Diversity of cultures and resources: This multi-ethnic nation is home to a constantly evolving economy

Since gaining independence from Britain in 1957 Malaysia has undergone a dramatic transformation. Following self-rule, the country was highly dependent on a limited range of primary commodities and much of the populace lived below the poverty line. Today, after decades of robust growth and sound government planning, Malaysia has a diversified upper-middle income economy, along with a stable multi-party democracy that allows the nation’s diverse ethnic groups – such as Malay, Indian and Chinese – to be encompassed within the political system.

DEVELOPMENT PLANS: Progress aside, Malaysia still faces big challenges, including a human resources shortage in key industries, intensifying regional competition for foreign investment and the threat of stagnation within the middle-income trap, which has ensnared several developing economies in recent decades. In order to overcome these hurdles and reach high-income status by the year 2020, the government is now placing a greater emphasis on private sector growth and value-added industries through several development plans. These plans include the New Economic Model, the Economic Transformation Programme (ETP), the 10th Malaysia Plan and the Government Transformation Programme.

Putting all of these plans into practice will be difficult but achievable. Indeed, early indications suggest that the state is making progress in executing its liberal reform programme. Announcing the 2013 budget in late September 2012, the prime minister reported that RM75.3bn ($24.29bn) in private investment had been achieved in the first half of 2012. Moreover, as of November 2012, 93% of the ETP’s entry point projects were under way and 36% were operational across a number of economic areas.

POPULATION: According to official figures, Malaysia’s population was just under 29m at the end of 2010, up from 23m in 2000. About one-third of the current population is below the age of 18 and only 5% are above the age of 65. Most of the people live on the country’s peninsula, especially in the Klang Valley, Penang and Johor. On the mountainous eastern island of Borneo, the states of Sabah and Sarawak are sparsely inhabited, with a total population of roughly 5m. The population of Sabah is growing rapidly, however, and now has the nation’s highest growth rate at nearly 4%.

Over the centuries, successive waves of migration to Malaysia have produced a diverse mix of languages, religions and cultures. The country’s largest ethnic group is Malay (60%), followed by Chinese (25%) and Indian (10%). Whereas the Malay, or bumiputera, are primarily Muslim, the Chinese and Indian minorities are mainly Buddhist and Hindu, respectively. Through the 1Malaysia initiative, the government is encouraging all ethnic groups in Malaysia to embrace a more unified culture in order to promote community building, effective governance and civil society.

GEOGRAPHY & CLIMATE: Malaysia includes 13 states across a total land area of 330,000 sq km. Whereas 11 states are in Peninsular Malaysia, which is situated to the south of Thailand, the two states of Sabah and Sarawak are located to the east on the northern portion of the island of Borneo. Eastern Malaysia is separated from the peninsula by the South China Sea, and both Sabah and Sarawak share their borders with Indonesia and the sultanate of Brunei Darussalam.

Located on the south-east of the peninsula, the Malaysian capital of Kuala Lumpur is roughly 300 km from Singapore. Peninsular Malaysia is divided into west and east by the Titiwangsa Mountains.

The country’s tropical climate is hot and humid year round. From April to September, monsoon winds bring significant rainfall and occasional flooding. The landscapes in both the east and west have similar but varied features, including coastal planes, hills, rugged mountains, flat paddy fields, and both secondary and old-growth rainforests that host an incredible array of flora and fauna. In Sabah, Kinabalu Park alone contains more than 5000 species of flowering plants, over 150 species of trees, around 100 kinds of mammals and some 326 species of birds. Sabah also features the country’s tallest mountains, including Mount Kinabalu, which attracts tens of thousands of climbers each year.

LANGUAGE & CULTURE: Most Malaysians practice Islam, which is the nation’s official religion. In addition, Malaysia is considered a key member of the Organisation of the Islamic Conference. Nonetheless, freedom of worship is guaranteed under the constitution, and the population includes Buddhists, Taoists, Hindus, Christians and Sikhs, as well as animist religions still practised by some indigenous tribes.

The country’s official language is Bahasa Malaysia. However, English is widely used, as it was the administrative language of the British colonisers. A number of Indian and Chinese languages are also spoken as well as Thai and indigenous languages such as Tamil and Iban. As the country has become more integrated into the global economy, English has become more important in the education system and has emerged as the lingua franca of the business community. Moreover, English is often used at official functions and speeches and at business conferences.

EDUCATION: In the past 20 years the government has consistently dedicated 20% to 25% of its budget to the education sector. Due to high government spending, progressive policies and rapid economic growth, educational indicators have improved significantly during this time. From 1990-2010, preschool participation among children aged four and five surged from 25% to 72%, and adult literacy rose from 82% to 92%, with plans under way to push this figure to 100% by 2016.

Given the government’s focus on creating a more innovative and knowledgeable society, education has become a focal point for policymakers. The focus is on boosting enrolment in early childhood education, and on increasing the number of postgraduate degree holders, especially in fields related to science and technology. In the coming years, both of these goals will involve more private sector participation, and more international benchmarking to ensure quality control.

NATIONAL RESOURCES: Malaysia has long benefitted from an abundance of natural resources such as tin, rubber, timber and palm oil. It was tin mining that first attracted Western attention to the Malay states, while colonial British planters transformed the country’s arable land into rubber and oil plantations.

Although Malaysia remains a primary exporter of rubber and palm oil, its tin mining is no longer a significant industry. Malaysia produces over half of the world’s palm oil, and increasing global demand for the commodity bodes well for the industry. Though arable land is restricted due to environmental concerns, Malaysian plantations also cultivate cocoa, timber, pepper, pineapple and sugar canes. Copper, iron ore and bauxite are also present in Malaysia, and rice paddies dot the northern areas of the peninsula.

Figures from the national oil company Petronas indicate that Malaysia’s hydrocarbons reserves stand at 20.2bn barrels of oil equivalent (boe), with average production at 1.66m boe per day. National oil reserves are located almost entirely offshore, mostly in the South China Sea off Sabah and Sarawak, and current investment in enhanced oil recovery techniques is designed to extend the life of the country’s reserves. Malaysia is also intensifying research and development in renewable energy, and considering nuclear power plants as an alternative fuel for electricity generation.

HISTORY: It is believed that indigenous Malays began arriving from south-western China around 10,000 BCE. As early as the first century CE Malaysia began developing through shipping and trading – industries that heavily influenced the settlement of the Malay Archipelago. Traders from India brought Hindu and Buddhist practices to the peninsula, and Islam was introduced via Muslim merchants travelling through the Strait of Malacca. Due to its strategic location along major trading routes, the Islamic city-state of Malacca flourished until the Portuguese invaded in 1511, beginning four centuries of European rule. Johor was the last area to remain independent from European administration, submitting to British control in 1916.

During the Second World War, Malaysia was invaded by Japan; however, this brief occupation ended in 1945 when British rule was restored. In 1948 Malaysia was granted semi-autonomous status. Nonetheless, the emergence of communist insurgency in the area made it difficult for the British to retain control. Responding to these and other pressures, the UK officially withdrew in 1957, and Abdul Rahman Putra Al Haj was named the country’s first prime minister.

After becoming prime minister in 1981, Mahathir Mohamad began implementing a liberal economic reform programme that included the privatisation of a number of state-owned industries, and the economy expanded rapidly throughout the 1980s and 1990s, though growth temporarily stalled due to the Asian financial crisis of 1997-98. After winning elections in 2004, Abdullah Badawi implemented a historic free trade agreement with Japan. In 2009 Najib Razak was appointed the country’s sixth prime minister as the leader of the National Front coalition government.