4Malaysia - A glanceFull country name: Federation of Malaysia 馬來西亞聯邦 Area: 329,750 sq km (204,445 sq mi) Population: 25 million Capital city: Kuala Lumpur (pop 1.5 million) People: 50% Malay, 33% Chinese, 9% Indian,plus indigenous tribes such as Orang Asli and Iban Language: Bahasa Malaysia, English, Chinese dialects, Tamil, indigenous dialects Religion: 52% Muslim, 17% Buddhist, 12% Taoist, 8% Christian, 8% Hindu, 2% tribal Government: Parliamentary monarchy GDP growth: 4-5% (2002), 6-6.5%(2003)Per capita income: 2002 RM14098(US$3710),Inflation rate: 1.9%Unemployment: 3.5%hibiscus
5- HistoryFirst Indians were lured to the Malay Peninsula and arrived in Kedah sometime around 100 BC, Indian traders arrived in search of gold, aromatic wood, and spices.Hindu Kingdoms 100 BC ADAboriginal Malays (Orang Asli) began moving down the Malay peninsula from south-western China about 10,000 years agoAncient Malaysia:35,000 BC BCRule under the Cambodian-based Funan, the Sumatran-based Srivijaya and the Java-based Majapahit empires, before the Chinese arrived in Melaka in 1405.Islam arrived in Melaka at about the same time and spread rapidly.Malacca was founded in 1400by a fleeing Palembangprince named Parameswara.Perfectly located for trade,within 50 years it was themost influential port in S.E. Asia.Islam and the Golden Age of Malacca AD AD
6The Japanese overran Malaya in WWII Colonial Malaysia1511 AD ADMelaka's wealth soon attracted European powers, and the Portuguese took control in 1511, followed by the Dutch in The British established a thriving port in Penang in 1786 and took over Melaka in 1795British colonised the peninsula when tin and rubber were discovered and developed, British also brought large numbers of Indians into the country, altering the peninsula's racial mix.Sarawak came into British hands via the adventurer Charles Brooke in 1841 after suppressing a revolt against the Sultan of Brunei and the North Borneo Company administered Sabah from Britain took formal control of both Sabah and Sarawak after WWII.The Japanese overran Malaya in WWIIIndependence and Onward: 1957 – present day Malaya achieved independence in Sabah, Sarawak and Singapore combined with Malaya to establish Malaysia in 1963, but two years later Singapore withdrew from the confederation.1963 had the 'Confrontation' with Indonesia.1969, violent riots broke out between Malays and Chinese since then all races lived in relative peace together
7Political System (http://www.windowstomalaysia.com.my/gov/20.htm) The Federation of Malaysia is a constitutional monarchy with a system of parliamentary democracy. Malaysia is a federal one, with each (13) state having its own legislature, but power is centralized in the national government. General elections are held every five years. The Barisan National, is a coalition of various political parties with the main party being UMNO, which continues to rule the government.Malaysia Political Parties:国家阵线 Barisan Nasional国家马来人统一机构(巫统) United Malay National Organisation (UMNO)马华公会 Malaysian Chinese Association (MCA)人民进步党 People's Progressive Party of Malaysia (BARU)泛马伊斯兰教党 Pan Malaysian Islamic Party (PAS)民主行动党 Democratic Action Party (DAP)人民运动党 Malaysian People's Movement Party人民党 Parti Rakyat Malaysia社会党 Socialist Party of Malaysia沙巴进步党 Sabah Progressive Party (SAPP)沙巴民主党 Parti Liberal Demokratik-SABAH (LDP)沙巴团结党 Parti Bersatu Sabah (PBS)砂劳越人民联合党 Sarawak United People’s Party (SUPP) )联合人民正义党 Parti Keadilan Nasional印度人国民大会党 Malaysian Indian Congress
8The Monarch - Head of State The Malaysian monarchy is a unique systemas its King is rotational elected every 5 yearsand is not hereditary.Here the King or the ‘Yang di-Pertauan Agong’ iselected every five years from 9 royal states.Unlike the traditional system where the Monarchascends the throne through lineage and remainsuntil his abdication or death.Royal RegaliaRoyal Head Dress(Royal Short Keris)Sultan of Perlis was elected as the 12th Yang di Pertuan Agong of Malaysia on 25th April 2002.(Royal Tiara)
9Prime Minister Official & Cabinet Ministers of Malaysia Head of GovernmentPrime Minister Official &Cabinet Ministers of MalaysiaPERDANA PUTRA BUILDING (PRIME MINISTER'S OFFICE)Putrajaya the New Government CityMalaysia has undergone tremendous growth and prosperity, and has arguably made significant progress in race relations. Many attribute the country's success to the dynamic leadership of Prime Minister Mahathir bin Mohammed, who has led the country since 1981. He is scheduled to step down on the end of October 2002 to finish the longest 22-years government administration among the Asia.
10Senators, whether appointed or elected, serve a six-year term,
12House of Representatives are elected for a 5-year term in a single member constituency system
13Religions Islam is the national religion, but freedom of religion is guaranteed. Malays are usually Muslims. Chinese are predominately Taoists and Buddhists, some are Christians. Majority Malaysia's Indian are mainly Hindu, a small percentage are Muslims, Christians and also Sikhs. East Malaysia have converted to Christianity although others still follow their animist traditions.
14Cultures have been meeting and mixing in Malaysia The Malay people and the Islam in Malaysia:Though Islam originates from Saudi ArabiaThe Malays do not accept all cultural values from the Arab, there is a difference between the Islam how it is practised in the Arab States in Middle East (so-called "desert-Islam") and in Malaysia, the "tropical Islam".Moslem New Year - Ma'al Hijrah / Awal Muharram (March)"Selamat Tahun Bahru!" - A happy New Year!Malaysia Fest is a two-week affair held in SeptemberHari Raya Puasa: (Ramadan or festival of break-fast-time). It is a celebration marking the end of Muslim month of fasting and abstinence. (October- November)Hari Raya Haji - the pilgrimage to Mecca (February)
16Opera, Lion Dance and others Chinese Culture in MalaysiaChinese New Year,Dragon Boat Festival,Moon-cake FestivalOpera, Lion Dance and others
17Indian’s Thaipusam: a day of consecration to the Hindu deity Indian’s Thaipusam: a day of consecration to the Hindu deity. A feature is carrying a frame decorated with colorful papers, tinsels, fresh flowers, and fruits as a form of penance (January/February)The Panguni Utthiram FestivalThis is an auspicious date for worship on the fullmoon day of the Tamil month Panguni (March-April).Indian New Year (April)
18Guidelines on the Do's & Don'ts Take off your shoes when entering a placeof worship or a Malaysian home.Impolite to cross your legs with shoes facing other person.Don’t point your finger to others in most situationAvoid liquor and dishes which contain pork to serve Muslims.If your guest is an Indian Hindu, avoid serving him beef.Use right hand to shake hands, but kissing hand or cheek should be avoided. Muslim women prefer not to shake hands, a simple nod and smile is sufficient.Visitors should dress modestly in the conservative rural areas.Impolite to wear shorts to a place of worship or a function, except beach party.
19Some Malay expressions Terima kasih (Thank you.) Sama-sama (You're welcome)Tolong (Please!)Apa khabar? (How are you?) Selamat pagi (Good morning) Ma’afkan saya (Excuse me/I'm sorry)Berapakah harganya? (How much is it?)Tak apa (It's okay)
20Malaysia Special Tropical Fruits and Agriculture "The King of the fruits“Durian"The Queen of the fruits"MangosteenJackfruitcocoaRubberRambutanPalm Oil
21Malaysia Economic System The core of Malaysian economic system is free market with private enterprises.Government also plays an active role in development planning to promote balanced economic growth and social progress.Malaysia is essentially a trade-oriented and open economy with exports and imports for over 176% of the GNP in the early 1990s. Exports play a dominant role and important determinant of the state of economic activity over the short and medium terms.
22Malaysia Economic Development and Policies Phase 1: 1957~1970 After IndependencePolicy: Self-sufficiency, open, market-oriented economy with min. interventionsRubber and Tin are the major products (Shared 85% of total exports)1st and 2nd 5-year economy plans:Reforms on land and diversify agricultural outputs,i.e. palm oil, cocoa, pepper, timber, etcRestructure the reliance on rubber and tin production (colonial industries)Encourage manufacturing by using Import-substitution policyShares of GDP (%)195519601965197019751980198519901994Agriculture40.240.531.530.827.722.820.718.714.8Mining6.36.19.04.610.010.49.87.5Manufacturing8.28.613.416.420.019.626.9Services & others45.344.849.151.349.547.249.346.148.8Source: Malaysia Statisitcs Dept.
23Rural development plan: (1) Diversify agriculture products- introduce technology to produce industry crops,i.e. palm oil, coco, pepper, coconut, coffee, etc.- provide agricultural training(2) Setup the production standard for rubber to keepthe leadership of productions and exports(3) Green reforms among rural areas(4) Centralize purchase price of major agriculture(5) Land reform:Setup FELDA to provide to farmers, 4 arcs for each migrated farmerto new areas. Use 3.2 arcs for rubber and 0.8 arc for others.Also provide financial support and fertilizer to farmers until harvesting(5a) Later years introduce palm oil planting and encourage cooperate andmerge to large farming.
24New Economic Policy (NEP): Phase 2: 1971~ 1990: Authoritarian PolicyNew Economic Policy (NEP):Increase overall income, increase job opportunities, poverty eradication- Directly subsidies and preferential to Malays,- Encourage Malays to establish business,- Enlarge the education opportunities for Malays(2) Income re-distribution and balance economic power among races- Restructure employment ratio: 54% Malay, 35% Chinese, 10% Indian,- Restructure ownership shares to 30: 40: 30 for foreign, non-Malay and Malay- Target 30% of companies are owned by Malays in 1990(3) Export-oriented policy:- Free Trade Zones (FTZs), Export process Zone (EPZs),- Exemption on Licenses manufacturing warehouse (LMWs)- 8 yrs Tax Free for foreign investors- Expand the petroleum industryManufacturing sector accounts for 30.4% of GDP, and make up 86.5% of the country's total exports. The world's largest producer of palm oil, rubber and tin, also one of the world's leading exporters of semiconductor devices, computer hard disk drives, audio and video products, and room air-conditioners
25Income differentials ratio by race and locations in Malaysia 1957/81970197619841989Chinese/Malay2.152.292.281.761.70Indian/Malay1.561.281.29Chinese/Indian1.261.301.461.371.32Urban/Rural1.8188.8.131.521.72Ownership Restructuring under NEP,1970198019851990Malay (a) Individuals(b) Trust agencies184.108.40.206.711.77.420.3Chinese27.237.533.444.9Indian220.127.116.11Foreigners63.442.92625.1Source: Table10.9, 13.4, Drabble, An Economic History of Malaysia, c
26(4) 1981 “Look East” – Resource-Base industrialization policy, - want “know-how”, don’t want “show-how”heavy industries: auto (“Proton”), steel, oil & gas, paper, chemical fertilizer,…setup HICOM for centralize management, coordinate and monitor- infrastructures: highway, sea-port, airport, telecommunications network- Industrial Parks, Specialized parks, etc.
27New Development Policy (NDP) Malaysia Real GDP growth rate before 1997198719881989199019911992199319941995199687-965.4%8.9%8.7%9.8%7.8%8.5%8.6%8.3%9.4%8.4%Phase 3: 1990 ~ 1997New Development Policy (NDP)Stress on economic growth and balance developmentStress on harmonious and cooperation(3) Liberalize investment regulations for non-MalayThe Government has instituted significant reforms by dismantling many state-run enterprises and encouraging private enterprise to undertake many of the country's development projects. Through promoting a free market in some areas, the Government is also an investor in the economy (usually as a minority partner) and controls prices on some key commodities such as fuel and rice.The Economy Video Clips
28Malaysia Tax structures Company Tax: %Petroleum Income Tax: 38%Personal Income Tax: 1- 28%Resident individuals with chargeable income of RM30,000 (US$7,895)and above per annum (after deduction of personal reliefs)Sales Tax: %The general sales tax is 10%. Certain essential goods, foodstuffs and building materials are taxed at 5%, whilst cigarettes and liquor are taxed at 15% and 25% respectively.Service Tax: 5%Goods include food, drinks or tobacco products provided in restaurants, bars, snack bars, coffee houses, private clubs, etc. Services include services provided by professionals (such as lawyers, engineers, architects, surveyors, consultants), advertising firms, private hospitals, insurance companies, communication companies, hotels and restaurants.Import duty: Ad Valorem. Last few years, import duties on a wide range of raw materials, components and machinery has abolished.Committed to the ASEAN Common Effective Preferential Tariffs (CEPT):Import duties on most goods from ASEAN countries will be reduced to between 0% - 5%by the year 2003.
29Labor welfare and social security Central Provident Fund System (1957-present)Statutory contributions under the Employees Provident Fund Act 1991Employers – Min. of 12% of the employees’ monthly wages(before 1991 is 10%)Employees – Min. of 11% of the employees’ monthly wages(before 1991 is 5%)Until 55-year-old employees can withdraw from the central provident fund.
31Human Resources Development High Priority on Education Education shared about 15% of total public expenditure allocatedunder Malaysia's five-year development plans.There are 18 public and 15 private universities, 4 oversea U. branches, and various polytechnics and industrial training institutesTotal enrolment in public institutions of higher learning alone is projected to reach over 250,000 in 2003,with more than half in the science and technical disciplines.HKBU-Economics2003 Malaysia Field Trip
38Malaysia Prior to the Crisis Causes for concern: Economic growth above the potential output2. Loss of efficiency in the economyRising current account deficitsExcessive Credit Expansion to the Non-Tradable Sectors
41Exchange Rates: National currencies against US Dollar The Ringgit, which had been one of the region's strongest and most stable currencies, plunged in value from RM2.5 to the US dollar to almost RM5 to the dollar, before the Government fixed it at RM3.8 in September 1998.
42Asian Financial Crisis: Malaysia has been seriously affected by the Asian financial crisis with GDP shrinking by 7.5 per cent by the end of The decline in output was mostly observed in the construction, manufacturing and agricultural sectors. The Ringgit depreciated by 56 per cent and the stock market fell by 50 per cent between mid-1997 and January 1998.The financial crisis had cost Malaysia about US$50 billion in terms of purchasing power of imports and US$150 billion in market capitalisation.Several Government-funded mega-projects were put on hold following the implementation of the National Economic Recovery Plan (NERP), drawn up by the National Economic Action Council (NEAC), to counter the negative effects of the Ringgit depreciation and the collapse of the stock market.Economic Recovery Plan after 1997Malaysia Budget – Keynesian Approach
43Six Objectives of the Economy Recovery Plan and Actions after the Asian CrisisStabilizing the Ringgit :a. Appropriate choice of exchange rate regimeb. Increase external reservesc. Reduce an over-dependence on the US dollard. Adopt a balanced interest rate policy2. Restoring the market confidencea. Improve transparency and the regulatory environmentb. Establish rules for assisting industries and companiesc. Increase the consistency of government policiesd. Adopt liberal market-based policiese. Improve public relationsf. Improve the dissemination of economic information
443. Maintaining Financial Market Stability a. Preserve the integrity of the banking systemb. Establish agencies along the lines of the Resolution Trust Corporation (RTC) and the Federal Deposit Insurance Corporation (FDIC)c. Recapitalise the banking sectord. Monitor closely overall credit expansione. Improve the capital marketf. Develop the private debt securities (PDS) market4. Stranghtening Economic Fundamentalsa. Increase the quality of investmentsb. Improve the balance of paymentsc. Maintain a balanced public sector financial positiond. Maintain an appropriate monetary policye. Maintain price stabilityf. Increase labor competitiveness
455. Continuing the Equity and Socio-economic Agenda a. Ameliorate the hardship from povertyb. Address Bumiputera equity ownershipc. Expand employment opportunitiesd. Meet the challenge of expanding tertiary educatione. Address graduate unemploymentf. Control the influx of foreign workersg. Gear up state corporations to face the crisish. Revamp cooperatives and cooperative banksi. Protect the Environment6. Restoring adversely affected SectorsAddress and restore the following sectors:Primary commodities and resource-based industries , Mining and petroleumManufacturing , Information Technology and the Multimedia Super CorridorMotor industry , Construction , Property , Infrastructure , TransportFreight Forwarding , Tourism , Banking , Insurance and Reinsurance
46The Malaysia Government has responded immediately by putting in place measures to prevent further deterioration in the economy.Steps are being taken to reduce dependency on external trade, while more attention is given to domestic economic activities as well as the new markets, which will be expected to lead in the nation's economic growth in 2002 and the years ahead.
47Liberalisation of Equity Policy in the Manufacturing Sector After July 1998, foreign investors are allowed to hold 100% of the equity in all manufacturing projects, with the exception of 7 activities and products comprising paper packaging, plastic packaging, plastic injection moulded components, metal stamping and metal fabrication, wire harness, printing and steel service centersSince Jun 2003, to further improve the investment climate,the government has decided to fully liberalise equity holdingsin all manufacturing projects, irrespective of the level ofexports and without any product/activity being excluded.Liberalisation Policy on the Employment of Expatriates in the Manufacturing Sector.To address the need for high level expertise in the manufacturing sector, the Government has further liberalized the policy on the employment of expatriates in the manufacturing sector.Automatic approval for up to 10 expatriate posts, including 5 key posts.Expatriates can be employed for up to a maximum of 10 years for executive posts, and 5 years for non-executive posts.