Kuala Lumpur, capital of steamy Malaysia in the heart of South East Asia, has undergone some incredible changes. When I first came here as a University student, I slept on the floor of a furniture factory and watched sacred cows wandering the streets of a semi-rural KL.
Now instead there are gleaming sky scrapers not scared cows as the Malaysian economy has grown quickly, investing in physical infrastructure and technology. Malaysia is an amazing economic story as it’s transformed itself from being a developing country to a middle-income country in just over three decades.
Let’s take a look at how a modern Malaysia fares today.
Since gaining its independence from the British in 1957, Malaysia has had one of the best economic records in Asia, with its economy growing at an average of 6.5% per annum for almost 50 years. Malaysia is in the top 40 economies in the world in terms of GDP and top 65 in terms of GDP per capita. Malaysia has traditionally been fuelled by its natural resources, particularly crude petroleum, rubber and timber but it is expanding in the sectors of science, tourism, and information technology. Inflation is low at 2.4 per cent and unemployment only 3 per cent. Malaysia’s main export destinations are its nearest neighbour Singapore, then China and Japan. Similarly it imports from China, Singapore and Japan and invests mainly in ASEAN, North East Asia, India and the Middle East.
Malaysia has a strong trading culture
In historical terms, Malaysia has been a trading hub as long as it has had human habitation. Traders came from India and China in the first century AD, the Dutch and Portuguese fleets fought over Malacca in the 16th and 17th centuries and then the British took control in the 18thcentury through a treaty between the Sultan of Kedah in Penang, and the East India Company. The British ruled Malaya until 1957 when a new independent federation came about until Singapore’s expulsion in 1965.
Much of Malaysia’s social and political history has been about balancing the needs of its different ethnic groups which comprise the Malays or ‘bumiputra’ who are around half the population, the Chinese community, the Indian community and a range of other groups including indigenous minorities.
The champion of Malay nationalism was long time Prime Minister Dr Mahatir Mohammad who modernised the Malaysian economy and focussed on big symbolic infrastructure projects like the Petronas Towers, the North-South Expressway, the Multimedia Super Corridor and moving the federal capital from KL to Putrajaya. The Asian financial crisis of 1997-99 dented Malaysia’s progress and confidence although the economy recovered to solid growth rates in the 21stcentury.
Malaysia has a strong trading culture with ties to its ASEAN neighbours, APEC, the Asia Pacific and the Middle East via Islamic Finance. For instance, for Australian exporters under the Malaysian Australia Free Trade Agreement (MAFTA) 99 per cent of goods will be tariff free by 2017. Milk, rice, automotive parts, iron and steel, wine, processed foods all benefit as do professional services with 70 per cent majority foreign ownership allowed in education, financial services, telecommunications and 100 per cent in professional services like accounting. Professionals in architecture thrive in Malaysia as do engineers and construction firms helping to build Malaysia’s modern infrastructure.
Malaysia is modern and open but it is important to be respectful of Muslim tradition as the majority of Malays are Muslim and they hold high positions in government. But just get a few basics right and be respectful and you’ll find Malaysians are relaxed and have a great sense of humour. It’s very relationship orientated too with a lot of emphasis on entertaining (with its food glorious food (!)) and discussion of children’s education and family life.
In conclusion, Malaysia has undertaken an amazing economic transformation. It’s quite something to witness how, in just a few decades, a country can transform itself from a developing country to a middle income economy with top class physical and digital infrastructure. It will be interesting to see what path Malaysia takes next on its superhighway to economic success.
Tim’s Tips for doing business in Malaysia
Here are just a few simple tips.
- Government badge matters in Malaysia so get to know MATRADE and MIDA, Malaysia’s trade and investment agencies.
- Malaysia is multicultural – made up of three key communities – the Malay (Bumiputra), the Chinese and South Asian (Indian and Sri Lankan background). Learn about each culture and how they have forged a modern nation together.
- Malays are predominantly Muslim so respect local religious customs.
- There’s East Malaysia too – don’t forget Sabah and Sarawak.
- As all Malaysians will tell you – enjoy the food! I had my first Laksa as a University student with my Malaysian classmates here many years ago, and no matter what happens to Malaysia in terms of modern technology, the food is always authentic and excellent!
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Missed the latest episode you can catch up with The Airport Economist Malaysia episode on the show’s website: www.theairporteconomist.com