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Strategic Management and Business Policy
Submitted to: Mr. Faiez seyal Submitted by: Ammara Ijaz Tahira Jabeen Asma Basher Summia Saleem Amna Tabassum Saba Akhtar Rabia Yousaf Rashida Bashir FA-09-MBA-13B 011 150 183 142 181 129 120 126
Comsats Institute of Information Technology Lahore.
PEST ANALYSIS OF MALAYSIA
and hopes to achieve developed-nation status by 2020.MALAYSIA INTRODUCTION Malaysia in the 21st century is confident in its economic achievements and aspires to be a leader amongst Asian nations. it has enjoyed substantial success in reducing the rate of poverty. Malaysia ranks among nations today as an upper-middle-income country. crime and corruption. lagging standards in education.5 in 2010. which stood at 3. Since achieving independence in 1957.7 percent in 2007. But Malaysia also suffers from a widening gap between the rich and poor. . and maintaining a democratic political system. and polarization between the country’s major ethnic groups. which was an impressive 6. accelerating growth.
PEST ANALYSIS OF MALAYSIA PEST analysis of Malaysia refers to the analysis of its • • • • Political Economic Sociocultural Technological FACTORS…… .
The Malaysian political system refers to all those regulations and practices and the structure of laws that show how the government is run. and there is multi-party system. 1957. . • The constitutional system The Constitution of Malaysia was drafted based on the advice of the Reid Commission which conducted a study in 1956 . The Constitution came into force on August 27. the Prime Minister of Malaysia is the head of government. Malaysian political system has a unique foundation on which the country's machinery functions.Malaysia political Analysis Malaysia is a federal parliamentary monarchy.
high courts. The other four states. transportation. defense. magistrate's courts. The federal government has authority over external affairs. which have titular Governors. internal security. industry. do not participate in the selection. communications. The political system of Malaysia is closely modeled on that of Westminster parliamentary system. is nominally headed by the Paramount Ruler or Yang di-Pertuan Agong. Abdullah bin Ahmad Badawi has been the Prime Minister since 31 October 2003 chosen from the lower house of parliament. Court of Appeals. The Executive power is vested in the cabinet led by the prime minister. a federal constitutional elective monarchy. commonly referred to as the King of Malaysia. members of which are elected by popular vote to serve a term of fiveyears. federal citizenship. 26 appointed by the state legislatures and the House of Representatives or Dewan Rakyat with 219 seats. The legislative power of the political system of Malaysia is divided between the federal and the state legislatures. Selected for a term of five-years from among the nine Sultans of the Malaystates. finance. the king also is the leader of the Islamic faith in Malaysia.• Executive Branch Malaysia. The members of the cabinet are all chosen from among members of both houses of Parliament and are responsible to that body • Legislative Branch Malaysia has a bicameral Parliament consisting of the Senate or Dewan Negara with 70 seats. The judges of the Federal Court are appointed by the paramount ruler on the advice of the prime minister. commerce. session's courts. • Judicial Branch The Malaysian legal system is based on English common law and most of the laws and the constitution are adapted from Indian law. and other matters. There are the Federal Court. . 44 appointed by the paramount ruler. a legacy of British colonial rule. and juvenile courts. justice.
generally titled 'sultans'. In total there are more than 30 registered political parties.• The Party in Power The ruling party. and communication. tourism. the income tax rate was 28 percent for both resident and non-resident companies. • TAXES The major proportion of government revenue comes from taxes. The Malaysian government has introduced a number of initiatives for manufacturing activities. Parti Islam se Malaysia (PAS) and Parti Keadilan Rakyat (PKR). Nine of these states have hereditary rulers. totaling 76 percent of revenue in 1999 (46 percent from direct taxes and 30 percent from indirect taxes). Each of these states has an assembly and government headed by a chief minister. is the Barisan Nasional (National Front) consisting of United Malays National Organization (UMNO) and 13 other parties. There are 13 states and three federal territories which are Kuala Lumpur. most of which are ethnically based. while the remaining four have appointed governors in counterpart positions. companies resident in Malaysia have tax exemption on income brought in from abroad. all of which are represented in the federal parliament. Labuan Island and the Putrajaya federal administrative territory. however. . the agricultural sector. nominated by the state assemblies and advising their respective sultans or governors. transportation. which is also a coalition. • State Governments The state governments are led by chief ministers. Other parties include Democratic Action Party (DAP). In 1999.
responsible for several other achievements. During his term. shifted the economic focus of the country from mainly agricultural to mainly industrial centering on the manufacture of computers and consumer electronics. Tun Dr Mahathir bin Mohamad. .Malaysia Economic Analysis To understand Malaysia’s economy it is imperative to analyze one of the most important factors of the change which happened in the country’s economy during the 22 years when Dr Mahathir bin Mohamad was Prime Minister.
Several steps are being taken to improve the country’s competitiveness. the government also implemented a RM 50 million fund with the aim of providing financing guarantees for low income groups to purchase property through Bank Simpanan Nasional and Bank Islam. Forecasts Analysis of the 2008 budget sees the economy in the long term being driven by the private sector. As well as the announced 50% exemption on stamp duty tax for the purchase of one property whose purchase prices is under RM 250. A Tourism Infrastructure Fund of RM 200 million has been created to further promote tourism activities in Sabah and Sarawak. with GDP growth reaching an average of over 6% per year for 16 years and which today continues a healthy growth. Additionally. despite the recent global rise in petroleum retail prices. promoting national and foreign investment and promoting competitiveness. One of the most significant driving forces of the Malaysian economy today is the expansion in domestic demand. including the introduction of a new business traveller visa as well as multiple entry visas for Chinese and Indian nationals which are likely to increase the demand for transitory residences (rental properties).000. the two Malaysian states which make up Malaysian Borneo. Additionally. contributors to Malaysia’s social security/retirement . RM 858 million (€ 177 million or just under £ 124 million GBP) has been allocated to the Tourism sector with the goal of improving and diversifying the tourist attractions and upgrading tourist facilities. with important steps being implemented to reduce the cost of doing business. low unemployment figures of under 4% since 1992 and low inflation.The result is apparent. largely due to the private sector. a key player since 2003.
you can spend as much as your heart desires (or as little). For example. Property market set for healthy growth With all of the actions which the government in Malaysia are taking to promote foreign investment in real estate in Malaysia. Note: Malaysia currency is Malaysian Ringgit is (MY. student rent can cost anywhere between RM 300 (€ 62 or £ 43) for shared accommodation to RM 1200 (€ 247 or £ 173) per month at the higher end of the spectrum. you could also spend as much as RM 250 (€ 50 or £ 30) for a luxury dining experience in a renowned Kuala Lumpur restaurant. with a major investment by local and foreign companies expanding their existing office locations. As the market has only really just opened up to overseas investors. The commercial real estate sector is seeing substantial growth.30 or £ 7. winner of the “Best Oriental Restaurant” award in 2004 during the Malaysia Tourism Awards. However if you really have something to celebrate.50 or £ 0. relocating to Malaysia or simply opening new ventures in the country. Meals traditionally can cost between RM 2.planning EPF will benefit from the government’s Home Financing Scheme which allow for monthly withdrawls from their EPF fund to finance the purchase of a house.20).50 (€ 0.30p) for roadside meals up to RM 50 for a special occasion (€ 10. as well as promoting the purchase of property by Malaysians. the value of real estate is likely to see considerable growth over the coming years. Due to the modern atmosphere and culture variety in Malaysia. now is the best time to enter the market. . MYS). The symbol for it is RM Low cost of living The cost of living in Malaysia is still very low in comparison to western cities.
this market. This significant relocation has created a high demand for residential real estate. is coined as one of the favourites by major analysts. The government is still carefully controlling the situation. still very much in its infancy. Incentives are not only planned for the corporate world of Malaysia though. of course areas which are considered favored locations and significantly more promising due to local submarket trends. Inflation Inflation in Malaysia is generally kept very low. there is no reason to assume things will change. the real estate market was officially opened up to global property investors as the process for purchasing property was streamlined and simplified and further in 2007 as the government announced their decision to abolish Capital Gains Tax on real estate sales which take place after 31st March 2007.9%. There are. healthy increase in commercial real estate and active promotion of the government for corporate and individual purchase of real estate. inflation was at a controlled low of 2% however due in large part to the global increase in retail prices of petroleum products. In 2006. With a strong economy. .The government has created an environment which promotes national economic competitiveness and benefits the creation and operation of enterprises. inflation rose in 2005 to 3% and again in 2006 to 3. where it was kept by the government who made a commitment not to raise the retail price any further. For example during the years of 2002 and 2004. and with more incentives for companies set for 2008.
the subsequent increase in residential property around these commercial hubs has also been significant.Economic expansion With many incentives from the government to stimulate further economic growth and competitiveness amongst national and international companies operating in Malaysia. Because the economy of Malaysia is focusing on and being driven by the private sector and internal growth rather than relying only on export products. beneficial policies and the removal of several barriers has also increased the interest of international property investors in Malaysian property and the Tourism sector has seen steadily increasing figures in recent years. Malaysia. The commercial real estate sector is increasing significantly each year as more and more companies relocate or open in Malaysia. the country’s economy is looking at very healthy years to come. the healthy and steady growth of the country’s economy is set to continue for the years to come. .
.Malaysia Sociocultural Analysis Malaysia is a country of Southeast Asia composed of two noncontiguous regions: West Malaysia on the Malay Peninsula and East Malaysia on the north coast of the island of Borneo.
Eurasians. Ethnic Malays and other indigenous peoples comprise 58 percent of the population. there are Europeans.9 percent per year. Australians. Malaysia's population of approximately 24 million (2003) continues to grow at a rate of 1. cultures and religions. linguistic groups. which was aimed at helping Malays who were economically disadvantaged at that time. . Indeed. In addition. The population of Malaysia can be divided into four major ethnic groups: the Malays. Almost all Malays are Muslims. Americans. There is great diversity regarding the Malaysian population's ethnicities. • Language and religion They are the largest. They share a common culture and speak a common language .Malay . in the country in terms of culture. Malays also enjoy certain privileges under the affirmative action program introduced in 1971. as well as people of mixed ancestry. by constitutional definition. with some 15 million residents concentrated in the lowlands of Peninsular Malaysia. the Chinese. and adherence to the religion is seen as an important factor distinguishing a Malay from a non-Malay.the official language of Malaysia. language and religion. all Malays are Muslim. There are favorable quotas for Malays entering universities and in the arena of employment. These privileges have been sources of conflicts between Malays and other ethnic groups in the country. the Indians and the indigenous people. Middle Easterners and Thais.• Population distribution Population distribution is uneven. as well as the most homogeneous ethnic group.
but since then. each speaking a different language from the other groups. some are Buddhist or Taoist as well as a small number of Christians.848. but they are very active and successful in business.211 1.743. Most of them believe in traditional religions. Until the 20th century. the Chinese have historically played an important role in trade and business in Malaysia. but less so in terms of language and religion. The "other" category includes Europeans. Hakka Han Chinese. The Chinese are ethnically homogeneous. more than half of Sarawak's population and about two-thirds of Sabah's population are composed of nonMalay indigenous groups. They speak several different Chinese dialects. The Chinese are largely outside of the political process. and most of them speak Tamil. Non-Malay indigenous groups make up 10 percent of the Malaysian population and they tend to live in Eastern Malaysia. Eurasians. but some have converted to Islam. but they share some general patterns of living and culture. Indeed. Cantonese Total 9. Australians. as well as Malaysians of mixed ethnic and national backgrounds. and there is no dominating religion among them.027 1. Considerable tension exists between the Malays and the Chinese as a result of success of the Chinese in business and their unfavorable political position in the country. Group Malay. Buddhism and Christianity. Peninsular Han Chinese. most practiced traditional beliefs. The majority of the people in this ethnic group practice Hinduism. Americans. The Orang Asli is subdivided into several groups.679. others practice Islam.355. Middle Easterners. many have become Christian or Muslim. Hokkien Tamil Han Chinese.• Different ethnic groups The second largest ethnic group in Malaysia is Chinese. The indigenous Malaysians known as the Orang Asli constitute the smallest such ethnic group. The Indians constitute about 8 percent of the population in Malaysia.922 1.041. consisting of 24 percent of the population. As such. They are divided into dozens of ethnic groups.091 1. Thais.541 .
can read and write. Min Dong Straits Chinese Nepalese Tausug Dusun. different kinds of ethnic groups. Mandarin Minangkabau Indonesian Iban Filipino Han Chinese.933 380.781 373. religion and .467 874.573 958.979 249. • Conflicts due to different groups In Malaysia there many different kinds of religion. • Literacy rate In terms of literacy rate in Malaysia.9 percent (85. Hainanese Han Chinese. and 69. Teochew Han Chinese.Banjar Malay Han Chinese. 88.797 191.918 217.587 201. people are open and knows the sensitivity of talking about different people’s culture.034 442.01 for females). Central 1.413 236. The infant mortality rate of Malaysia is 19 deaths per 1.000 live births.4 percent for females and 92.5 for males. different culture and many more.7 years (74. age 15 and over.615 974.337 271.536 772.146 • Birth rate The population of Malaysia has a healthy life expectancy at birth of 71.558 666. Min Bei Malay.4 percent for males). The likelihood of problems increases when the cultural differences are severe and when the various cultural groups are nearly equal in size but in Malaysia. East Malaysia Han Chinese.237.
But most of all many malaysian know how to work together.different ethnic groups. Remove legal obstacles and gender discriminatory practices. there’s minority conflicts and remain peaceful though there are many different ethnic groups.7 and increase over 2005 (18. 3.086/female 3.967/female 667.8% (male 526. Enhance the national machinery for women's advancement.838. education and social well being.403) 15–64 years: 62.833) 65 years and over: 4.1) Crude death rate: .3) but well below the rates registered for 2004 (19.785. • The Government and Women's Equality The Government of Malaysia has committed itself to women's equality and taken a number of initiatives to promote this: By agreeing to the commitments set forth in the Beijing Platform for Action at the UN Fourth World Conference on Women (1995). Increase women's participation in decision-making. the Government promised to: 1.831) (2007 est.2% (male 4.) Crude birth rate: For 2006 is around 18. 4. 2. In Malaysia.118.78% (2006 data) Age Structure: • • • 0–14 years: 32.884. Key demographic rates Population growth rate: 1. Safeguard women's rights to health.166/female 7.9% (male 7.
7 children born/woman (2010 est.) 3.6 deaths/1. relatively unchanged since 2004 Net migration rate: 0 migrant(s)/1.) 2.05 years (at 1:1 male-to-female ratio) male: 71.01 children born/woman (2007 est.04 children born/woman (2006 est.000 population (2000 est.01 male(s)/female 65 years and over: 0.) Human sex ratio: • • • • • at birth: 1.3 years (2006 data) Total fertility rate: • • • • 2.In 2006 stood at 4.07 male(s)/female under 15 years: 1.8 years (2006 data) female: 76.) .01 male(s)/female (2005 est.5.98 children born/woman (2008 est.000 live births (2006 data) Life expectancy at birth: • • • total population: 74.06 male(s)/female 15–64 years: 1.) 3.79 male(s)/female Total population: 1.) Infant mortality rate: 6.
Presently the country has only 16.) Technological analysis of Malaysia • Phone Lines Per Thousand Malaysia while having made tremendous strides in developing its telecommunications infrastructure is still in its infancy and is considered as having a low "teledensity" rate.07 children born/woman (2005 est. The current Malaysia telephone penetration rate is at 166 telephones per thousand.6 per 100 people which is targeted to be increased to a penetration rate of 45 lines per 100 by the year 2005. up from a previous rate of 93 telephones per thousand .• 3.
including the fixed line market and has issued eight new licenses for new telecommunications companies to enter the market. with an estimated penetration rate of 24.000 subscribers Celcom Time Telekom Mutiara Telecommunications Syarikat Telefon Wireless Source: Star Graphics.. The GoM is actively promoting policies to increase this rate by encouraging growth in the entire telecommunications industry. July 1996 • Fiber trunks and Phone Cables Malaysia presently has an adequate copper analog system that is being replaced and expanded upon by a new digital fiber optic cable network as demand for capacity increases. FIXED-LINE SERVICES OPERATORS Company Telekom Malaysia Binariang Number of Customers 3.in 1990.7 phone lines per 100 by the turn of the century.5 million subscribers Not available yet (license only) Not available yet (license only) 5. With this advent of new companies it is expected that the penetration will continue to grow.000 subscribers Not available yet (license only) 4. This will allow the introduction of advanced .
000 new subscribers per month. There is concern as to what the saturation point is but a penetration rate of 40% is not uncommon in countries where wireless service has been available for a long time as in Australia and the Nordic regions. fiber optics. Five new networks were launched in 1995 .two Global System for Mobile telecommunication (GSM) networks (Binariang and Celcom) and three Personal Communication Networks (Mutiara. Currently the only fiber-trunks constitute the backbone of the major telecommunications exchanges. or a rise from a current rate of 35 cellular phones per thousand people to 165 by the year 2000. There were many concerns regarding these duplicate networks about the cost of the networks and the commercial viability of having five domestic service networks. The penetration rate rise is rising and this is mainly attributed to the upgrading of current infrastructure and the implementation of new technologies such as digital. Sapura Digital and MRCB Telecommunications).or about 1 million users. broadband. PCS and Cellular Systems One area of Malaysia’s telecommunications industry that has been prospering is the wireless phone market. Malaysians cellular penetration rate is about 6% . • Mobile Phones. one of the highest in the region. . PCN is an enhanced version of the European GSM. The cellular market continues to grow and has an anticipated growth rate of 30% over the next three years reaching a total of about 2.telecommunications services in the country. wireless and cellular.5 million handset users by the year 2005. pegs the growth rate at around 20. From the present base of. by the Malaysian cellular industry. ISDN and other high speed services T-1 service and ISDN service was recently introduced by one of the telecommunications licensee’s Telekom Malaysia and is still quite low. ATM and ISDN. • T1.One estimate.
345 ART 900 23.448 340. .890 561.074 571. Cellular Service Technology Subscribers in Malaysia Wireless Technology Year 1990 1991 1992 1993 1994 1995 ART 450 54.580 PCN 39. TMB has more than 3 million customers and has embarked on a multibillion ringgit investment program to upgrade and modernize its network.100 149.820 Total 77.118 89. The company plans to modernize its existing infrastructure by installing state-ofthe-art digital technology.315 60.729 GSM 25.five international gateways.3 million people.730 96.720 872.761 123.788 Composition of Cellular Service Technology Subscribers 1995 • Main Service Providers Telekom Malaysia Berhad (TMB) Telekom Malaysia Berhad (TMB) is the dominant telecommunication service provider.314 AMPS 800 32.046 442.678 206.931 131.616 70. TMB first introduced cellular communication in the country in 1985 via the Atur 450. and eight cellular networks in a country of 19.917 83.028 96.330 251.
the three PCN operators have attracted a total of 80. The ART 900 system was introduced in 1989. (Sapura Digital was recently merged with Time Telekom). Demand for digital mobile handsets has seen a fall in prices. Digital technology is fast gaining momentum in the country. . There is a higher penetration/rate of growth for the cellular phone market as opposed to the paging industry. Cellular market in the country continues to grow with an anticipated average growth of 30 per cent for the next three years reaching a total of about 2. The cellular division operates under the brand name Maxis which uses GSM technology.Cellular Communications (M) Sdn Bhd (CELCOM) Celcom is one of the GSM licensees and operates under the brand name of Celcom GSM and ART 900.000 subscribers in less than a year. Sapura Digital Sdn Bhd Sapura Digital is the other PCN service operator which uses the ADAM (or Advanced Digital Access for Mobile Telecommunication) brand.000 subscribers between them.000 new subscribers a month (a portion is attributed to CELCOM's already established ART 900 analog service).5 million handset users by 2005. GSM licensees Binariang and Celcom share about 70. introducing the system in 1994. Mobikom Berhad Mobikom operates the Mobifon 800 service which uses both analog and digital technology. Binariang Sdn Bhd Binariang is recognized as a dominant player in the industry. Today. One estimate puts the growth rate at around 20. However this service has not been widely accepted due to the relatively high price of dual mode handsets as compare to other analog sets.
Only 20 of the licensed companies currently serve the market as growth of the paging industry . Malaysia has a total of 38 paging licensees. Operators expect the paging penetration rate to reach five per cent by the end of 1998.000 subscribers. the penetration rate in 1995 was about 1 per cent as compared to Singapore's 20 per cent.000 (1995) subscribers in Malaysia.Current Technology Market Share Market Share 64 % 17 % 11 % 5% 3% Technology ART 900 AMPS 800 ATUR 45 PCN GSM Source: Jabatan Telekom Malaysia Paging Market Industry sources estimate the total market potential for the paging industry to be 500. Industry sources have expressed the opinion that the market would be more effective if the industry were consolidated. Analysts therefore see great potential for the paging market. providing improved and standardized paging services. Eight of the 38 companies with local paging licenses have also been awarded nationwide licenses. but currently there are about 150.
000 1993 109.442 1991 62. Easycall holds about 20 per cent of the market share and has a subscriber base of 34. which are dictated by customers. Easycall.000.000 and operates about six networks. The quantity of licenses issued have made it difficult to control prices. The market is in a stage of decline as reflected in the number of pagers sold over the years as number of paging customers have migrated to other modes of communication such as the cellular phones.787 Market Share 67 % 14% 13 % . Number of Paging Subscribers for 1990-1995 Year Number 1990 42. Komtel with a market share of about 28 per cent...268 Regional Market Share for Radio Paging Region Central Northern Southern No. Other major companies include Komtel Sdn Bhd. of Subscribers 98.818 1995 149. has a total subscriber base of 46. Electcoms Sdn Bhd is the dominant paging operator in the country with a market share of about 35 per cent. Hutchinson Paging and Kilatcom.000 1994 128.176 19.000 1992 80. hurting the profitability of many paging companies and slowing the introduction of new features.731 21. Most operators offer regional coverage but have established roaming arrangements with each other allowing subscribers to have national coverage.has been slower than that of the cellular market.
a subsidiary of Binariang Sdn Bhd. . USA Radio Television Malaysia (RTM). data and voice service. Measat 2 was launched in late October of 1996. Subscribers will be able to receive communication.Eastern Sarawak Sabah 4.204 3% 2% 1% Source: Jabatan Telekom Malaysia Satellites. Earth Stations and Teleports Malaysia has developed its own satellite network with the launch of its own satellite (MEASAT1) in January 1996. Measat 1 has 5 Ku-band and 12 C-band transponders while Measat 2 has 9 Kuband and 12 C-band transponders (with a double capacity equivalent to 6 transponders).860 2.510 2. Binariang has a license to own and manage satellites for 20 years without restriction on the number of satellites that may be launched. entertainment and information from the 20 TV and eight radio Direct-To-User (DTU) services. Binariang is investing about US$236 million in these two satellites along with ground facilities located in Langkawi. The result was the immediate and simultaneous point to point and point to multi-point telephone is presently available throughout Malaysia’s islands. The C band service will provide commercial and economic benefits to all regional network operators who require broadband capacity for video. Measat is owned and operated by Binariang Satellite Systems Sdn Bhd (BSS). Measat's satellites are from Hughes. the government radio/television station will lease two 36 MHz C band transponders on a full-time basis and one additional 36 MHz C band transponder for occasional use.
com/malaysia.123independenceday.html http://www.wikipedia.com/malaysia/political-system.com/viewer? a=v&q=cache:kSD4VUXvqG0J:asiafoundation.pdf+political+factors+of+malaysia&hl=en&gl=pk&pid=bl&srcid=ADGEES hI0NAn83VpCcUylrl8sd6aRR09u1mCLUlVR31FiHB3shEu0eqk6oYSkWoMRPvIhSUb4QjL Fbv-biEL9lbCUkfS60vuJ97yn_alHixafh2GwJ2R2RpURK8oQe6ltzqBX7R2J&sig=AHIEtbQHesvyJenKoVdTrRECw8L7E3aWyw • • • • • http://www.REFRENCES • http://docs.org/wiki/Demographics_of_Malaysia .com/economies/Asia-and-thePacific/Malaysia-POLITICS-GOVERNMENT-AND-TAXATION.com/investment-propertymalaysia/economic_factors_in_malaysia.nationsencyclopedia.mkeever.html http://en.htm http://www.google.org/resources/pdfs/Malaysi a.html http://www.internationalpropertyworld.
• • http://www.edu/initeb/to2115a/informat.wao.american.my/news/20010301statusreport.htm .htm http://www1.org.
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