Malaysia’s Economic Development

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Malaysia boasts of a rapid development unprecedented and unforeseen in any other developing country. What we are looking at are annual GDP growth rates of 8% and greater compared to other neighbouring SE Asian economies and other Asian Economics such as India that has shown a growth rate of around 4% and Pakistan that has experienced sluggish growth as low as 2%, but not greater that 5% over the past decade.

Recently known as a NIC Newly Industrialised Country and emerging market, their basic characteristic are rapid economic growth that has been sustained over a longer term time horizon; their and economic policies having a clear determined path towards upgrading and reinvesting in their private and public sectors. The result is a country with an unparalleld economic drive amongst other Asian economies. A distinctive feature of the investments are corporate investments between public and private sectors resulting in conglomerates flourishing in capital, fostering private investments and a planned city with an emphasis on improved infrastructure and accessibility.

What manifests this accessibility and does it hide differences in regional development in the country? How much of the seemingly urban wealth that has been generated has trickled down towards hinterland areas and other towns. In other words have the average standards of living improved for ordinary Malaysians or does this statistic hide wider differences? Has economic development affected all equally or has it caused some impoverishment within society? These are just a few of the pertinent questions that skim the surface of the consequences of economic development in this country. Setting aside the impressive GDP growth rate figures and capital investments, in 2000 public and private capital investments were US$ 900 billion and grew to US$150,billion annually. Inflation rates are predicted to be slightly higher at 3.8% for 2010 as interest rates are generally low averaging about 2% to 3%. For any growth to be meaningful inflation rates would have to be maintained at low levels.

In the outskirts of a village, several houses dotted amongst the paddy fields, their platforms raised on wooden stilts for a foundation is a picture of a typically agrarian Asian countryside of low incomes and a subsistence livelihood. The little town adjacent, telling a similar tale about a difficult economic drive towards maintaining crucial reinvestments. What is significant though is the services they are offering and the inclination offered by liberal trade and capital in fostering small business. The majority of these businesses cater to the tourist industry and thrive during the tourist season. A drive around takes one to a desolate factory that either manufactures when stockpiles are low and has a stunted production process and a brewery that produces seasonally and lays off workers for the rest of the year. The result is high seasonal unemployment. A higher rate than the national average. This would be the case of all tourist towns around unless they are drawing in vast amounts of investments. The standard of living is generally high in Asia and comparable to other local ASEAN economies.

The standard of living indicators that we have used are indicated by the number of telephone and internet connections as an increasing volume of business is being conducted more efficiently with these channels; public subsidies and per capita power consumption. Internet connectivity per 10,000 is 25.43 compared to 162.82 in neighbouring Hong Kong 1,939.97 in the US, but much higher than the dwindling 0.34 in Pakistan and 0.23 in India. The power sector has been taken as a significant indicator of type of development that has occurred in economies. Per capita commercial energy use kg of oil equivalent was 2237kg/capita towards in 1997. Electricity consumption per capita 2352 kW h compared to 4959 in Hong Kong; 333 kW h in Pakistan and 363 kW h in India.

Public policy programmes are run by the state subsidies that are designed to enhance the quality of education and services and ensure public goods are provided to all and market failures avoided as they are known to when public services break down. As a % of total expenditure, subsidies and other current transfers were 24% in 1997 and have since increased in light of government policy on promoting subsidies for workforce development. Although free capital does incline towards a harsher environment where some areas attract more capital than others, a well planned development path aimed at providing essential services to all on the basis of a private and public investments being targeted in particular towards industrial growth. The magnitude of these investments highlights how much capital flows into the country. In 2000 net private capital flows were US$8.295 billion in addition to foreign direct investment of US$5 billion. Merchandise exports were US$73.305 million that year.

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