Current Economic Status Of Malaysia Essay Research

Current Economic Status Of Malaysia Essay, Research Paper

Private Sector PopulationThe outstanding characteristic of Malaysia’s population today is its highly variegated ethnic @mix makers it one of the prime examples of a multi-racial society in the whole world. The @multi-ethnic character of Malaysia’s population has come into being over the course of the @last 150 years. Broadly speaking Malaysia’s ethnic groups fall into two main categories: @those with culture affinities indigenous to the region and to one another, who are classified as bumiputera; and those whose cultural affinities lie outside. Malaysia is a multi-cultural nation of friendly, warm hearted people. It has population of 17.9 @million people. Penisular Malaysia has 14.6 million people while Sabah and Sarawak have 3.3 @million people. Agriculture, Forestry, FishingThe agricultural sector (including forestry and fishing) plays an important role in the economy although its share of the GDP has declined from 34 percent in 1987 to 18.6 percent in 1992. This sector contributed about 29 percent to Malaysia’s total exports and employed about 30 percent of the total labour force. Malaysia is the world’s leading producer of natural rubber and a major producer of many other exportable commodities including palm oil, cocoa and pepper. Other important cash crops include coconuts, tea and pineapples. The principal subsistence crop is rice. However, Malaysia is still not self sufficient in rice and local production accounted for only about 80 percent of domestic requirements. The National Padi and Rice Authority (LPN), the sole importer of rice, imported rice from Thailand, Pakistan, India and Australia. Malaysia also has substantial supplies of tropical hardwoods. Sarawak is the main timber producer (43 percent), followed by Sabah (26 percent) and Peninsular Malaysia. After three consecutive years of decline, there was an increase in marine fish landings in 1987. This was due to the introduction of incentives by the government to encourage deep sea fishing activity. The Malaysian is also promoting the development of aquaculture centres to supplement diminishing marine resources in coastal areas and to increase fishermen’s income. MiningThe mining sector’s share of GDP has remained in the region of 9-10 percent over the past years. Malaysia is currently the world’s fourth largest producer of tin, accounting for about 15 percent of world production. Malaysia’s other minerals include copper, which is mined in Sabah and relatively small reserves of iron and bauxite. The main export markets for Malaysia’s tin were the Netherlands, Japan and USA. Exports of tin amounted to M$684 million in 1991 compared to M$902 million in 1990. ManufacturingThe manufacturing sector has replaced the agricultural sector to be the leading sector in the Malaysian economy since 1987. It accounted for 26.8 percent of GDP in 1992 and employed about 17 percent of the working population. The Malaysian government has accorded top priority to this sector. Under the Sixth Malaysia Plan (1991-95) the manufacturing sector is expected to account for 32.4 percent of Malaysia’s GDP by 1995 and it will maintain its position as the largest sector of the economy. Output of the manufacturing sector is projected to increase at an annual average rate of 7.9 percent during 1986-95 and the leading growth sectors are expected to be electrical and electronic products, textiles, machinery and transport equipment and basic metal products. Peninsular Malaysia accounts for about 90 percent of the country’s total manufacturing output. Malaysia is currently the world’s largest producer of semi-conductors and the second largest producer of room air-conditioners. General Description of Economy Malaysia has a relatively open, market-oriented economy; real GDP has grown between 6 and 8 percent per year from 1964-1984. Since independence in 1957 the Malaysian economy has shown sustained growth and has diversified away from the twin pillars of the colonial economy, tin and rubber. In 1985-1986, the collapse of commodity prices led to Malaysia’s worst recession since independence, with real GDP falling one percent. Since then, the economy has rebounded, led by strong growth in both foreign and domestic investment and exports of manufactures, with real GDP growing at an average rate of over 8percent. In 1995 real GDP growth reached nearly 9.6 percent. After a decade of such sustained economic growth, during which real GDP increased in excess of 8% annually, Malaysia’s economy at mid-year 1998 was headed for recession. Real GDP contracted by 1.8% in the first quarter, year-on-year, the first quarterly contraction since 1985. By years end the government announced that the GDP had contracted by nearly 2%. Malaysia since July 1997 has been buffeted by the economic and financial downturn that currently plaques most of Asia. Despite stronger fundamentals relative to its neighbors, growing investor concerns over excessive commercial property investment, high levels of domestic corporate debt, government-funded megaprojects, and the lack of transparent policies regarding support for troubled firms contributed to record declines in the local stock market and value of the Malaysian currency. As of mid-July 1998, shares on the Kuala Lumpur Stock Exchange were trading at 9-year lows, with the KLSE Composite Index well below 450. The ringgit has slid from RM2.5 to roughly RM4.2 against the US dollar in