Emerging Market: Malaysia

Introduction

The definition of Emerging markets which are countries that are restructuring their economies along market-oriented lines and offer a wealth of opportunities in trade, technology transfers, and foreign direct investment. (What Are Emerging Markets, 2010) Malaysia is one of emerging market in South East Asia. This article is to see how Malaysia being the emerging market, what factors influence Malaysia developing and what the characteristics and challenge for Malaysia.

Overview of Malaysia

Since ancient times, Malaysia has traditionally been a strong exporting and importing nation and its location makes it ideally placed for conducting business with the other Asia Pacific nations such as China and India and other countries which became the trading centre and transhipment port. Malaysia also has a long history with multi-ethnic and multi-cultural that makes Malaysia formed a unique historical because Malaysia had been colonization of Portugal, the Netherlands and the United Kingdom which influenced by difference countries' culture. (Malaysia: Definition from Answers.com, 2010) These elements make Malaysia forming a unique and special religious, social, culture, traditions and language in there that help it raise the nation in global in deeply. Malaysia declared to independence on August 31, 1957, and Sarawak and Shaba have formed the joint state in Malaysia in 1963.

Malaysia is located in the central part of South East Asia and the country is separated by the South China Sea into two regions, Peninsular Malaysia and East Malaysia/ Malaysian Borneo -Sabah and Sarawak. The northern of Peninsular Malaysia is Thailand and Singapore is the neighbour in the south. Sabah and Sarawak are bounded by Indonesia; and Sarawak also borders with Brunei. There are 11 states in the peninsula of Malaysia and two states on the northern part of Borneo. The total area of Malaysia is nearly 329,758 square km. (Tourism Malaysia Official Homepage, 2010)

Ideological factors

In Malaysia, about 57% of the population are Malays; and the Chinese, Indian and Bumiputeras and other races make up the rest of the country's population. Because of the multi-ethnic, although Malay (Bahasa Melayu) is the national language in use, but various languages and dialects are also converse in ethnic groups and English is widely spoken. (Tourism Malaysia Official Homepage, 2010) As there is diversify culture, social and traditions, Malaysians have different ideology for themselves. The ideological of Malaysia are tolerance and acceptability which easier to accept new things.

Political factors

Under the rule of 1957 amendment to the Constitution, Malaysia is a constitutional monarchy, and now it also follows the bicameral legislative system which to adopt a democratic parliamentary. The head of the country is the Yang Di-Pertuan Agong (the king), a position which is changed every five years among the Malay Sultanates. The Prime Minister is head of government. (Tourism Malaysia Official Homepage, 2010) The country is divided into 13 states and three federal territories in administrative. The government concentrate the development of economy such implement a set of policies and build the infrastructure; for example, the major cities on the Malay Peninsula are connected by railroads with Singapore, and an extensive road network covers the west coast that making trades more effective and efficiency. (Malaysia: Definition from Answers.com, 2010) In mid 1980s, there is a recession because of the country too dependent on primary commodities which made a narrow export base and the government directed resources to the manufacturing sector which introduced generous incentives and relaxed foreign equity restriction; the government also invest to modernize the country's infrastructure. (Merchant, 2008) Therefore, as the government supportive for hardware and software, the country be more completive and attractive for the local and foreign investors which make Malaysia will be the emerging market in Asia.

Economical factors

Manufacturing constitutes the largest single component of Malaysia's economy. Tourism and primary commodities such as petroleum, palm oil, natural rubber and timber are also important source of income to the economy. (Malaysia: Definition from Answers.com, 2010)

Malaysia is a large producer of rubber and tin; palm oil, crude petroleum, petroleum products and timber. The government has moved to privatize large industries that had been under state control since the late 1980s that foreign investment in manufacturing has increased significantly. (Malaysia: Definition from Answers.com, 2010) However, there is a recession in mid 1980s because the country too dependent on primary commodities which made a narrow export base. (Merchant, 2008) Therefore, manufacturing industry had been promoted by the government and made the country's economy recovery.

Since the expanding of manufacturing industrial sector, Malaysia being one the mid-highest living standards in South East Asia which propelled Malaysia to an 8%-9% yearly growth rate from 1987 to 1997. (Malaysia: Definition from Answers.com, 2010) The manufacturing sector was leading contributor to the economy accounting for about 30% of gross national product (GDP) in 2002; and the major trading partners of Malaysia are the United States, Singapore, Japan, Taiwan, Korea, Hong Kong and China.(Merchant,2008)

On the other hand, Malaysia's economy had been hit during the 1997 Asian financial crises. Although the government was forced to cut spending or defer several large infrastructure projects; and unemployment rate and interest rates rose because of the economic crises, Malaysia was one of the fastest country in Asia to recover from economic crises after declining the International Monetary Fund (IMF) assistance. (Merchant, 2008) In conclude, although