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Geography
The Federation of Malaysia consists of two
parts: Peninsular Malaysia and East Malaysia.
Peninsular Malaysia adjoins Thailand to the
north and is connected by a causeway to Singapore
in the south. Its total land area is 131,000
square kilometres. East Malaysia lies some
600 kilometres east of Peninsular Malaysia
and occupies a broad strip running from the
westernmost to the northernmost tip of the
island of Borneo, with a land area of some
198,000 square kilometres.
Demography
The population was estimated to be approximately
18.6 million in 1992, and the rate of growth
was 2.5% per annum between 1982 and 1989.
The urban population accounts for some 35%
of the total. The principal urban concentration
is in the Klang Valley, around the Federal
capital city of Kuala Lumpur (1.2 million
inhabitants), where the population is growing
annually at a rate of 7%. Peninsular Malaysia's
population is 14.8 million, against 3.2 million
in East Malaysia. Some 76% of the adult population
is claimed to be literate, and 38% of the
total population is under the age of 15.
Malays and other indigenous ethnic groups
(together known as "Bumiputras")
account for 59% of the population, the Chinese
for 32% and Indians for 8%. The official
language is Bahasa Malaysia (Malay), but
English still predominates in industry and
commerce. The official religion of the country
is Islam, but there is freedom of worship.
In 1991, the total labour force was 7.05
million. The agricultural sector still has
the largest share of employment (31% in 1991),
and 28% of the workforce was engaged in commerce
and services, 17% in manufacturing, 14% in
the public sector and 6% in construction.
With the emergence of labour shortages, the
government announced in late 1991 that more
foreign workers could be recruited in the
plantation, construction and domestic service
sectors under the Foreign Labour Recruitment
Policy. The rate of unemployment in 1992
was just over 4%.
History and Political Situation
In 1957, the Federation of Malaya, comprising
the 11 states of Peninsular Malaysia gained
independence from the United Kingdom The
Federation became known as Malaysia with
the accession of three further states, Singapore,
Sarawak and Sabah in September 1963. In August
1965 Singapore withdrew from the Federation
to become an independent sovereign state.
Malaysia is a federal constitutional monarchy.
Its head of state is the king who is elected
for a five year term by the nine hereditary
Sultans of the eleven states of Peninsular
Malaysia. The King (the Yang-di-Petuan Agong),
advised by the Prime Minister and his Cabinet,
has powers to delay legislation, though not
to reject it. The Malaysian Parliament consists
of a House of Representatives (Dewan Rakyat)
and a Senate (Dewan Negara); the former consists
of 180 members chosen in general elections
held at no more than five year intervals;
the Senate is composed of 26 elected members,
two from each of the 13 states, and 43 members
appointed by the King on the advice of the
Prime Minister. Each of the 13 states has
its own constitution and assembly to handle
matters not dealt with by the federal government,
thereby permitting a degree of autonomy.
The four states of Melaka, Penang, Sabah
and Sarawak are each headed by a governor
who is appointed for a term of four years
by the King on the advice of the Prime Minister.
The Barisan Nasional (National Front), a
multi-racial coalition currently comprising
thirteen parties, has governed Malaysia since
1957. The largest party, The United Malays
National Organisation (UNMO), representing
the biggest ethnic group, the Malays, has
headed each coalition government since independence.
There is therefore a generally very stable
political environment.
The other main parties in the coalition are
the Malaysian Chinese Association (MCA),
The Malaysian Indian Congress (MIC), the
Gerakan Party, the Parti Pesaka Bumiputera
Bersatu (PBB), the Democratic Action Party
(DAP), the dominant party in Sarawak, and
the Parti Bersatu Sabah (PBS). The prime
minister and leader of UMNO, Datuk Seri Dr.
Mahathir Mohamad, is Malaysia's fourth elected
prime minister and has been leader of the
National Front government since 1981.
In the last elections in October 1990, the
Barisan National won 127 out of 180 seats
in the lower House of Parliament, a reduction
of 21 seats from the previous elections in
1986. Its share of the popular vote fell
from 57% to 52%. This largely reflected UMNO's
loss of Malay support to its breakaway faction
Semangat '46. It also lost control of the
state assemblies of Kelantan and Sabah.
Economy
Malaysia has historically been an exporter
of primary products such as rubber, tin palm
oil and timber. In 1991 Malaysia accounted
for some 50% of world palm oil production,
generating exports of about US$ 1.8 billion.
Tin products in 1991 were estimated at US$
251 million, but Malaysia's relatively high
extraction costs have led output to decline
from 61,400 tonnes in 1980, to 20,710 tonnes
in 1991. In the mid 1970s export manufacturing,
in particular of textiles and electronics,
began to develop, based on an accommodative
government attitude towards incoming foreign
investment and a skilled low-cost labour
force. Malaysia has become one of the world's
three largest manufacturers of semi-conductors
and air conditioners. The New Economic Policy
(NEP) was adopted in 1971, as part of the
response to the 1969 race riots, to ameliorate
the economic plight of the numerically superior
Malays and to eradicate poverty, irrespective
of race. To this end "Bumiputras"
(or native Malays) were to increase their
ownership of the corporate sector to 30%
by 1990, with other Malaysians holding 40%
and the stake of foreigners in corporate
equity falling to 30%. The NEP has been the
cornerstone of government policy since 1971,
with an increase in spending on basic services
and education and the setting up of trust
agencies to finance "Bumiputra"
enterprises.
Following the expiry of the NEP in 1990,
the government introduced the New Development
Policy (NDP) in 1991 as the framework for
economic policy between 1991 and 2000. While
still holding the NEP's twin objectives of
poverty eradication and ethnic redistribution
of wealth, NDP places greater emphasis on
redistribution through rapid growth rather
than outright favouritism, with, as its overriding
goal, rapid industrialisation.
Malaysia's economy has enjoyed real annual
growth at an average rate of 8.4% in the
last 5 years, with the manufacturing sector
contributing more than 40% of the total growth
and the finance, agriculture and transport
sectors each contributing about 10% each.
This rapid growth continued in 1992 when
the economy began showing signs of overheating
as a consequence of successive years of rapid
expansion - inflation and wages rose relatively
rapidly, by 4.7% and approximately 10% respectively
and labour shortages emerged in the plantation,
construction and manufacturing sectors. After
several years of successfully attracting
huge direct foreign investment inflows (approximately
US$ 6.5 billion of approvals in 1991 alone),
the government is increasingly encouraging
higher value-added manufacturing projects,
as well as those which exploit the national
resource base.
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