Malaysia – An Overview Malaysia – An Overview

Malaysia is a federal constitutional monarchy in Southeast Asia, consisting of thirteen states and three federal territories. The capital city is Kuala Lumpur, while Putrajaya is the seat of the federal government. Malaysia's course of history has been dictated by its strategic position at one of the world's major crossroads, and a place of cohabitation and interaction of a wide array of races, religions and traditions. Malaysia gained independence in 1957. Malaysia came into existence on 16 September 1963 as a federation of Malaya, Singapore, Sabah (North Borneo), and Sarawak; in 1965 Singapore withdrew from the federation.

According to data collected for the latest census in 2010, Malaysia had 28.3 Million inhabitants.[i] Preliminary data for the year 2012, tells that Malaysia's population grew to a number of 29.3 million.[ii] The country's population consists of many ethnic groups. According to the Department of Statistics, in 2010 Bumiputeras (the ethnic Malays) made up 61.8% of the population, whereas 22.6% were of Chinese descent and 6.7% of Indian descent. The remainder comprises of 0.6% of other ethnical descent and 8.2% who are no Malaysian citizens.[iii]


Ethnicity/Origin Share
Bumiputeras 61.8%
Chinese 22.6%
Indian 6.7%
Others 0.6%
Non-Malaysian citizens 8.2%

Politics and Administration

Since independence, Malaysia has adopted the political system of a parliamentary democracy. The political scene has been characterized by an extraordinary degree of political stability and continuity through a holistic national coalition of political parties. The political leadership of the country has been focusing on two key long-term goals: cementing national unity and economic development with equity. While national unity remains elusive, the highly successful industrialization drive (since the mid-1980's) has turned the country into one of the world's most important trading nations. Apart from this, Malaysia's economic performance and fundamentals are strong; its social development is exemplary among developing countries.

Malaysia's legal system is based on English Common Law. Malaysia's foreign policy is based on the principle of neutrality and maintaining peaceful relations with all countries, regardless of their political system. Economic relations and incentives play a major role in shaping foreign affairs. Furthermore, Malaysia seeks to develop relations with other countries in the region and portray itself as a progressive Islamic nation.

Economy - Overview

In the 1980s, Malaysia transformed from a "protected low income supplier of raw materials to a middle income emerging multi-sector market economy."[iv] Economic growth is attributed to the fact that "trade is the lifeblood of the Malaysian economy and foreign direct investment its backbone."[v] Ever since, "Malaysia has adopted an export-led, foreign investment driven growth strategy. It chiefly relies on Multinational Companies (MNCs) to develop export-oriented industries in the non-resource based sector."[vi]

Malaysia is a considerably open, state-oriented, newly industrialized market economy. The 2012 estimates for GDP amounted to US$ 492.4 billion (a growth of 5.6% compared with 2011), which made it the 3rd largest economy in Southeast Asia and the 30th largest economy in the world by purchasing power parity (PPP).[vii]

Through the Economic Transformation Program (ETP) that was launched during Prime Minister Najib Razak's office term in October 2010, the country has been set on a path towards becoming a high-income economy by 2020 (as per definition of the World Bank: more than a GNI of US$ 15,000 per capita). The ETP is based on the development of 12 National Key Economic Areas (NKEAs), which are expected to contribute to 73% of the country's GNI in 2020:

  • Oil, Gas & Energy
  • Financial Services
  • Palm Oil & Rubber
  • Agriculture
  • Communications Content & Infrastructure
  • Business Services
  • Electrical & Electronics
  • Wholesale &Retail
  • Healthcare
  • Education
  • Tourism

To retrieve further information on the country's economy and statistical data, please follow the following links:

[i] Population Distribution and Basic Demographic Characteristic Report 2010 accessed on 25 April 2013

[ii] Bank Negara Malaysia Annual Report 2012

[iii] Population Distribution and Basic Demographic Characteristic Report 2010 accessed on 25 April 2013

[iv] accessed on 21 January 2011

[v] Mohammed Ariff. (2007). Economic Openness, Volatility and Resilience: Malaysian perspectives. Kuala Lumpur: Malaysian Institute of Economic Research. (p. 23)

[vi] Natarajan, S. and Tan, Juay Miang. (1992). The Impact of MNC Investments on Malaysia, Singapore and Thailand. Singapore: ASEAN Economic Research Unit, Institute of Southeast Asian Studies. (p. 7)

[vii] accessed on 26 April 2013

[viii] Malaysia: The Economic Transformation Program (B), Rev: February 4, 2013, Harvard Business School