Malaysia

Malaysia is a country with a huge land mass, extensive resources, good weather

and reasonably sized population base and capability. This multicultural context makes

Malaysia a highly rich society, with diverse religions, foods, culture, and customs. In

fact, this country is the second happiest country in Asia. however, this country also has

stumbling blocks for economic growth and these are; its politics and governance,

racial-based issues, wide spread corruption and inefficiency that cannot bring the best

out of the country.

Malaysia Economic Performance

Malaysian labour productivity is significantly higher than neighbouring Thailand,

Indonesia, Philippines or Vietnam due to a high density of knowledge-based industries

and adoption of cutting edge technology for manufacturing and digital economy as of

2018. This country was ranked 22nd rank in competitiveness in the world yearbook.
 Malaysia's Economic System

Malaysia was a mixed economy that attempts to combine the advantages of free

enterprise system and the central command system wherein the government have

authority to intervene in the market and economy sector, but not totally can control it.

The government has a responsibility to help them to make the supply able to meet the

demand of the consumer. In this economy, the government can check the price of the

goods and services and tabulate the price list to adjust the level of the maximum price

based on the demand and supply. If maximum price being imposed by government to

the seller in a period of time, a shortage will occur in the market. When shortage

appears to the market, the government have to convert the maximum price to minimum

price in order to make sure that overcome the shortage.

 Population

Population growth affects many phenomena such as the age structure of a

country’s population, international migration, economic inequality, and the size of a

country’s workforce. These factors both affect and are affected by overall economic

growth.

Malaysia ranks number 44 in the list of countries and dependencies by

population.Their median age is 28.6 years. According to UN data, their population is

estimated at 31,949,777 people at mid year that is equivalent to 0.41% of the total world

population with a total density of 97 per Km2 (252 people per mi2). 77.8 % of the

population is urban (24,862,312 people in 2019).

Figure 1: Malaysia Population (1950-2019)

 For instance, the effect of population growth can be positive or negative

depending on the circumstances. A large population has the potential to be great for

economic development after all, the more people a country has, the more work is done,

and the more work is done, the more value or money is created.

Ethnicity

Table 1: Ethinic group by share of Population

 Malaysia has a different ethnic groups living in the country. These include

Malays, Chinese, Indians, and other indigenous Bumiputra groups. The demographic

composition in the country are as follows. 50.1% of the population are Malay, 22.6% are

Chinese, 11.8% are indigenous Bumiputra groups other than the Malays, 6.7% are

Indian, and other groups account for 0.7%. Non-citizens account for 8.2% of Malaysia’s

resident population.

Natural Resources

Natural Resources
of Malaysia
Mineral Gold, Copper, Tin, Silica sand, Bauxite, and
Resources Limestone.

Crops Palm oil, Rubber, Coconuts, Pineapples,

Pepper, Hemp and Tobacco.

Petroleum Crude oil

Table 2: Natural Resources of Malaysia

 Everything material in our culture ultimately comes from natural resources.
Malaysia’s most economically significant natural resource is tin, its tin deposits are the

most extensive in the world. Other important natural resources are bauxite, copper,

gold, iron ore, natural gas, petroleum, and timber.

Malaysia is the world’s leading tin producer and an important producer of other

non energy minerals including bauxite, coal, copper, gold, and iron. However, mining

has declined in its contribution to the economy and labor force.

Resources are very important for the development of any country. It is available

in fixed quantity and non- renewable. For example, every country requires mineral

resources for industrial development.

Policy or Law Enactment of Malaysia

Table 2: The fiscal Position of the Government during

the first 5 months of 2019 and 2018
 Malaysia is using a fiscal policy wherein it involves the government changing the

levels of taxation and government spending in order to influence aggregate demand

(AD) and the level of economic activity. Discretionary fiscal actions include increasing

government expenditure, capital expenditure and tax reduction. They further asserted

that fiscal deficits do not occur due to the cumulative effects of inefficiency and

long-term expenses such as wages for civil servants.

Given the current fiscal performance, Finance Minister Lim Guan Eng has

reaffirmed his confidence that the government would likely achieve its fiscal deficit

target of 3.4% of gross domestic product (GDP) in 2019. He also said in a statement as

of July24, 2019, the government was “on track to fully restore its fiscal health by 2021”.

More likely, by just getting the fiscal balance, Malaysia was able to stimulate

economic growth in a period of a recession.

 Labor or Workforce

Figure 1: Working age population and its Labour Force

The Malaysian Employment Act defines workweek of 48 hours, with a maximum of 8

hours per day and six days a week working. There are special restrictions, in industry or

agriculture, where they are not allowed to work between 10 pm and 5 am. The data

shows the labour force participation rate in July 2019, it decreased 0.1 percentage point

to 68.5 percent as compared to the previous month. Similarly, year-on-year labour force

participation rate decreased 0.1 percentage point (July 2018: 68.6%).

 Figure 2: Growth projection

The rising cost of living has been a key source of concern for large segments of the

population. Although headline inflation has been benign in recent years, food prices

have increased fast. This has increased the burden of families, especially the

low-income groups that consume more on food items. The government implemented

different initiatives and as well as programmes that will help the rising cost of living, one

of those is cash transfers and price controls. They also believe that the progress of the

country could also be made by providing a more targeted support, boosting

entrepreneurship, improving productivity and employability among the low-income

households.
 Conclusion

Malaysia’s success in reducing income inequality played an important role in the

country’s success at reducing poverty, in combination with economic growth. Malaysia

can claim more success than most countries in managing relative inequality.

Meanwhile, growth is projected to be resilient, though with downside risks on the

external front, mainly due to slowing global trade. Inflation is low.

A growing population can generate economic growth. Increased purchases in

products such as food, clothing, education-related expenses, sporting goods and toys

feed the economy, however unchecked population growth without equal agricultural

advancement to meet it leads to food shortages in a country that's why Malaysia's

government uses fiscal policy wherein their country sustainability needs to be ensured.

They promoted access to education and social services, notably healthcare, helping to

achieve a significant decline in poverty. For instance, Malaysia's reducing inequality

between ethnic groups (Chinese, Indian, Malay and indigenous people) continues to be

a priority on the policy agenda to ensure social cohesion.

 MALAYSIA 
ECONOMIC DEVELOPMENT 
 
 
 
 
 
 
 
 
 
 

Submitted by: Submitted to: 

Group 8 DR. Ocampo 
Members: 
Regencia, Eunice Ann 
Cuyos, Loveriel Joy 
Malucon, Maria Angel Ann 
Gaspe, Erica G.