BAFB 2003

MALAYSIAN ECONOMY

GROUP MEMBERS: DHANNESHWARY SHANMUGAM MC1402BC5521

THURKAH RAMAR MC1402BC5763

MALATHY HUTHAMAN MC1402BC5520

SEMESTER: FEBRUARY 2016

TITLE: ASSIGNMENT 1

LECTURER: MADAM WAN NOORASHIKIN BINTI WAN ABDULLAH

NO CONTENT PAGE
.
1 INTRODUCTION 1

2 QUESTION 1 2-3

3 QUESTION 2 4-7

4 QUESTION 3 8-9

5 CONCLUSION 10

6 REFERENCE 11

TABLE OF CONTENT
 INTRODUCTION

Malaysia has a newly industrialized market economy, which is fairly open and state
orientated. The economy of Malaysia is the 3rd largest in Southeast Asia, after the much
more heavily populated Indonesia and Thailand, and 35 th largest in the world. Malaysias
economy is one of the most competitive in the world, ranking 14 th in 2015.

As one of the three countries that control the Strait of Malacca, international trade plays
a huge role in Malaysias economy. Malaysia experienced an economic bang and
underwent quick development during the late 20 th century and has GDP per capita
(nominal) of US$11,062.043 in 2014, and is considered a newly industrialized country.

According to a report HSBC, Malaysia will become the worlds 21 st largest economy by
2050, with a GDP of $1.2 trillion and a GDP per capita of $29,247. The report also says
the electronic equipment, petroleum and liquefied natural gas producer will see a
substantial increase in income per capita. Malaysian life expectancy, relatively high level
of schooling and above average fertility rate will help in its rapid expansion. Viktor
Shvets, the managing director in Credit Suisse, has said Malaysia has the entire right
ingredient to become a developed nation.
QUESTION 1

What is economic structure? In case of Malaysias, the economy structure divided into
three main sectors. Briefly explain the Three (3) main sectors to the economy.

Economic structure is a term that describes the varying balance of output, trade,
incomes and employment drawn from different economic sectors- ranging from primary
to secondary and to tertiary.

Malaysia has emerged as a multi sector economy in the 21 st century from being a
producer of raw materials until 1970. Efforts are being made by the government to
promote value added production by luring foreign investments in pharmaceuticals,
technology industries and medical technology. In the last two decades of the 20 th
century, Malaysia experienced an annual GDP growth of 7% along with low inflation. In
2009, the nominal per capita GDP stood at US$6,761 and the nominal GDP at
US$191.4 billion.

The following graph depicts GDP by sector as of 2009:

Malaysia export plays a primary role in the countrys economic growth.

The economic structure of Malaysia can be divided into the following sectors:

I. PRIMARY SECTOR: Malaysias economic development is largely due to its

wealth of natural resources in agriculture and forestry. Some major produces in
the country includes:
Peninsular Malaysia: Cocoa, Rice, Rubber, Palm and Oil
Sabah: Rice, Rubber, Subsistence crops and Timber
Sarawak: Rubber, Pepper and Timber

Palm oil and rubber are the major foreign exchange earners in the primary sector. In the
1960s, the countrys forest reserves depletes at high rate. Agriculture, fisheries,
livestock, forestry and mining sectors are included in the primary sector because it
involves economic activity in the early stages where it is not or less involving processing
activities.

II. SECONDARY SECTOR: Malaysias diversified manufacturing sector is the

backbone of its economy. The growth of the manufacturing sector is visible in its
30% contribution to the GDP in 1999 as compared to 13.9% in 1970. (Economy
Watch Content, 16th March 2010). Malaysia has abundant natural resources
including minerals, liquefied natural gas (LNG), petroleum and tin. Electronic
components contribute a significant share in Malaysias manufacturers and
exports. It is the largest exporter of semi conductor devices and electrical goods
and appliances in the world.

III. TERTIERY SECTOR: The service sector of Malaysia predominantly comprises

Islamic banking, finance, telecommunications and tourism. This sector is the
sector that is involved with service activities such as transportations, gas and
water, insurance, real estate, retail trade and other services.
QUESTION 2

Briefly discuss 5 (FIVE) social economic policy in Malaya during British colonial period.

1) INFLUX OF WORKERS FROM INDIA(Kemasukan buruh dari India)

Indian laborers came to Malaya to work in the plantations. Indian
laborers came to Malaya in several ways:

Free labor system / independent (system buruh bebas /

Merdeka)
-Through this system laborers came to Malaya with their own
respective financing.
- Their arrival was arranged by certain people or groups.
- They are free to choose the residence or the preferred job in
Malaya.
Contract system (sistem kontrak)
- In this system, employers will bear the travel fare to Malaya.
- In return, the workers will be working with the employer for a
certain period (1-3 years) with minimum salary (9-13 cents per
day).
- Later, this system has been replaced with kangani system due to
some issues.
Kangani system (sistem kangani)
- Kangani refers to chief or foremen.
- Kangani who is trusted by the employer will be granted a license
to return to India in order to find the labor force.
- In 1938, this system was banned.

2) RUBBER INDUSTRY (perusahaan getah")

The Industrial revolution has increased the demand of rubber
mainly for the Automobile Company or Car Industry.
 Initially, rubber planted in yard of residence by Resident Huge Low,
Perak as a decorative or attractive plant.

H.N.Ridly (Director of the Botanical Garden of Singapore) promoted

rubber plantation by providing free seedlings to farmers.

He also discovered ibiden tap system.

The development of manufacturing industries such as consumer

goods, shoes, bicycle tires and electrical equipment has increased
demand for rubber.

As a result, the rubber prices soaring and the company became the
most important company In Malaya.

British brought in South India Employees in rubber plantation with

cheap salary.

3) MINING INDUSTRY (perlombongan)

At that time, Malaya also very rich in minerals.

Malaya also known as Suvarnabhumi (earth full of gold).

Tin ore imported to Malaya since 9th century.

Tin ore company got the attention of the British because it

profitable due to International ratings.
The involvement of entrepreneurs from China occurred significantly
from the 19th century.

In the 20th century, the mining industry was dominated by miners

from Europe.

In the same century the mining industry has declined, caused by

dredger.
4) COMMERCIAL FARMING SYSTEM (sistem pertanian komersial)

British emphasizing export-oriented agricultural sector because

agriculture is a major profit contributor to British in Malaya.

Commercial plantations:
- Cassava
- Sugar cane
- Pepper
- Gambir
- Tobacco
- Coffee

Europe and Chinese investors focus on commercial agriculture.

They can dominate commercial agriculture because:

- have capital
- has high-technology
- getting large and broad land
- getting a long term lease
While Malay society still tied to the subsistence agriculture.

In the 19th century, the British only focus on coffee and tobacco
plantations while Chinese investors seeking pepper, clove and
cassava

In the 20th century, the British capitalists began to cultivate rubber

for export.

5) INSURANCE SERVICE ( perkhidmatan insurans)

Insurance service has also increased its international trading

activities.

- Insurance for maritime/marine

- Fire insurance
- Property insurance
- Business and accident insurance
- Life insurance
 Insurance are usually a backup plan for people whom are hit with
an unfortunate event in their life.

People whom do not acquire wealth will use the money from the
insurance to repair the damage.

QUESTION 3

Discuss 3 (THREE) of the factors affecting the increasing trend of economic growth in
Malaysia.

a) Strong tourism growth

Malaysia figures among the top three countries for the greatest number of tourist
arrivals among the 53 Commonwealth countries, according to the World Tourism
Organization. In 2005 Malaysia welcomed some 16.5 million tourist resorts who seek
strong buy-to-let investment potential. Besides that, Malaysia is easy and cheap to
reach with 25 flights arriving per week at the same time, Malaysia served by low cost
regional flights on Air Asia to major S, E. Asian cities, creating easy access for growing
influx of tourists. Regarding to this tourism growth, Malacca aims to become second
largest Malaysian city, a report released by The Star that Malacca is setting it is sights
on becoming a metropolis in five years. Chief Minister Datuk Seri Idris Haron said the
geographical location of Malacca and its effective infrastructure had great potential to be
an international seaport by 2025. So, Idris said that Malacca residents should alter their
mindset to become big thinker in view of the states vision to become Malaysias second
largest city.

b) Goods Service and Tax

The government introduced a number of tax and legal initiatives. The implementation of
Goods Service and Tax (GST) helped push projects. GST allowed the Government to
put into place development projects, including infrastructure for rural areas, says the
Prime Minister. Recently, our Prime Minister Najib visited rural areas to Sibu and Kapit.
He saw that the place is undeveloped as there is no economic activity so he approved
RM50 million on the spot for gravel road to be constructed there. He also mentioned
that, as the government, they have shown that they do not only talk but can bring
development to rural areas like Kapit and Kanowit.

c) Small and Medium Enterprise (SME) Contribution

As the Malaysias economy, SMEs are one of the key segments the Government wants
to develop under the 11th Malaysia Plan. SMEs in Malaysia will face greater competition
as a result of free trade. One of the contributions is venture in ICT to enhance
productivity. Through adopting technology and making it fit for boost innovation,
strengthens customer interaction and improves agility and competitiveness. SMEs also
increase human resources management capability. This is to understand the career
aspirations of todays workforce and develop more creative ways to reward good
performance such as profit-sharing. This development is important to strengthen the
value proposition and remain attractive as an employer.
 CONCLUSION

The goal of socioeconomic study is generally to bring about socio economic

development usually by improvements in matrix such as Gross Domestic Product
(GDP), life expectancy, literacy, levels of employment. Economic development is
important because of jobs, salaries and wages increases. Most indicators of human
development are highly correlated with GDP, for example with economic development.
Life expectancy and education is positively correlated with GDP. Thus, development and
GDP are very closely related.
 REFERENCE

Economy Watch Content, 16th March 2010

www.sejarahsmkteresa.blogspot.my

www.cikguazid.com