Economy of Malaysia 19112 225665234 2008-07-14T20:19:21Z Rjwilmsi 203434 gen fixes + link/fix date fields in cite templates (explanation [[User:Rjwilmsi#My_correction_of_dates_in_templates|here]]) using [[Project:AutoWikiBrowser|AWB]] {{Economy of Malaysia table}} [[Malaysia]] is a growing and relatively [[open economy]]. In 2007, the '''economy of Malaysia''' was the [[List of countries by GDP (PPP)|29th largest economy in the world]] by [[purchasing power parity]] with gross domestic product for 2007 was estimated to be $357.9 billion with a growth rate of 5% to 7% since 2007<ref>{{cite news| title=Malaysia resilient against global economic slump | url=http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_7a3ef830-cb73c03a-c1186f00-95cc4df1| publisher=The Edge| author=| accessdate=2008-04-23}}</ref> The Southeast Asian nation experienced an economic boom and underwent rapid development during the late 20th century. With a GDP per capita standing at US$14,400, it has, from time to time, been considered a [[newly industrialized country]].<ref name=Globalization>{{cite book|title=Globalization and the Transformation of Foreign Economic Policy|author=Paweł Bożyk|chapter=Newly Industrialized Countries|pages=164|publisher=Ashgate Publishing, Ltd|year=2006|isbn=0-75-464638-6}}</ref><ref name=Principles>{{cite book|title=Principles of Economics|author=N. Gregory Mankiw|year=4th Edition 2007|isbn=0-32-422472-9}}</ref> On the income distribution, there are 5.8 million households in 2007. Of that, 8.6% have an monthly income below RM1,000, 29.4% had between RM1,000 and RM2,000, while 19.8% earned between RM2,001 and RM3,000; 12.9% of the households earned between RM3,001 and RM4,000 and 8.6% between RM4,001 and RM5,000. Finally, around 15.8% of the households have an income of between RM5,001 and RM10,000 and 4.9% have an income of RM10,000 and above.<ref>{{cite news| title= Half of M’sian households earn below RM3,000 a month| url= http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_af703730-cb73c03a-1b092820-e338574e| publisher=The Edge| accessdate=2008-07-10| date=2008-07-10| author=Pauline Puah }}</ref> As one of three countries that control the [[Strait of Malacca]], international trade plays a large role in its economy.<ref> The Prime Minister's Office. [http://www.pmo.gov.my/WebNotesApp/tpmmain.nsf/10542456114e04a748256c36001576f6/09ee4377fd049191482572aa00144782?OpenDocument The Security of the Straits of Malacca and its implications to the Southeast Asia regional security]. Retrieved November 26 2007.</ref> At one time, it was the largest producer of [[tin]], [[rubber]] and [[palm oil]] in the world.<ref>[[American University]]. [http://www.american.edu/TED/tin.htm Tin Mining in Malaysia]. Retrieved November 14 2007. </ref><ref>Malaysian Palm Oil Council. [http://www.mpoc.org.my/mktstat_pub_111006_01.asp Malaysian Palm Oil]. Retrieved November 14 2007. </ref> Manufacturing has a large influence in the country's economy.<ref>[[Bank Negara Malaysia|Bank Negara]]. [http://www.bnm.gov.my/index.php?ch=111 BNM National Summary Data Page]. Retrieved November 8 2007</ref> ==Background== ===Early and colonial history=== The [[Malay Peninsula]] and indeed [[Southeast Asia]] has been a center for trade for centuries. Various items such as [[porcelain]] and [[spice]] were actively traded even before [[Sultanate of Malacca|Malacca]] and [[Singapore]] rose to prominence. In the 17th century, large deposits of [[tin]] were found in several [[Malay states]]. Later, as the [[British Empire|British]] started to take over as administrators of [[British Malaya|Malaya]], [[rubber]] and [[palm oil]] trees were introduced for commercial purposes. Over time, Malaya became the world’s largest producer of tin, rubber, and palm oil. These three commodities along with other raw materials firmly set [[Malaysia]]'s economic tempo well into the mid-20th century. ===Post-independence=== During the 1970s, Malaysia followed the footsteps of the original four [[Asian Tigers]] and committed itself to transition from reliance on mining and agriculture to manufacturing. With [[Japan]]’s assistance, heavy industries flourished and in a matter of years, Malaysian [[export]]s became the country's primary growth engine. Malaysia consistently achieved more than 7% [[GDP]] growth along with low [[inflation]] in the 1980s and the 1990s. Current GDP per capita grew 31% in the Sixties and an amazing 358% in the Seventies but this proved unsustainable and growth scaled back sharply to 36% in the Eighties rising again to 59% in the Nineties led primarily by export-oriented industries. <ref>{{cite news| url=http://earthtrends.wri.org/text/economics-business/variable-638.html | title=Economics, Business, and the Environment — GDP: GDP per capita, current US dollars| publisher= Earth Trends}}</ref>. The rate of [[poverty in Malaysia]] also fell dramatically over the years. However, its precipitous drop has been questioned by critics who suggest that the [[poverty line]] has been drawn at an unreasonably low level.<ref>{{cite book |last=Musa |first=M. Bakri |title=Towards A Competitive Malaysia |year=2007 |publisher=Strategic Information and Research Development Centre |location=Petaling Jaya |isbn=978-983-3782-20-8|pages=124 }}</ref> Central planning has been a major factor in the Malaysian economy, as government expenditure was often used to stimulate the economy. Since 1955, with the commencement of the [[First Malayan Five Year Plan]], the government has used these plans to intervene in the economy to achieve such goals as redistribution of wealth and investment in, for instance, infrastructure projects.<ref>{{cite news|last=Mills |first=Greg |url=http://malaysia-today.net/blog2006/?itemid=4315 |title=South Africa: bumping against the Bumiputra policy |publisher=Malaysia Today|date=[[2007-05-01]]}}</ref> A legacy of the British colonial system was the division of Malaysians into three groups according to ethnicity. The Malays were concentrated in their traditional villages, focusing mainly on agricultural activities, while the Chinese dominated Malaysian commerce. Educated Indians took up professional roles such as those of [[physician|doctor]]s or [[lawyer]]s, while the less better-off worked the plantations.<ref>Abdullah, Asma & Pedersen, Paul B. (2003). ''Understanding Multicultural Malaysia'', p. 44. Pearson Malaysia. ISBN 983-2639-21-2.</ref><ref>Rashid, Rehman (1993). ''A Malaysian Journey'', p. 28. Self-published. ISBN 983-99819-1-9.</ref> The [[Reid Commission]] which drafted the [[Malaysian Constitution]] made a provision for limited [[affirmative action]] through [[Article 153]], which gave the Malays special privileges, such as 60% of university entrance (quota). However, after the [[May 13 incident]] of racial rioting in the federal capital of [[Kuala Lumpur]], the government initiated more aggressive programmes aimed at actively establishing a Malay entrepreneurial class through direct intervention in the economy. The first five year plan that implemented these goals was the [[Second Malaysia Plan]]; its perceived heavy-handedness led to a new emphasis in the [[Third Malaysia Plan]] on a growing economic pie, so as to avoid [[robbing Peter to pay Paul]]. As of 2006, the most recent five year plan is the [[Ninth Malaysia Plan]]. The five year plans have been criticised for resembling the [[central planning]] of [[Soviet communism]]; the five-year time frame has been attacked for being insufficient in dealing with short-term crises and long-term trends.<ref>Musa, p. 309.</ref> The effectiveness of the plans has also been disputed; at the beginning of 2005, the last year of the Eighth Malaysia Plan, almost 80% of the funds allocated under the plan had not been disbursed.<ref>Musa, p. 314.</ref> There has also been a trend towards government involvement in the economy through government-linked companies (GLCs). Their purpose was to "[level] the economic playing field" and "serve as the vehicles for Malay entry into the private sector" according to one commentator. However, several GLCs were reportedly taken over by the [[United Malays National Organisation]] (UMNO), the ruling party, through [[nominee]]s, resulting in criticism that they were vehicles for corruption.<ref>Musa, pp. 296&ndash;297.</ref> ===Tiger economy=== ====Macro-economic trend==== This is a chart of trend of gross domestic product of Malaysia at market prices <ref>{{cite news | url =http://www.imf.org/external/pubs/ft/weo/2006/01/data/dbcselm.cfm?G=2001 | title= World Economic Outlook Database| author=}}</ref> estimated by the International Monetary Fund with figures in millions of Malaysian Ringgit. {| class="toccolours sortable" border="1" cellpadding="3" style="border-collapse:collapse; width:40em" |- ! Year || GDP<br>(in millions) || Exchange<br>(1 USD to MYR) || Inflation Index<br>(2000=100) |- | align="center"|'''1980''' || align="right"|54,285 || align="center"|2.17 || align="right"|51 |- | align="center"|'''1985''' || align="right"|78,890 || align="center"|2.48 || align="right"|64 |- | align="center"|'''1990''' || align="right"|119,082 || align="center"|2.70 || align="right"|70 |- | align="center"|'''1995''' || align="right"|222,473 || align="center"|2.50 || align="right"|85 |- | align="center"|'''2000''' || align="right"|343,216 || align="center"|3.80 || align="right"|100 |- | align="center"|'''2005''' || align="right"|494,544 || align="center"|3.78 || align="right"|109 |} For purchasing power parity comparisons, the US Dollar is exchanged at 1.70 Ringgit only. Average wages in 2007 hover around $30-37 per day. From 1988 to 1997, the economy experienced a period of broad diversification and sustained rapid growth averaging 9% annually. By 1999, nominal per capita GDP had reached $3,238. New foreign and domestic [[investment]] played a significant role in the transformation of Malaysia's economy. Manufacturing grew from 13.9% of GDP in 1970 to 30% in 1999 , while [[agriculture]] and [[mining]] which together had accounted for 42.7% of GDP in 1970, dropped to 9.3% and 7.3%, respectively, in 1999. Manufacturing accounted for 30% of GDP (1999). Major products include electronic components -- Malaysia is one of the world's largest exporters of [[semiconductor devices]] -- electrical goods and appliances. During the same period, the government tried to eradicate poverty with a controversial race-conscious positive program called [[New Economic Policy (Malaysia)|New Economic Policy]] (NEP). First established in 1971 following race riots, commonly known in Malaysia as the [[May 13 Incident]], it sought to eradicate [[poverty]] and end the identification of economic function with ethnicity. In particular, it was designed to improve the distribution of wealth among the country's population.. The NEP ostensibly ended in 1991, however the policies persist in the form of other programmes such as the National Development Policy. The policies are enforced overtly through race-based quotas for low-cost housing units, university placement, business equity ownership, etc. Rapid growth was achieved partly through [[privatisation]] of inefficient [[state owned enterprises]], thus subjecting them to commercial pressures and forcing them to better utilise their resources. Many deals were done behind closed doors and put through rather quickly. In one example [[Khazanah Nasional]] alienated shares in [[DRB-HICOM|DRB Hicom]] to [[Mega Consolidated]]. This led to such deals being labelled mega projects. Foreign funds were attracted to invest making the local money market and bourse liquid. This created opportunity for local businesses to raise capital on the [[KLSE]], and carry out infrastructure development in areas like telecommunications, highways and power generation to meet bottlenecks caused by rapid industrialisation. An intense labor shortage created employment for millions of foreign workers. Subsequent events show that more than 50% were illegal. The influx of foreign investment led to the [[Bursa Malaysia|KLSE]] [[index (economics)|Composite index]] trading above 1,300 in 1994 and the Ringgit trading above 2.5 in 1997. At various times the KLSE was the most active exchange in the world, with trading volume exceeding even the [[NYSE]]. The stock [[market capitalisation]] of listed companies in Malaysia was valued at $181,236 million in 2005 by the [[World Bank]].<ref>[http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS/0,,contentMDK:20394793~menuPK:1192714~pagePK:64133150~piPK:64133175~theSitePK:239419,00.html Data - Finance<!-- Bot generated title -->]</ref> Some of the more visible projects from that period are [[Putrajaya]], a new international airport ([[Kuala Lumpur International Airport]]), a [[hydroelectric dam]] (Bakun dam), the [[Petronas Towers]] and the [[Multimedia Super Corridor]]. Proposals that were eventually canceled include the 95 km [[Sumatra]]-[[Malaysia]] bridge (would have been world's longest), the Mega International Sea and Air port on reclaimed land in [[Kedah]] (would have been world's biggest) and the KL Linear City (would have been the world's longest mall and the world's first city built over a river). Concerns were raised during the time about the sustainability of the rapid growth and the ballooning current account. The mainstream opinion prevalent at that time was that the deficit was temporary and would reverse once imported equipment started producing for export. In spite of that, measures were taken to moderate growth especially when it threatened to overheat into the double digits. The main target was asset prices, and restrictions were further tightened on foreign ownership of local assets. Exposure of local banks to real estate loans were also capped at 20%. As was widely expected, the current account deficit did narrow steadily, year to year, from 9% to 5% of GDP. Malaysia has the largest operational stock of industrial robots in the [[Muslim world]]. <ref>http://www.ifrstat.org/downloads/2006_Executive_Summary(1).pdf</ref> ===Asian financial crisis and recovery=== {{see|Asian financial crisis}} The year 1997 saw drastic changes in Malaysia. [[Foreign direct investment]] fell at an alarming rate and the Ringgit depreciated substantially from MYR 2.50 per USD to much levels lower (up to MYR 4.80 per USD at its bottom) as capital flowed out. The [[Kuala Lumpur Stock Exchange]]’s composite index fell from approximately 1300 to nearly merely 400 points in a few short weeks. In response, the Malaysian government imposed [[capital controls]] and [[fixed exchange rate|pegged]] the Malaysian Ringgit at 3.80 to a US dollar while refusing economic aid from [[International Monetary Fund]] (IMF) which came with austere lending conditions. By refusing aid and thus the conditions attached thereof from the IMF, Malaysia was not affected to the same degree in the Asian Financial Crisis as Indonesia, Thailand and the Philippines. Regardless, the [[Gross domestic product|GDP]] suffered a sharp 7.5% contraction in 1998. It however rebounded to grow by 5.6% in 1999. The Government of Malaysia predicted 5.8% real GDP growth in the year 2000, but most analysts predicted growth will exceed 8% for the year. In order to rejuvenate the economy, massive government spending was made and Malaysia continuously recorded budget deficits in the years that followed. Economic recovery has been led by strong growth in exports, particularly of electronics and electrical products, to the [[United States]], Malaysia's principal trade and investment partner. Inflationary pressures remained benign, and, as a result, [[Bank Negara Malaysia]], the central bank, had been able to follow a low interest rate policy. Later, the country enjoyed faster economic recovery compared to its neighbors though in many ways, the level of pre-1997 affluence has yet to be achieved. The [[fixed exchange rate]] regime was abandoned in July 2005 in favor of a managed [[floating exchange rate|floating system]] within an hour of [[China]]'s announcing of the same move. In the same week, the Ringgit strengthened a percent against various major currencies and was expected to appreciate further. As of December 2005, there has been no further appreciation of the Ringgit. In spite of the large positive current account surplus, foreign reserves have started to fall at a rapid rate. Official statistics released in March 2006, confirmed [[capital flight]] of more than [[USD]] 10 billion. However, as of the 4th fiscal year, a surge of FDI has pushed the KLSE above 1200 points, and is expected to strengthen to pre 1997 levels. As of 21 May 2007, the Ringgit touched a nine-year high record at 3.39 against the US dollar. Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz says the Ringgit moves up on its own merit and in line with the Malaysian economy and not in tandem with the Chinese Yuan. Malaysia has shown the ability to absorb the crude oil price increases and most economies have shown high resilience in absorbing higher energy prices. ==Economic Policies== Like many other independent nations, Malaysia's economic policies were shaped by various events in the nation's history since independence. ===Monetary Policy=== Prior to the [[1997 Asian Financial Crisis]], the [[Malaysian ringgit]] was a internationalized currency, which was freely traded around the world. Just before the crisis, the Ringgit was traded RM2.50 at the dollar. Due to speculative activities, the Ringgit fell as much as RM5.00 to the dollar in matter of weeks. [[Bank Negara Malaysia]], the nation's central banks decided to impose capital controls to prevent the outflow of the Ringgit in the open market. The Ringgit is not traded internationally, a traveler needs to declare to the central bank if taking out more than RM10,000 out of the country and the Ringgit itself was pegged at RM3.80 to the [[US dollar]]. The fixed change rate was abandoned to [[floating exchange rate]] in July 2005, hours after [[People's Republic of China]] announced the same move.<ref>{{cite news | url = http://www.theedgedaily.com/cms/contentPrint.jsp?id=com.tms.cms.article.Article_3f579c44-cb73c03a-1cf662f0-6b76946b&paging=0 | title = 22-07-2005: Ringgit depeg not likely to have immediate impact on sovereign, banks, corporates | publisher = the Edge | author }}</ref> At this point, the Ringgit is still not internationalized. The Ringgit continue to strengthen to 3.18 to the dollar in March 2008. Meanwhile, many aspect of the capital control has been slowly relaxed by [[Bank Negara Malaysia]]. However, the government continues to not internalized the Ringgit. The government stated that the Ringgit will be internationalized once it is ready.<ref>{{cite news | publisher=reuters | url = http://www.reuters.com/article/reutersEdge/idUSKLR5369320070319| title = Malaysia says offshore ringgit trade not needed | author = Liau Y-Sing}}</ref> ===Affirmative Action=== {{main|Malaysian New Economic Policy}} In plain and simple terms, the affirmative action policy is a direct result of [[May 13 Incident]] in 1969. Prior to the incident, the poverty rates among [[Malays]] is extremely high and discontent towards other races, especially the Chinese who controls the economy is evident. The [[Malaysian New Economic Policy]] was created in 1971 aiming to bring Malays to have 30% of the economy share in Malaysia and eradicate poverty amongst Malays through encouraging enterprise ownership among [[Bumiputeras]]. After 30 years on the program, NEP has somewhat met some of the goals. Statistically, Bumiputera ownership increased to 20% in 2004 against 2.4% in 1970 and poverty was decrease to 5% in 2004 against 52% in 1970s. The program has been criticized as creating an inefficient system and creating laid back environment for Malays. Certain policies such as 7% bumiputera housing discount and bumiputera quota in stock ownership has been accused of being discriminatory to other races. The program, although somewhat successful, only create opportunities for oligopolies to appear in the economy, enriching certain politically well connected individual and creating a subsidy mentality<ref>{{cite news| author= Thomas Fuller| url=http://www.iht.com/articles/2001/01/05/kuala.2.t.php| title=Criticism of 30-Year-Old Affirmative-Action Policy Grows in Malaysia| date=2001-01-05}}</ref>. Certain political parties such as [[Parti Keadilan Rakyat]] and [[Democratic Action Party]] has proposed a new policy which will be equal to every Malaysian, regardless of race. Democratic Action Party, coming in to power in the state of [[Penang]], announced that it will do away with the NEP on claims that it breed [[nepotism]], [[Political corruption|corruption]] and inefficiencies<ref>{{cite news| author= Niluksi Koswanage| title= Malaysia opposition takes aim at affirmative action| publisher=reuters| url=http://news.yahoo.com/s/nm/20080311/wl_nm/malaysia_election_dc}}</ref>. ===Subsidies and Price Controls=== *See Also: [[Petrol_prices#Malaysia|Gas Subsidies]] The Malaysian government subsidizes and control prices on a lot of essential items to keep the prices low. Items such as [[palm oil]] cooking oil, [[petrol]], flour, bread, rice and other essentials has been kept under market prices to keep cost of living low. In 2008, the government announced that it has spent RM40.1 billion in 2007 in subsidies to keep prices leveled.<ref>{{cite news| url=http://www.bt.com.bn/en/international_business/2008/02/25/malaysia_2007_fuel_subsidies_at_rm40b_pm| title=Malaysia 2007 fuel subsidies at RM40b: PM}}</ref> Smuggling and hoarding, which leds to shortages, is a prominent problem in Malaysia due to the subsidies. For example, cooking oil is subsidised only for domestic use only. This situation creates an environment where industrial players hoard domestic cooking oil for industrial use. During shortage time, such as the January 2008 cooking oil crisis, the government impose a 5 kg limit for each purchase to relief domestic demand. However, the limited purchase has created more panic buying, which prompt the Government to negotiate with cooking oil manufacturers to increase their production capacity, and situation revert to normal within one week time.<ref>{{cite news| author=MAZWIN NIK ANIS et al| title=5kg buying limit on cooking oil| url=http://thestar.com.my/news/story.asp?file=/2008/1/5/nation/19925382&sec=nation |publisher=the Star}}</ref> Another example is where vehicles in [[Thailand]] come to [[Malaysia]] to smuggle cheap [[petrol]] and [[diesel]] out of the country. The government also looking into restructuring the fuel subsidy so that the selected needy group will get the subsidy. The government is considering to remove subsidy on [[diesel]] on general consumers while maintaining subsidies for the right groups, for example those involved in public transport.<ref>{{cite news| title= Subsidy on diesel to go first, says Shahrir| url=http://thestar.com.my/news/story.asp?file=/2008/4/25/nation/21060846&sec=nation| publisher=The Star| author=Teh Eng Hock| accessdate=2008-04-25}}</ref> On [[May 5]], 2008 the Malaysia government raised the price of petrol by 41 percent from MYR1.92 to MYR2.70, (87 cents) a liter, or 10.23 Ringgit ($3.30) a gallon. The government stated that the spiraling fuel subsidy bill that could have been more than 56 billion Ringgit ($17 billion) this year due to rising world oil prices. Diesel prices also were raised upwards of 63 percent to 2.58 Ringgit (80 cents) per liter. In addition to the fuel hike, Malaysia also increased electricity tariffs starting in July by as much as 26 percent for some consumers. The government in the meantime promised cash rebates for owners of vehicles with engine capacities of 2 liters or less, and diesel subsidies for truck and bus operators. According to the Malaysian government the revised energy prices would save the government 13.7 billion Ringgit ($4.4 billion), part of which will be used to help subsidize rising food prices.<ref>{{cite news| title= Malaysia defends fuel price hikes| url=http://biz.yahoo.com/ap/080606/malaysia_fuel_hike.html?.v=1| publisher=Associated Press| author=Eileen Ng| accessdate=2008-06-06}}</ref> The government has considered to remove the subsidies but a formal plan had yet to materialized as of 2007.<ref>{{cite news | author=MUSTAPA MOHAMED | title=Time To Let Go Of Subsidy Crutch| url=http://www.neac.gov.my/index.php?ch=62&pg=145&ac=1311| publisher=the star}}</ref> In 2008, the government is considering to remove price controls on construction materials such as [[cement]] and [[steel]] bars while banning exports to ensure steady supply.<ref>{{cite news| title=Builders all for scrapping price controls| publisher=The Star| accessdate=2008-03-26| url= http://thestar.com.my/news/story.asp?file=/2008/3/26/nation/20750079&sec=nation}}</ref> The government is experimenting with the idea through allowing [[Sabah]] and [[Sarawak]] construction players to import steel and cement since February 2008.<ref>{{cite news| title =Steel products not necessarily cheaper| author=Chong Jin Hun | url=http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_4ac27991-cb73c03a-36306800-216ed5e8| publisher=The Edge| accessdate=2008-04-14}}</ref> The government then, on May 12, 2008 removed ceiling prices on steel bars and billets and removed import duties on selected items under HS Code 7214.10 110 and 7214.20 910, which do not fully cover steel bars use by the construction industry.<ref>{{cite news| title=Malaysia to scrap ceiling price on steel bars, billets|url=http://www.btimes.com.my/Current_News/BTIMES/Friday/Latest/20080509182014/Article/index_html| author= | publisher=Business Times| date=2008-05-09| accessdate=2008-05-09}}</ref> The government then further liberalized the cement industry by abolishing ceiling prices on June 5, 2008.<ref>{{cite news| title= No ceiling price for cement from Thursday| url=http://www.btimes.com.my/Current_News/BTIMES/Tuesday/Nation/simen02.xml/Article/| author=| publisher=Business Times| accessdate=2008-06-03| date=2008-06-03}}</ref> Another strategic item which Malaysia is heavily subsidize but moving towards a market based approach is [[Natural Gas]] which is used in the industrial sector. Beginning July 1, 2008, the government is expected to reduce the gas subsidy 5% to 10% per annum over 11 years, in which the gas price will reflect market price.<ref>{{cite news| title=Industries get 70% discount on gas| url= http://biz.thestar.com.my/news/story.asp?file=/2008/7/11/business/20080711155527&sec=business| author= Sim Leoi Leoi| publisher=The Star| accessdate=2008-07-11| date=2008-07-11}}</ref> ===Sovereign Wealth Funds=== The government owns and operates several [[sovereign wealth funds]] that invests in local companies and also foreign companies. One such funds are [[Khazanah Nasional]] [[Berhad]] which was established in 1993<ref name="khazanah size">{{cite news| url=http://www.iie.com/publications/papers/truman1107tables.pdf| title=Sovereign Wealth Fund Acquisitions and Other Foreign Government Investments in the United States: Assessing the Economic and National Security Implications| publisher=|format=PDF}}</ref>. Its objective is to help shape selected strategic industries in Malaysia and develop those investment for the benefit of Malaysia<ref>{{cite news | title=Khazanah Nasional Berhad: About| url= http://www.khazanah.com.my/about.htm| publisher=Khazanah Nasional}}</ref>. The fund invest in major companies in Malaysia such as [[Proton (carmaker)|Proton Holdings]] in the automotive sector, [[CIMB]] in the banking sector, Pharmaniaga in the medical sector, [[UEM Group]] in the consturction sector, [[Telekom Malaysia]] in the communications industry and many other companies in many other industries<ref>{{cite news| title= Khazanah Nasional: Portfolio| url=http://www.khazanah.com.my/portfolio.htm| publisher=Khazanah Nasional Berhad}}</ref>. It is estimated that the fund size of Khazanah Nasional stands at around 19 billion [[USD]]<ref name="khazanah size" />. Another fund that is owned by the Malaysian government is the [[Employees Provident Fund]] which is claimed to be the fourth largest state run pension fund in [[Asia]]<ref name="epf overseas">{{cite news| title=EPF to double overseas investments| url= http://www.btimes.com.my/Current_News/BTIMES/Wednesday/Latest/EPFBB.xml/Article/index_html| publisher=Business Times}}</ref>. Like [[Khazanah Nasional]], the EPF invests and sometimes owns several major companies in Malaysia such as [[RHB Bank]]<ref name="epf overseas" />. EPF investment is diversified over a number of sectors but almost 40% of their investment are in the services sector<ref>{{cite news| title=EPF's Investment Income Increases To RM3.6 Billion In Q2| url=http://www.kwsp.gov.my/index.php?ch=p2news&pg=en_p2news_press&ac=1431| publisher=Kumpulan Wang Simpanan Pekerja}}</ref>. Fund size in 2007 is estimated at 100 billion [[USD]]<ref>{{cite news| url=http://www.kwsp.gov.my/index.php?ch=p2news&pg=en_p2news_press&ac=2282| title=EPF's Fund Size Rises To RM312 Billion| publisher=Kumpulan Wang Simpanan Pekerja}}</ref>. [[Pemodalan Nasional Berhad]] is a major fund manager controlled by the Malaysian Government. It offers capital guaranteed mutual funds such as Amanah Saham Bumiputera and Amanah Saham Wawasan 2020 which are open only to Malaysian and in some cases, [[bumiputera]]s.<ref>{{cite news|title=Eligibility to Invest|url= http://www.asnb.com.my/english/eligibility.htm| publisher=Amanah Saham Nasional Berhad| accessdate=2008-06-09}}</ref>. As of April 2008, it manages [[MYR]]120 billion of funds (36 billion [[USD]]), of which MYR76 million is unit trust funds<ref>{{cite news| title=PNB targets 10% growth in fund size this year| url=http://biz.thestar.com.my/news/story.asp?file=/2008/4/10/business/20904711&sec=business| publisher=The Star| accessdate=2008-06-09| date=2008-04-10}}</ref>. The fund manager is a sizable investor in strategic companies such as MMC Corporation Berhad<ref>{{cite news| title= Shareholder Listing| url=http://www.mmc.com.my/content.asp?menuid=100033&rootid=100002| accessdate=2008-06-09}}</ref>, Maxis Communications Berhad<ref>{{cite news|title=List of 30 Largest Shareholders|url=http://www.maxis.com.my/personal/about_us/investor/annual_report/2005/24_List%20of%2030%20Largest%20Shareholders.pdf| publisher=Maxis|format=PDF}}</ref> and TM International Berhad<ref>{{cite news| title=About TM International: Shareholding Structure| url=http://www.tmigroup.com/about-us/shareholding-structure.htm| accessdate=2008-06-09| publisher=TM International Berhad}}</ref> among others. ===Government Influence=== Although the federal government promotes private enterprise and ownership in the economy, the economic direction of the country is heavily influenced by the government though five years development plans since independence. The economy is also influenced by the government through agencies such as the Economic Planning Unit and government-linked wealth funds such as [[Khazanah Nasional]] [[Berhad]], [[Employees Provident Fund]] and [[Pemodalan Nasional Berhad]]. The government's development plans, called the Malaysian Plan, currently the [[Ninth Malaysia Plan]], started in 1950 during the British colonial rule<ref name="planbook">{{cite news| title=Growth, Structural Change, and Regional Inequality in Malaysia| author=Asan Ali Golam| page=67| url=http://books.google.com.my/books?id=TtKxDem7CrsC&pg=PA67&lpg=PA67&dq=malaysia+five+years+development+plans&source=web&ots=cXBxV18rJB&sig=PN5-PK8E-1mIYniGISthDHeQBbs&hl=en}} </ref>. The plans were largely centered around accelerating the growth of the economy by selectively investing in selective sectors of the economy and building infrastructure to support said sectors<ref name="planbook" />. For example, in the current national plan, three sectors - [[agriculture]], [[manufacturing]] and [[services]], will receive special attention to promote the transition to high value-added activities in the respective areas<ref>{{cite news| title= Investment in Malaysia| url =http://www.innovasjonnorge.no/Internasjonale-markeder/Kontorer-i-utlandet/Malaysia/|author=| publisher=Innovasjon Norge}}</ref>. Other than the generalized plans like the Ninth Malaysia Plan, the government also have a development plan that are targeted to improve the manufacturing sector which is called the Industrial Master Plan. Currently, the plan is called the Third Industrial Master Plan (IMP3) which covers a period from 2006 to 2020. The industrial plans aim to make Malaysia a major trading nation and build up the country's economy and human capital.<ref>{{cite news| title=Highlights of IMP3 | url=http://www.miti.gov.my/ekpweb/application?origin=publishedcontents.jsp&event=bea.portal.framework.internal.refresh&pageid=miti&subpageid=contentdetails&section=content&global=yes&_cat=BvSx1LpsjUj5516&0.52831920826392560.14560061218020980.5563920074658643&_cont=EPB0000834019&0.35097321099762746&_type=FULL&0.38814895302972385&0.18292589275640514 publisher= Ministry of International Trade and Industry| accessdate=2008-04-15}}</ref> [[Economic Planning Unit]] ([[Malay]]: ''Majilis Tindakan Ekonomi Negara''), established in 1961<ref>{{cite news| title=Economic Planing Unit History| publisher=Economic Planing Unit| url= http://www.epu.jpm.my/New%20Folder/history.htm}}</ref> was instrumental in steering Malaysia to recovery from the [[1997 Asian Financial Crisis]]. The unit is an agency under the Prime Minister's Department responsible for steering Malaysia's socio-economic development towards achieving a developed-nation status by the year 2020 through various measures such as preparing policies and strategies for socio-economic development, prepare medium and long term plans for the government and most importantly, advise the government on economic issues<ref>{{cite news| title=About Economic Planing Unit| url=http://www.epu.jpm.my/New%20Folder/aboutEPU.htm#FUNCTION| publisher=Economic Planing Unit}}</ref>. Government-linked investment vehicles such as [[Khazanah Nasional]] [[Berhad]], [[Employees Provident Fund]] and [[Pemodalan Nasional Berhad]] invest and sometimes own major companies in major sectors of the Malaysian economy. For example, Khanazah Nasional is a major shareholder in [[Proton (carmaker)|Proton Holdings]], an automaker and [[CIMB]] banking group in the financial sector<ref>{{cite news| title= Khanazah Nasional portfolio companies| url=http://www.khazanah.com.my/portfolio.htm| author=| publisher= Khazanah Nasional}}</ref>. The government, however, is keen to sell stakes in their companies such as [[Malaysia Airlines]] to let the companies remain globally competitive<ref>{{cite news| url=http://www.iht.com/articles/ap/2008/02/18/business/AS-FIN-COM-Singapore-Malaysia-Airline.php| title= Government keen to sell stake in Malaysia Airlines, says CEO| author=| publisher= Associate Press}}</ref> ==Currency System== ===Ringgit=== {{main|Malaysian Ringgit}} The only legal tender in [[Malaysia]] is the [[Malaysian Ringgit]]. As of March 20, 2008, the Ringgit is traded at [[MYR]] 3.18 at the [[USD|dollar]]<ref>{{cite news| title=Money Roundup by Business Times| url=http://www.btimes.com.my/Current_News/BTIMES/Thursday/Nation/20mart20080319Mar031205939295.xml/Article/| publisher= Business Times}}</ref>. The Ringgit was not internationalized since September 1998, an effect due to the [[1997 Asian Financial Crisis]] in which the central bank impose capital controls on the currency<ref>{{cite news| title=Did the Malaysia Capital Controls Work?| author=Ethan Kaplan and Dani Rodrik| url=http://ksghome.harvard.edu/~drodrik/Malaysia%20controls.PDF}}</ref>. As a part of series of capital controls, the currency was pegged between September 1998 to [[21 July]] 2005 at MYR 3.80 to the dollar<ref>{{cite news| title= Malaysia’s Economic Growth Moderating But Improvement in Second Half Expected | url= http://www.asli.com.my/DOCUMENTS/asli_sep05.pdf| author=| publisher= Asian Strategy & Leadership Institute|format=PDF}}</ref>. In recent years, [[Bank Negara Malaysia]] beginning to relax certain rules to the capital controls although the currency itself is still not traded internationally yet. According to the Bank Governor, the Ringgit will be internationalized when it's ready<ref>{{cite news| publisher=reuters| title= Malaysia may liberalize ringgit if forex market 'vibrant' | author= |url=http://business.inquirer.net/money/breakingnews/view_article.php?article_id=79224}}</ref>. ==Natural resources== Malaysia is well-endowed with natural resources in areas such as agriculture, forestry and minerals. In terms of agriculture, Malaysia is one of the top exporters of natural [[rubber]] and [[palm oil]], which together with sawn logs and sawn timber, [[cocoa]], [[black pepper|pepper]], [[pineapple]] and [[tobacco]] dominate the growth of the sector. Palm oil is also a major generator of foreign exchange. Regarding forestry resources, it is noted that logging only began to make a substantial contribution to the economy during the nineteenth century. Today, an estimated 59% of Malaysia remains forested. The rapid expansion of the timber industry, particularly after the 1960s, has brought about a serious erosion problem in the country's forest resources. However, in line with the Government's commitment to protect the environment and the ecological system, forestry resources are being managed on a sustainable basis and accordingly the rate of tree felling has been on the decline. In addition, substantial areas are being [[silviculture|silviculturally]] treated and reforestation of degraded forest land is also being carried out. The Malaysian government provide plans for the enrichment of some 312.30 square kilometres (120.5&nbsp;[[square mile|sq&nbsp;mi]]) of land with [[rattan]] under natural forest conditions and in rubber plantations as an inter crop. To further enrich forest resources, fast-growing timber species such as ''meranti tembaga'', ''merawan'' and ''sesenduk'' are also being planted. At the same time, the cultivation of high-value trees like [[teak]] and other trees for pulp and paper are also encouraged. [[Rubber]], once the mainstay of the Malaysian economy, has been largely replaced by [[oil palm]] as Malaysia's leading agricultural export. [[Tin]] and [[petroleum]] are the two main mineral resources that are of major significance in the Malaysian economy. Malaysia was once the world's largest producer of tin until the collapse of the tin market in the early 1980s. In the 19th and 20th century, tin played a predominant role in the Malaysian economy. It was only in 1972 that petroleum and [[natural gas]] took over from tin as the mainstay of the mineral extraction sector. Meanwhile, the contribution by tin has declined. Petroleum and natural gas discoveries in [[oil field]]s off Sabah, Sarawak and Terengganu have contributed much to the Malaysian economy. Oil and Gas resources are managed by [[Petronas]], the state controlled oil company which forms production sharing contracts with other players like [[Exxon-Mobil]] and [[Royal Dutch Shell]] to explore oil fields in Malaysia. In 2004, Minister in the Prime Minister's Department, [[Mustapa Mohamed]], revealed that Malaysia's [[oil]] reserves stood at 4.84 billion barrels while natural gas reserves increased to 89 trillion [[Cubic foot|cubic feet]] (2,500&nbsp;km³). This was an increase of 7.2%.{{Fact|date=October 2007}} As of January 1, 2007, [[Petronas]] reported that oil and gas reserve in Malaysia amounted to 20.18 billion barrels equivalent.<ref>[http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_ad7e8c8b-cb73c03a-38d46000-9063a75f Petronas 1H profit up 7.7% to RM26.6b]</ref> The government estimates that at current production rates Malaysia will be able to produce oil up to 18 years and gas for 35 years. In 2004, Malaysia is ranked 24th in terms of world oil reserves and 13th for gas. 56% of the oil reserves exist in the Peninsula while 19% exist in East Malaysia. The government collects oil royalties of which 5% are passed to the states and the rest retained by the federal government.<ref>{{cite news| url=http://www.dailyexpress.com.my/news.cfm?NewsID=54118| title= Oil royalty rate is outdated, govt told | publisher=Daily Express}}</ref> <!---Every state maintains the right to control resources inside the states. However oil and gas are controlled by the federal government. The states where the resources are found will be given royalties.---> Other minerals of some importance or significance include copper, bauxite, iron-ore and coal together with industrial minerals like clay, kaolin, silica, limestone, barite, phosphates and dimension stones such as granite as well as marble blocks and slabs. Small quantities of [[gold]] are produced. ==Business Environment== According to World Bank, Malaysia ranks 24th in Ease of doing business. Malaysia's strengths in the rank includes getting credit (rank 3rd), protecting investor (ranked 4th) and doing trade across borders (ranked 21st). Weaknesses include dealing with licenses (ranked 105th). The study ranks 178 countries in all aspect of doing business<ref>[http://www.doingbusiness.org/economyrankings/ Rankings - Doing Business]</ref>. In the investor protection category of the survey, Malaysia had scored a perfect 10 for the extent of disclosure, nine for director liability and seven for shareholder suits. Malaysia is behind [[Singapore]], [[Hong Kong]] and [[New Zealand]] in investor protection category of the survey<ref>{{cite news| url= http://www.btimes.com.my/Current_News/BTIMES/Friday/Nation/20071227223139/Article/| title=Malaysia ranks 4th for investor protection| publisher=Business Times}}</ref> The government is moving towards a more business friendly environment by setting up a special task force to facilitate business called PEMUDAH, which means simplify in Malay<ref>[http://www.pemudah.gov.my/bg.asp Permudah Background]</ref>. Highlights includes easing restrictions and requirement to hire expatriates, shorten time to do land transfers and increasing the limit of sugar storage (a controlled item in Malaysia) for companies<ref>[http://www.pemudah.gov.my/prhigh.asp Permudah Highlights]</ref>. The Government aims to be in the top 10 in the Ease of doing business survey before 2010 in order to attract even more foreign investors.<ref>[http://www.mida.gov.my/beta/view.php?cat=53&scat=2140 Malaysia targets to be in top 10 in World Bank survey]</ref> ==External trade== [[Image:2006Malaysian exports.PNG|thumb|left|Malaysian exports in 2006]] Malaysia is an important trading partner for the [[United States]]. In 1999, two-way bilateral trade between the U.S. and Malaysia totaled U.S. $30.5 billion, with U.S. exports to Malaysia totaling U.S.$9.1 billion and U.S. imports from Malaysia increasing to U.S.$21.4 billion. Malaysia was the United States' 10th-largest trading partner and its 12th-largest export market. During the first half of 2000, U.S. exports totaled U.S.$5 billion, while U.S. imports from Malaysia reached U.S.$11.6 billion. The Malaysian Government encourages [[Foreign Direct Investment]] (FDI). According to Malaysian statistics, in 1999, the U.S. ranked first among all countries in approved FDI in Malaysia's manufacturing sector with approved new manufacturing investments totaling RM5.2 billion (US$1.37 billion). Principal U.S. investment approved by the [[Malaysian Investment Development Authority]] (MIDA) was concentrated in the chemicals, electronics, and electrical sectors. The cumulative value of U.S. private investment in Malaysia exceeded $10 billion, 60% of which is in the oil and gas and petrochemical sectors with the rest in manufacturing, especially semiconductors and other electronic products. In the first six months of 2007, Malaysia's total trade increased by 2.2% to RM522.38 billion, compared with RM511.11 billion in the same period of 2006. ===Free trade efforts=== {{See also| Malaysia-US Free Trade Agreement}} Malaysia is the founding member of the [[ASEAN Free Trade Area]] which was established in 1992 to promote trade among ASEAN members. Most tariffs among the first generation member states were scrapped in 2007. ASEAN itself is increasingly playing a large role in free trade negotiation on behalf of its members. ASEAN as a group hopes to establish a free trade agreement with the [[European Union]] by 2009<ref>{{cite news| title=EU hopes to wrap up FTA with Asean by end-2009| url=http://www.btimes.com.my/Current_News/BTIMES/Friday/Corporate/20080410214508/Article/| publisher=Business Times| author=}}</ref>. The Malaysian Government is negotiating free trade deals with [[Australia]], [[New Zealand]], [[United States]], [[Chile]] and India.<ref>{{cite news|title=Malaysia to take proactive approach to FTAs|url=http://www.btimes.com.my/Current_News/BTIMES/Monday/Nation/rup251120080427Apr041209311881.xml/Article/| author=Rupa Damodaran|publisher=Business Times|accessdate=2008-04-28}}</ref>. Officials have expressed desire for free trade agreements their [[ASEAN]] members [[Singapore]] and [[Thailand]]. The Malaysian Trade Ministry released a statement in [[Vietnam]] saying that the FTA "has the potential to increase trade, investment cross flows and economic cooperation between the two countries. The agreement would also serve to make Chile a gateway for Malaysia's exports to the [[Latin America]]n market."<ref name=FTA>[http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/242205/1/.html Malaysia, Chile to start free trade talks] Channel News Asia</ref> Malaysia signed a Japan-Malaysia Economic Partnership Agreement with [[Japan]] on December 13, 2005<ref>[http://www.ftamalaysia.org/article.php?aid=25 Japan-Malaysia Economic Partnership Agreement]</ref>. This leads to a Free trade agreement which was in effect from July 13, 2006 and expected to be fully realized in 2016<ref>[http://www.ftamalaysia.org/article.php?aid=80 Japan, Malaysia FTA takes effect]</ref>. The agreement itself is an extension of an FTA between ASEAN and Japan, which is called Asean-Japan Comprehensive Economic Partnership<ref>{{cite news| title=Malaysia expects investment influx| url= http://www.btimes.com.my/Current_News/BTIMES/Tuesday/Nation/14AJCEP.xml/Article/| publisher=Business Times| author= Hamisah Hamid | accessdate=2008-04-15}}</ref>. On [[November 8]], [[2007]], Malaysian and [[Pakistan]] signed a bilateral Free Trade Agreement which will come in force on January 1, 2008. Malaysia will cut tariffs on 140 lines while Pakistan will cut 124 lines. Most tariffs and duty is expected to be eliminated by 2012. <ref>[http://biz.thestar.com.my/news/story.asp?file=/2007/11/13/business/19451317&sec=business Malaysia signs bilateral FTA with Pakistan]</ref> ==Sectors== ===Industry=== Malaysia industrial sector accounts for 48.1 percent of total GDP or 63.4 billion [[US dollar]]s. The industrial output is ranked 32nd in the world.<ref>{{cite news| title=List of countries by GDP sector composition| url= http://en.wikipedia.org/wiki/List_of_countries_by_GDP_sector_composition|publisher=Wikipedia|accessdate=2008-05-05}}</ref>. The industrial sector is regulated and promoted by Malaysia Industrial Development Authority<ref>{{cite news|title=Functions of MIDA|url=http://www.mida.gov.my/beta/view.php?cat=8&scat=471| author=MIDA|accessdate=2008-05-05}}</ref>. Malaysia have 15 companies that rank in the [[Forbes Global 2000]] ranking for 2008.<ref>{{cite news| title=The Global 2000|url=http://www.forbes.com/lists/2008/18/biz_2000global08_The-Global-2000_Counrty_9.html|publisher= Forbes| author=}}</ref> {| class="prettytable sortable" |- style="background-color:#efefef;" !World Rank !! Company !! Industry !! Revenue </br> (billion $) !! Profits </br> (billion $) !! Assets </br> (billion $) !! Market Value </br> (billion $) |- | 623 || [[Malayan Banking]] || Banking || 4.16 || 0.92 || 74.12 || 13.90 |- |625 ||[[Tenaga Nasional]] || Utilities ||6.66|| 1.16|| 19.34|| 12.27 |- |691 ||[[Sime Darby]] || Conglomerates ||7.94 ||0.74 ||9.68 ||21.82 |- |704 ||[[Bumiputra-Commerce Holdings]] || Banking || 3.82 ||0.84 ||54.90 ||11.07 |- |780 ||[[Telekom Malaysia]] || Telecommunications Services ||5.35 ||0.76 ||13.21 ||12.28 |- |822 ||[[Public Bank]] || Banking ||2.79 ||0.64 ||52.14 ||11.08 |- |1038 ||[[MISC]] || Transportation ||3.24 ||0.83 ||8.09 ||10.48 |- |1198 ||[[Genting]] || Hotels, Restaurants & Leisure ||2.54 ||0.60 ||9.04 ||7.94 |- |1326 ||[[IOI Group]] || Food Drink & Tobacco ||2.60||0.43|| 3.94 || 15.40 |- |1518 ||[[Perlis Plantations Bhd|PPB Group]] || Food Drink & Tobacco|| 0.89|| 2.08 || 3.60 || 4.01 |- |1648 ||[[RHB Bank]] || Banking ||1.83 ||0.21 ||31.47 ||3.34 |- |1679 ||[[Cahya Mata Sarawak]] || Banking ||1.75|| 0.00|| 29.21 ||0.21 |- |1771 ||[[AmBank|AMMB Holdings]] ||Banking ||1.60|| -0.06|| 22.50 ||2.91 |- |1780 ||[[Hong Leong]] Financial Group || Banking|| 1.07 || 0.14 || 22.33 ||1.54 |- |1791 ||[[Petronas]] Gas|| Oil & Gas Operations || 0.86 || 0.36 || 2.75 || 6.26 |} ===Finance & Banking=== Finance and Banking sector in Malaysia is regulated by [[Bank Negara Malaysia]]. The central bank limits foreign participation through licensing limits. The central bank launched a Financial Sector Master plan in 2001 to revamp the finance sector following the [[Asian Financial Crisis]]. The master plan calls for emphasis on Islamic Banking.<ref>{{cite news|title=The Financial Sector Masterplan| url=http://www.bnm.gov.my/index.php?ch=20| publisher=Bank Negara Malaysia| author=Bank Negara Malaysia|accessdate=2008-04-05}}</ref> [[Maybank]] is [[Asia]]-[[Pacific]] the largest Islamic banking service provider with US$6.4 billion (RM22.48 billion) Syariah-compliant assets.<ref>{{cite news|title=Maybank largest in Islamic banking in Asia-Pacific | url= http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_fb9ca7a8-cb73c03a-a030d600-38d3af55| author=| publisher=The Edge|accessdate=2007-01-08}}</ref> Malaysia also accounts for two thirds of global $82.2 billion [[sukuk]] market in 2007.<ref>{{cite news|title=Adapting Finance to Islam| url=http://www.nytimes.com/2007/11/22/business/worldbusiness/22islamic.html?pagewanted=2| author=Wayne Arnold| publisher=New York Times|accessdate=2008-05-05| date=2007-11-22}}</ref> [[Khazanah Nasional]] owns the largest re[[takaful]] company in the world, ACR Retakaful Holdings [[Limited]], with capital base amounting to 300 million [[US Dollar]]s.<ref>{{cite news|title=Khazanah accord on world’s largest retakaful group|url= http://biz.thestar.com.my/news/story.asp?file=/2008/5/8/business/21186708&sec=business| author=|publisher=The Star|date=2008-05-09|accessdate=2008-05-09}}</ref> ===Oil And Gas=== Malaysia has a vibrant Oil and Gas industry. The national oil company, [[Petronas]], provides 32% of the federal budget in taxes, dividends and royalties.<ref>{{cite news| title=Prudent spending critical for long-term survival| url= http://www.emedia.com.my/detailnews.php?nid=3710&cid=C01| publisher=New Straits Times, E-media| date=2008-06-13| accessdate=2008-06-22| author= Hardev Kaur}}</ref> The oil company ranked 121 in [[Fortune Global 500]] list of companies in 2007. It also ranked 18 in the industry of the same list.<ref>{{cite news| title= Fortune Global 500 2007: Petronas| url= http://money.cnn.com/magazines/fortune/global500/2007/snapshots/6418.html| author=Fortune| publisher=Fortune Magazine| accessdate=2008-06-22}}</ref> Petronas is also the custodian of oil and gas reserves for Malaysia. Hence, all oil and gas activities are regulated by Petronas. Malaysia encourages foreign oil company participation through production sharing contracts, in which significant amount of oil will be given away to the foreign oil company until it reaches a production milestone. Currently, many major oil companies such as [[Exxon-Mobil]], [[Royal Dutch Shell]], [[Nippon Oil]], and [[Murphy Oil]] are involved in such contracts.<ref>{{cite news| title=Petronas Corperate Milestones 1974-2002| author=Petronas| accessdate=2008-06-28| url= http://www.petronas.com.my/internet/corp/centralrep2.nsf/0ddc209ca3aa90e848256e9900178727/ebe8f95b4e4b83db48256a9900456959?OpenDocument}}</ref> As a result, 40% of oil fields in Malaysia are developed.<ref>{{cite news| title=Oil and Gas opportunity in Malaysia| url=http://www.malaysiamission.com/team.php?id=19| author=Malaysia Trade Mission to US| accessdate=2008-06-27| date=2005}}</ref> Malaysia and Thailand has a wedge shaped area 150km from [[Kota Bharu]], [[Kelatan]] and 260 km from the shores of [[Songkhla]], [[Thailand]] which is jointly developed by [[Petronas]] and its [[Thailand]] counterpart. The area, which is called Malaysia-Thailand Joint Development Area, has 4.5 trillion cubic feet of proven reserves.<ref>{{cite news| title=Malaysia-Thailand Joint Development Area summary| accessdate=2008-06-28| url=http://www.dmf.go.th/bid19/annaul/08.asp| publisher=Department of Mineral Fuels Thailand}}</ref> ==See also== *[[Islamic banking in Malaysia]] *[[Poverty in Malaysia]] ==References== {{reflist|2}} ==External links== *[http://www.pbs.org/wgbh/commandingheights/shared/minitextlo/int_mahathirbinmohamad.html Mahathir bin Mohamad's interview with the PBS series "Commanding Heights" on the subject of East Asian economic development.] *[http://www.statistics.gov.my/english/frameset_keystats.php Key Statistics for Malaysia] *[http://www.viewswire.com/index.asp?layout=VWCountryVW3&region_id=&country_id=1600000160 Economic Outlook by Economist Intelligence Unit] * http://www.matrade.gov.my/matrade/matradeMedia072007.htm {{Template group |list = {{Asia-Pacific Economic Cooperation (APEC)}} {{World Trade Organization (WTO)}} {{Malaysia topics}} {{Asia topic|Economy of}} }} [[Category:Economy of Malaysia| ]] [[Category:WTO member economies|Malaysia]] [[de:Wirtschaft Malaysias]] [[es:Economía de Malasia]] [[fr:Économie de la Malaisie]] [[gl:Economía da Malaisia]] [[io:Ekonomio di Malaizia]] [[ms:Ekonomi Malaysia]] [[oc:Economia de Malàisia]] [[pt:Economia da Malásia]] [[ro:Economia Malaeziei]] [[ru:Экономика Малайзии]] [[vi:Kinh tế Malaysia]] [[uk:Економіка Малайзії]] [[zh:马来西亚经济]]