used to cultivate it. Rubber, like “no other major commodity in the world,” was subject to “dramatic and rapid shifts in sources and derivation of demand” (McHale, 9). Thus, Malaysia has been moving away from its complete dependency on rubber for its income, and begun to diversify its economy. The peninsula’s forests produce approximately 1,100,000 tons of timber each year, and about two thirds of that is exported. Up to 1965, Malaysia was producing 40% of the world’s tin supply. However, with its quickly diversifying economy, Malaysia no longer depends on tin as a substantial part of its income. Small amounts of other useful minerals can be found all over Malaysia, as it is a naturally abundant land.
Its major exports are electronic equipment, machinery, petroleum, palm oil, rubber, timber, and tin. The biggest trading partners are Japan, the United States, and Singapore. Other trading partners include the United Kingdom and Russia. About two thirds of the land on the peninsula is devoted to the cultivation of rubber, and Malaysia produces more than a third of the world’s rubber. Tin is the second largest export, and has been mined on the peninsula since the 17th century. Since Malaysia’s exports are mostly raw materials, and raw materials are susceptible to wildly fluctuating market prices, Malaysia’s economy is easily affected by market swings. For example, just a one cent fall in the price of rubber would decrease Malaysia’s export earnings by $22,000,000 in one year (Britannica Encyclopedia, 692A). Such fluctuations would damage its growing economy, and until recently Malaysia has been slow in catching up with the industrial world.
Recently, in an effort to balance the economy, Malaysia has put more emphasis on the manufacturing of semiconductors for computers in an effort to lessen its reliance on agriculture and mining. Growing manufacturing sectors include air conditioners, cement, rubber, textiles, and food processing. The manufacturing sector has doubled its economic impact in the last two decades, showing definite growth and progress as Malaysia grows more important to the global economy.
Major imports are food, petroleum, non-electrical machinery, electrical equipment, chemicals, steel, and textiles. Food, drinks, and tobacco comprise a quarter of the imported goods. Manufactured goods are another quarter, and machinery and equipment are just slightly less than twenty five percent (Britannica Encyclopedia, 692A).
The country’s economy is usually quite balanced—in 1990 its exports earned $45.6 million, while its imports totaled $47.1 million. Almost a third of Malaysia’s international trade passes through Singapore, the gateway of Southeast Asia. Malaysia achieved such balance by concentrating on exports and diversifying its products to include petroleum and natural gas. Previously, the reliance on rubber and timber was susceptible to too much market fluctuation, and Malaysia has strengthened its economic base by expanding its markets.
Malaysia has among the best economies of Southeast Asia. From 1986 to 1990, its GDP grew at 4.2% per year. This was because of the concentration on exports in the development of its economy. It has also developed its palm oil exporting business to be the leader in the world.
Peninsular Malaysia is the most developed area of the nation and comprises most of the country’s GDP. However, in that prosperous region, economic and industrial development is uneven. Most of the plantations, mines, ports, and cities are within thirty miles of the west coast. Manufacturing is concentrated in the Kuala Lumpur