Malaysia

I

INTRODUCTION

Malaysia is a constitutional monarchy in Southeast Asia on the South China Sea. Malaysia is divided into two regions, known as West Malaysia and East Malaysia. West Malaysia, also known as Peninsular Malaysia, consists of the southern portion of the Malay Peninsula and nearby islands. Thailand borders West Malaysia on the north, and Singapore lies off the southern coastal tip.
East Malaysia occupies the northern section of Borneo Island, as well as offshore islands. East Malaysia shares Borneo with Brunei, which lies on a small section of the northern coast, and with the Kalimantan region of Indonesia, which lies to the south. Malaysia is a federation of 13 states and 3 federal territories. The city of Kuala Lumpur, coextensive with the federal territory of the same name, is the capital and largest city. Located near Kuala Lumpur is the administrative center of the federal government, Putrajaya, which also makes up a federal territory.

From the late 18th to the early 19th century, Britain gradually gained control of Peninsular Malaysia, and most of northern Borneo fell into private British hands. During the same period, the largely Malay population became diversified, as ethnic Chinese and Indians immigrated to work in Malaysia’s tin and rubber industries. Since independence in 1957, ethnic tensions, especially between Chinese and Malays, have dominated political and economic issues. Despite the tensions, however, Malaysia has experienced rapid economic growth, particularly in the manufacturing sector, and economists include the country among Asia’s newly industrialized economies (NIEs).

II					THE PEOPLE OF MALAYSIA

Population	25,259,428 (2008 estimate)
Population density	77persons per sq km 199 persons per sq mi (2008 estimate)
Urban population distribution	65 percent (2005 estimate)
Rural population distribution	35 percent (2005 estimate)
Largest cities, with population	Kuala Lumpur, 1,352,000 (2003 estimate) Ipoh, 562,000 (2007 estimate) Kelang, 996,000 (2007 estimate)
Official language	Bahasa Malaysia
Chief religious affiliations	Muslim, 48 percent Folk religions, 24 percent Christian, 8 percent
Life expectancy	73 years (2008 estimate)
Infant mortality rate	16 deaths per 1,000 live births (2008 estimate)
Literacy rate	89.9 percent (2005 estimate)

Malaysia’s estimated 2008 population was 25,259,428. The population growth rate was 1.74 percent in 2008. The overall population density is 77 persons per sq km (199 per sq mi), but the population is unevenly distributed; West Malaysia has a population density about twice the national average. Some 65 percent of Malaysia’s population is urban. Like most developing nations, Malaysia has experienced high rural-to-urban migration rates since the 1950s. Urban unemployment is very low in Malaysia, and this contributes to the growth. The labor shortage for low-skill jobs attracts many immigrants, particularly from Indonesia, the Philippines, Pakistan, and Bangladesh. Skilled workers are recruited primarily from India, Japan, and China.

In addition to Malaysia’s largest city, Kuala Lumpur, large cities in the country include Ipoh, Johor Baharu, Petaling Jaya, Kelang, Kuala Terengganu, and George Town (formerly Pinang). Kuala Lumpur, Petaling Jaya, and Kelang are part of the Kelang Valley conurbation, which is Malaysia’s largest urban region. Most of the conurbation is located in the state of Selangor, which surrounds the Kuala Lumpur federal territory. Selangor is Malaysia’s most populated state, followed by Johor and Sabah. From 1991 to 2000, Selangor had an annual population growth rate of about 6 percent—the highest of any Malaysian state. The growth was largely due to employment opportunities in the Kelang Valley conurbation and to the sprawl of the Kuala Lumpur greater metropolitan area beyond the borders of the federal territory. Growth of the metropolitan area has been spurred since the late 1990s by the construction of a new administrative center of the federal government, Putrajaya, about 40 km (about 25 mi) south of Kuala Lumpur, and the Kuala Lumpur International Airport, located south of Putrajaya.

A

Ethnic Groups and Languages

Ethnic Malays and other indigenous peoples, sometimes known as Malayan peoples, comprised 65 percent of Malaysia’s population at the 2000 census. In Malaysia they are called bumiputera (sons of the soil). Other groups include ethnic Chinese, who constituted 26 percent of the population, and ethnic Indians, who made up about 8 percent. Small numbers of Indonesians, Thai, Europeans, and Australians also live in Malaysia. In West Malaysia ethnic Malays make up a majority of the population. In East Malaysia, however, numerous Dayak ethnic groups constitute a sizable population, as do Chinese, especially in Sarawak. The national language is Bahasa Malaysia (also known simply as Malay), a Malay language of the Austronesian language family. English, Chinese, and Tamil (a Dravidian language of southern India) are also widely spoken.

B

Religion

Islam is the country’s official religion, although the constitution guarantees freedom of religion. More than half the people of Malaysia are Muslims, including nearly all ethnic Malays. Most Chinese are Buddhists, although Confucianism and Daoism (Taoism) are also important. Most Indians practice Hinduism. In Sabah and Sarawak many of the indigenous peoples are Christians, although traditional beliefs are also widely practiced.

C

Education

In Malaysia education is free and compulsory for children between the ages of 6 and 16, and an additional two years of free education are optional. In 2002–2003, virtually all Malaysian children attended primary school. Parents may choose between Bahasa Malaysia, Chinese, or Tamil as the language of instruction for their primary school children. Bahasa Malaysia is the primary language of instruction in all secondary schools, although continued learning in Chinese and Tamil is available and English is a compulsory second language. Enrollment in secondary education was 70 percent in 2002–2003. Malaysia has a number of institutions of higher education, including nine universities. Universities include the National University, in Bangi; the University of Technology, in Johor Baharu; and the University of Malaya, in Kuala Lumpur.

III					ECONOMY

Gross domestic product (GDP in U.S.$)	$151 billion (2006)
GDP per capita (U.S.$)	$5,769.90 (2006)
Monetary unit	1 ringgit Malaysia (RM), consisting of 100 sen
Number of workers	11,594,023 (2006)
Unemployment rate	3.5 percent (2004)

The economy of Malaysia once relied principally on the production of raw materials for export, most importantly petroleum, natural rubber, tin, palm oil, and timber. After Malaysia gained independence in 1957, however, the development of the manufacturing sector took priority. From the mid-1970s to mid-1990s Malaysia had one of the world’s fastest-growing economies, mainly due to rapid industrialization. In the late 1980s industry replaced agriculture as the largest contributor to the gross domestic product (GDP). The services sector, especially tourism, also drove growth.

In 1991 the Malaysian government launched the ambitious “Vision 2020” program, which envisions Malaysia attaining the status of a developed nation by 2020. Toward this goal, the government has invested heavily in modernizing the infrastructure of the Kuala Lumpur metropolitan area. The modernization is designed to propel Malaysia into the digital age and position it as a hub for high-technology businesses in Southeast Asia. However, the country’s reliance on exports of manufactured goods, such as computer microchips and other electrical components, has made its economy susceptible to regional and global economic downturns. Malaysia was one of many Asian countries that suffered economic decline during a regional economic crisis in 1997 and 1998. This crisis led to the delay of some infrastructure projects and possibly of the Vision 2020 goal.

The nation’s economy expanded an average of 5.9 percent annually in the period 2006. In 2003 Malaysia’s annual budget included revenues of about $21 billion and expenditures of about $25 billion. The country’s GDP was $150.7 billion in 2006. Industry including mining and construction, accounted for 50 percent of the GDP; services, 41 percent; and agriculture, forestry, and fishing, 9 percent.

A

Agriculture, Forestry, and Fishing

Some 5 percent of Malaysia’s land is under cultivation for field crops and 18 percent is used for plantation agriculture. Malaysia ranks as the world’s leading producer and exporter of palm oil. The country was once the leading producer of natural rubber, but in the early 1990s Thailand and Indonesia surpassed Malaysia after Malaysia began shifting to more profitable crops such as palm oil. Other important export crops are cacao, sugarcane, pepper, coconuts, and pineapples. The principal subsistence crop is rice. Cassava and bananas are also important.

The country is a leading world supplier of tropical hardwoods. Exports of raw timber have declined since the mid-1990s, in part because the government of Malaysia introduced measures to encourage the local production of finished goods, such as plywood and furniture. Most wood processing takes place in West Malaysia, where log exports are banned, while Sarawak provides the bulk of raw timber.

In 2005 Malaysia’s annual fish catch was 1.4 million metric tons, nearly all of it from ocean waters. Aquaculture (the farming of fish and shellfish) has expanded rapidly to help supply the domestic market. However, domestic production of fish has not kept pace with increasing consumption, and Malaysia is an importer of fish products.

B

Mining

Production of petroleum and natural gas has increased greatly since the 1970s, and the refining of crude oil is a major industry. In 2004 mineral fuels provided 12 percent of Malaysia’s export revenues. Malaysia’s tin reserves rank among the largest in the world, although production has declined sharply, from about 70,000 metric tons of concentrates in the early 1970s to about 3,000 in 2004. Much of the decline is due to a sharp fall in the world commodity price for the metal. Mining activity also yields bauxite, copper, iron ore, silver, and gold.

C

Manufacturing

In 2004 manufactured items accounted for 75 percent of exports by value. Electronic goods constitute most of Malaysia’s manufactured exports. Principal industrial activities are the processing of palm oil, petroleum, timber, rubber, and tin; and the production of electrical and electronic equipment, processed food, textiles, chemicals, building materials, and handicrafts. In addition, Malaysia produces its own automobile, the Proton.

D

Transportation and Communications

The framework of West Malaysia’s system of roads and railroads was laid down during the British colonial period. A main highway in western Peninsular Malaysia extends over 800 km (500 mi) from Singapore to the Thai border in the north. The road system in Sabah and Sarawak is much less developed; a main road runs along Borneo’s northern coast but there are few good interior roads. The state-owned railroad system consists of 1,667 km (1,036 mi) of track, most of which is in West Malaysia and with a short stretch in Sabah. Malaysia Airlines, founded in 1971, offers both domestic and international flights. Other domestic carriers also offer local flights. Malaysia has a number of international airports, including the Kuala Lumpur International Airport, located south of the city at Sepang. Major seaports in West Malaysia are Port Kelang, George Town, and Melaka. Kuching and Labuan are the major seaports serving Sarawak and Sabah, respectively.

The government of Malaysia tightly controls and monitors most public communications. Government censorship, and the expectation of it, imposes restrictions on the news media. Malaysia has 35 daily newspapers publishing in four languages. A government agency Radio Television Malaysia, controls and monitors radio and television broadcasting. The state-run Radio Malaysia operates six radio networks, and Television Malaysia operates two television networks; two private television networks also exist. The government has made it a policy to not censor the Internet, which as a consequence has become an important alternative source of information for the Malaysian public.

E

Currency and Banking

The Malaysian unit of currency is the ringgit, consisting of 100 sen (3.70 ringgits equal U.S. $1; 2006 average). Malaysia’s central bank and bank of issue is the Bank Negara Malaysia, in Kuala Lumpur. There is a stock exchange in Kuala Lumpur.

IV				HISTORY
A			The Imposition of British Rule

The British became active in the area in the 18th century, partly because they sought trade, but also to check French power in the Indian Ocean. The sultan of Kedah, looking for help against the Siamese, leased the island of Pinang to the English East India Company in 1786, and Sir Thomas Stamford Raffles, a company administrator, founded Singapore in 1819. Under the Anglo-Dutch Treaty of 1824, Britain secured Malacca from the Dutch and in return relinquished its claims to Sumatra and nearby smaller islands. Singapore, Pinang, and Malacca (which collectively became the Straits Settlements in 1826) were then administered by Britain.

In the mid-19th century tin-mining activity greatly expanded in the Malay Peninsula, and Malay rulers and the immigrant Chinese they employed became involved in territorial disputes. Fearful that these disputes might disrupt trade, the British took control of the peninsular states, working indirectly through the Malay rulers. Using diplomacy and taking advantage of dynastic quarrels, the British persuaded the rulers to accept British “residents” or “advisers,” who dictated policy. Before World War II (1939-1945) the native states were classified as either federated or unfederated, with British control somewhat looser in the unfederated states. The federated states were Perak, Selangor, Negeri Sembilan, and Pahang. The unfederated states were Johor and the four northern states, which were acquired from Thailand in 1909. At the top of the British system of rule was a high commissioner, who was also governor of the Straits Settlements.

The present Malaysian territories in Borneo were largely under the domination of the powerful Muslim state of Brunei until the 19th century. Before then, Europeans traded on the island but made no permanent settlements. In 1841, however, the sultan of Brunei rewarded Sir James Brooke, an English adventurer who helped to suppress rebels, with a gift of land and the title raja of Sarawak. Brooke and his successors expanded the territory. To the east, the sultans of Brunei and Sulu also granted land to Europeans. In 1882 the British North Borneo (Chartered) Company purchased the European-held territory. British North Borneo and Sarawak became British protectorates in 1888.

British colonial impacts on Malaysia, especially West Malaysia, while not always positive, were profound. For example, Britain was directly or indirectly responsible for the establishment of the plantation system and the commercialization of agriculture; the framework for the present-day transportation system; multiracialism (through the importation of Chinese and Indian labor); the introduction of English and an educational system; and modern political institutions.

B

The Coming of Independence

Malaya, Sarawak, and North Borneo were seized by the Japanese in 1941 and 1942 and remained under Japanese occupation until World War II ended in 1945. Ethnic rivalries complicated the movement for independence that emerged after the war. The British had encouraged Chinese and Indian immigration to supply labor needed by the tin, rubber, and other industries. In the 1940s the population of the Malay states was approximately 50 percent Malay, 37 percent Chinese, and 12 percent Indian. Deep divisions separated these groups, coinciding substantially with religious and linguistic differences. With independence approaching, Malays expressed concern that immigrants would acquire political power. In 1946 they protested successfully against a scheme, known as the Malayan Union that would have given most immigrants citizenship and voting rights while reducing the power of the Malay rulers. In 1948 the peninsular states formed the Federation of Malaya, which retained the power of the sultans.

The Alliance, the dominant political party that emerged in the 1950s, was multiethnic in its leadership but also ensured separate representation of ethnic groups through three component parties: the United Malays National Organization, the Malayan Chinese Association, and the Malayan Indian Congress. The Alliance won an overwhelming victory in the first nationwide elections in 1955. The British and the Alliance worked out the constitution, providing for a federal state; a bicameral parliament consisting of one elected and one appointed body; citizenship for most non-malay; and special provisions for the Malays, who were regarded as less economically, developed and were given preference for civil service jobs, scholarships, and licenses. In 1957 the Federation of Malaya (which occupied what is now West Malaysia) gained independence from Britain. It joined the United Nations that same year.

Meanwhile, the government had been fighting a Communist-led rebellion, known as the Malayan Emergency, since 1948. Most Communists were poor ethnic Chinese who were opposed to British colonial rule. When the Federation of Malaya became independent in 1957, they continued to fight for Communist rule. By the time the conflict finally ended in 1960, about 11,000 people had died. Not until 1989, however, did the Communists formally agree to lay down their arms.

C

An Independent Malaysia

In 1961 Tunku Abdul Rahman, Malaya’s first prime minister, proposed a Malaysian federation of Malaya, Singapore, Sarawak, North Borneo (later called Sabah), and Brunei. All but Brunei joined the federation in 1963. Economic and political disputes based on racial differences led to Singapore’s exit in 1965.

Since independence, ethnic disputes have dominated Malaysian politics. In the 1960s these disputes centered on the preeminence of Malays in politics and the supremacy of Chinese and Indians in the economic arena. In the 1969 general elections, the Alliance faced opposition from both Malay and non-Malay parties. Immediately afterward serious rioting broke out in Kuala Lumpur and at least 200 people were killed. The government invoked emergency powers and imposed restrictions on raising ethnically sensitive issues; parliament did not meet again until 1971.

The new Prime Minister, Tun Abdul Razak, announced a new program called the New Economic Policy (NEP) to alleviate poverty in general, but also to improve specifically the economic condition of the Malays. Among the goals of the NEP was to increase the employment of Malays in occupations dominated by non-Malays. He also broadened the Alliance (already extended to Sarawak and Sabah) into an organization called the National Front, which included some opposition parties. The National Front won the 1974 elections decisively and also, under Prime Minister Datuk Hussein Onn, the 1978 elections. Ethnicity, however, still dominated the political scene, and two major opposition parties opposed the National Front: the Islamic Party of Malaysia and the Democratic Action Party. When Hussein Onn retired in 1981, he was succeeded by his deputy, Mahathir bin Mohamad, who would lead Malaysia for the next 22 years.

D

The Mahathir Era

A constitutional conflict in 1983 between the Mahathir government and the hereditary sultans led to a compromise restricting the power of Malaysia’s head of state (the Yang di-Pertuan Agong) to veto certain legislation. In 1987 the Mahathir government responded to the alleged threat of rising tensions between Malays and Chinese by arresting opposition leaders and suspending four newspapers. Constitutional amendments passed in 1993 and 1994 further restricted the powers of the head of state. The amendments prohibited the nine hereditary rulers from pardoning themselves or their families from criminal charges and removed the head of state’s power to delay legislation. The National Front, having won three consecutive victories in 1982, 1986, and 1990 with Mahathir as prime minister, gained an even greater majority in the elections of 1995. Mahathir again retained his position as prime minister.

In 1991 Mahathir launched his “Vision 2020” program to propel Malaysia into the ranks of developed industrialized nations by 2020. In 1997 and 1998, however, Southeast Asian financial markets suffered a serious blow when investors lost confidence in a number of Asian currencies and securities. During the regional economic crisis, the Mahathir government scaled back or postponed several important infrastructure projects. The impact of the crisis was not as severe in Malaysia as it was in some other Asian countries, but in the long term it was expected to delay Malaysia’s attainment of developed-nation status beyond 2020. Nevertheless, Malaysia continued to attract foreign investment and to develop as a major center of electronics manufacturing.

The economic crisis raised a political rift between Mahathir and Finance Minister Anwar Ibrahim, who had also served as deputy prime minister and was regarded as Mahathir’s most likely successor. They differed on what Malaysia’s response to the sudden economic downturn should be, and in September 1998 Mahathir dismissed Anwar from his government posts. Anwar and his supporters then launched a campaign against government corruption, and demonstrations in support of reform began to gain momentum around the country.

In late September riot police arrested Anwar, and he was subsequently charged with abuse of power and personal misconduct. He denied the charges, claiming they were part of a political conspiracy against him. In two separate and highly publicized trials in 1999 and 2000, Anwar was convicted of abuse of power and sodomy and sentenced to a total of 15 years in prison. Despite the controversy surrounding Anwar’s arrest, the National Front decisively won November 1999 legislative elections, and Mahathir retained the office of prime minister.