Key facts and figures
Capital city: Kuala Lumpur
Currency: Malaysian ringgit (formerly dollar), approx 3.5 ringgits to the USD
Government: Barisan Nasional (National Front), a broadly conservative coalition government, led by Prime Minister Najib Tun Razak
Population: 25,715,819 (July 2009 est.)
Population growth rate: 1.723%
GDP - real growth rate: -2.9 (2009)
Economy
Malaysia has one of the strongest economies within Asia Pacific. In 2009 it delivered the ninth highest GDP for the region, behind wealthier neighbours including Japan, India, Australia and China. And, despite the fact that its economy shrank by 6.2% year-on-year at the beginning of 2009, it has since shown signs of stabilisation and is expected to grow throughout 2010 – making it one of the key emerging markets within Asia Pacific. So what makes its economy tick?
Historically Malaysia has been a producer of raw materials: rubber, palm oil and timber in particular. Its agricultural and manufacturing industries have been supported by significant reserves in oil and gas – Malaysia is one of the top 30 exporters for oil and one of the top ten exporters for gas in the world. Indeed, the government receives approximately 40% of its revenue from oil exports.
Despite these natural resources, the government has pursued a successful long term policy of moving away from its reliance on processing and manufacturing towards promoting more strategic industries, including medical technology and pharmaceuticals and, in particular, ICT and electronics. These last two sectors are currently experiencing considerable growth.
ICT
In its ‘Malaysia Factsheet’, IDC predicts steady growth across the services, hardware and software sectors of the ICT industry, with software seeing the biggest growth at around 25% over the next four years. That said, the hardware market still commands the largest share and will be the driving force behind the sector’s growth.
Malaysia’s ICT is well established, with more than 16 million internet users, widespread internet availability (better than either India or China) and 98% mobile penetration. The incumbent telecommunications company, Telekom Malaysia, currently holds around 90% market share.
The country is also seeing a marked growth in e-commerce activity, with a significant rise in the use of online payments. Unlike other emerging markets, it has advanced instruments such as e money already in place, making it better suited than either India or China to support this growth.
The move towards ‘Green IT’, which has become prevalent in much of the West, has not been seen in Malaysia so far. But, as budget restrictions begin to impact, it is likely that the cost savings offered by green IT solutions, such as virtualisation, will become appealing and take-up may begin to grow.
Electronics
Malaysia has built a fine reputation on the quality of its electronics and is known in particular for its manufacture of computer components. Electronics exports account for 40% of the country’s overall exports yet this dependency caused dramatic losses to the economy when the global financial crisis hit and the US – one of its biggest importers – cut its demand. This has led to a government-driven policy of encouraging foreign investment and domestic demand.