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$Unique_ID{COW02338}
$Pretitle{245}
$Title{Malaysia
Economy}
$Subtitle{}
$Author{Embassy of Malaysia, Washington DC}
$Affiliation{Embassy of Malaysia, Washington DC}
$Subject{malaysia
million
per
development
cent
oil
products
exports
industries
largest}
$Date{1990}
$Log{Highway*0233801.scf
Table 1.*0233801.tab
Table 2.*0233802.tab
}
Country: Malaysia
Book: Malaysia in Brief
Author: Embassy of Malaysia, Washington DC
Affiliation: Embassy of Malaysia, Washington DC
Date: 1990
Economy
[See Highway: Courtesy Embassy of Indonesia, Washington DC.]
ECONOMY
Malaysia, basically a developing free-enterprise agriculture-based
economy, has since her independence, progressed from a country mainly
dependent on her raw commodity exports to a nation which has successfully
diversified to become a leading exporter of manufactured goods.
The country is the world's largest producer and exporter of palm oil,
rubber and tin. It is also a major producer of cocoa and pepper and a
significant exporter of timber and wood products. Crude petroleum and
liquefied natural gas (LNG) jointly head the export list.
The Agriculture (includes forestry and fishing), manufacturing and
mining sectors are the biggest contributors to the economy. The agriculture
sector's contributions to the Gross Domestic Products (GDP) has been
declining with an increasing role played by the manufacturing sector. In
1988, the manufacturing sector overtook the agriculture sector (which
accounted for 21.5 per cent of GDP) to become the leading sector in the
Malaysian economy, accounting for 24 per cent of GDP. In 1983, manufacturing
and agriculture contributed 18 per cent and 22.4 per cent to GDP
respectively. Exports of manufactures, valued at M $26,917 million made up 48.5
per cent of total exports in 1988, whereas agriculture contributed 33.4 per
cent amounting to M $18,513 million.
However, the agriculture sector maintained its lead in the provision of
employment with 31.9 per cent of Malaysia's working population of 5,881,000
engaged in the sector in 1988.
The mining industry contributed 10.4 per cent to the nation's GDP in
1988. Export earnings from minerals, including tin, petroleum and liquefied
natural gas, amounted to $9.3 billion or 16.7 per cent of total exports.
Having sustained high annual GDP growth rates averaging above 5% in the
early part of the decade, Malaysia was able to weather the worldwide recession
with a GDP growth of 1.2 per cent in 1986 and accelerating to 5.2 per cent in
1987 and 8.1 per cent in 1988. The Gross National Product at 1978 prices was
M $65,900 million in 1986 and M $73,000 million in 1987 and M $85,300 million in
1988. The Gross National savings amounted to M $18,000 million with per capita
income at M $4,088 in 1986 while in 1987 Gross National savings stood at
M $23,400 million with per capita income at M $4,412 and in 1988 the Gross
National savings amounted to M $28,000 million with per capita income at
M $5,040.
RUBBER
Malaysia is the world's largest producer of natural rubber. In 1988,
rubber output amounted to 1.66 million tonnes to account for 33.4 per cent of
world production. A total of 1,622,000 tonnes of rubber was exported valued at
M $5,256 million. The main importing countries were the EEC, Singapore,
Republic of Korea, USA, People's Republic of China, Japan and the Soviet
Union.
TIMBER
Timber is one of Malaysia's largest earners of foreign exchange. In 1988
the total output of saw logs was 34.3 million cubic metres and production of
sawn timber amounted to 6.6 million cubic metres. Export earnings for the year
totalled M $5,851 million from both saw logs and sawn timber.
The main buyer of the saw logs were Japan, Taiwan and Republic of Korea
whereas sawn timber exports mainly went to the EEC, Singapore, Thailand and
Japan.
OIL PALM
Malaysia is the world's largest producer of palm oil with its production
of 5 million tonnes of crude palm oil in 1988 accounting for 59.4 per cent of
world production. In 1988, Malaysia exported 4,164,000 tonnes of palm oil
products comprising crude and processed palm oil and palm kernel oil valued at
M $5,172 million. The major markets were India, Singapore, Pakistan and the
EEC.
COCOA
Malaysia has emerged as the fourth largest producer of cocoa in the world
and accounted for about 10 per cent of total production in 1988. It is the
third most important agricultural crop in the country. Malaysia's output in
1988 stood at 235,000 tonnes with exports valued at M $709 million.
Netherlands is Malaysia's largest cocoa export market.
PEPPER
Malaysia is the third largest producer of pepper in the world and
accounts for about 14.2 per cent of total production. Pepper exports earned
M $158 million in 1988.
RICE
The rice industry is the second most important economic activity in
Malaysia in term of labour employment and land utilisation. Padi production in
the last crop year was 1.725 million tonnes.
OTHER CROPS
Other crops of significance are coconut, vegetables, pineapples, sago,
tapioca, sugar-cane, coffee, tea, tobacco, maize and groundnuts. Sugar-cane
and tea are grown as plantation crops while small-holders predominate in the
cultivation of other crops.
FISHERIES
To supplement the inadequate domestic supply Malaysia has to import fish.
Total landing of marine fish in 1987 is estimated at 515,000 tonnes.
PETROLEUM
The petroleum industry in Malaysia is a significant contributor to the
economy of the nation and is the single largest primary commodity export
earner. Oil strikes have been made off the coast of Peninsular Malaysia, and
offshore Sabah and Sarawak. In 1988, crude oil production was at 542,000
barrels per day. Exports of crude petroleum fetched M $6.338 billion. The major
buyers were Singapore, Japan, Republic of Korea, the Philippines and Thailand.
TIN
In 1988, Malaysia which is the major supplier of tin in the world,
produced 28,866 tonnes of tin-in-concentrates. Export receipts from tin metal
amounted to M $911 million that year. The main buyers were the EEC, Japan,
Singapore, United States, India and Taiwan.
MANUFACTURING
Malaysia's kick-off towards industrialisation began in the area of import
substitution during the late sixties and early seventies with rapid expansion
in the food, household appliances, furniture and clothing industries. The
later part of the seventies saw the shift towards export-oriented
manufacturing, with increasing emphasis today being placed on heavy and high
technology industries.
The establishment of Free Trade Zones in various states has enabled an
increasing number of export-oriented industries, such as the manufacturing of
electronic equipment, rubber shoes and textiles, to be located in the zones.
Malaysia is the world's largest exporter of semi-conductors and rubber gloves
and the third largest exporter of room air-conditioners.
To encourage greater industrialisation, tax exemptions like a tax-free
holiday for a maximum of ten years, investment tax credit, accelerated
depreciation allowances and export incentives are granted to approved
industries. In addition, there is tariff protection, exemption from import
duty, surtax and excise and labour utilisation tax relief granted for the
establishment of new industries.
Leading industries are food products, tobacco, wood products, electrical
goods, textile, chemical products, construction goods, non-metallic products,
transport equipment, and the processing of agricultural products (palm oil,
rubber, coconut and tea).
INDUSTRIAL MASTER PLAN (IMP)
The IMP represents a comprehensive study intended to provide the basis
for industrial policies up to the year 1995 and covers 12 industries - rubber
products, palm oil products, food-processing, wood-based, chemical and
petrochemical, non-ferrous metal, non-metallic mineral products, electronics
and electrical, transport equipment an