The Economic Activity of Malaysia

The economy of Malaysia ranks 29th biggest in terms of purchasing power parity its GDP is about $358 billion as of 2007. It is continuously growing and occasionally regarded a new industrialized nation. The Petronas Towers, head office of the national oil giant in Kuala Lumpur, is a symbol of the country’s rapid development and prosperity.

Malaysia imitated the economic strategies of the 4 Asian Tiger (Taiwan, South Korea, Hong Kong, Singapore) in the 1970s and shifted to a manufacturing-driven nation. The Malaysian New Economic Policy was created in the early 1970s to alleviate poverty in the country and increase Malays’ share of the economy. After more than 30 years since it was initiated, poverty was decreased to almost 8.3% in 2004 over 64.8% in the 1970s. The Asian Financial Crisis of 1997 had a striking effect on the Malaysian economy, though not with the same degree as Indonesia, Thailand, and the Philippines. The Kuala Lumpur Stock Exchange’s composite index fell from roughly 1300 to 400 points in a matter of weeks.

Main industries of Malaysia includes rubber and palm oil processing and manufacturing, petroleum production and refining, electronics, tin mining and smelting, logging, agriculture processing, and tourism. As of 2008, Malaysia is home to 15 companies that rank in the Forbes Global 2000 ranking. The top 6 on the list includes Malayan Banking (623rd), Tenaga Nasional (625th), Sime Darby (691st), Bumiputra-Commerce Holdings (704th), Telekom Malaysia (780th), and Public Bank (822nd).

As the founding member of the ASEAN Free Trade Area which was established in 1992, Malaysia has bee committed in establishing free trade agreements with other economic powers. In December of 2005, the Japan-Malaysia Economic Partnership Agreement was signed while in November of 2007 a bilateral Free Trade Agreement was ratified between Malaysia and Pakistan. On going free trade talks with the US, Chile, New Zealand, Australia, and India have been initiated by the Malaysian government with other ASEAN members.