Malaysia is a South East Asian democratic country with a population of 31 million. It comprises various ethnic groups with the largest being Malays followed by Chinese, Indians and other indigenous groups. The official religion is Islam and by the constitution of the country other religions are freely practiced. It was a former British colony and since gaining Independence in 1957 has followed the British legal and administrative system. Malaysia practises a parliamentary system of government in a democracy. The political party with a majority of seats in Parliament forms the Government and elects the Prime Minister who appoints the cabinet. At present, the Government is a coalition of a number of parties comprising all ethnic groups. The same coalition has been ruling the country since Independence. The Head of State is appointed on a five year term by rotation from the Head of State of nine federated states in Malaysia.
Malaysia is a member of ASEAN, a regional grouping comprising 10 member states. It consists of 4.4 million square kilometres with a combined population of 625 million inhabitants. The regional organization was formed in 1967 to promote intergovernmental cooperation and facilitate economic cooperation between member states. Since 2007 the regional bloc has gradually lowered import duties to member states and targets the eventual abolishment of tariffs in the coming years. The greatest success of the organization besides economic cooperation is to maintain a peaceful coexistence in the region.
Malaysia has an open economy. The country has signed 21 trade agreements which have reduced tariffs, facilitated market access and opened Malaysia for direct investments. The economy is driven mainly from exports of commodities, petroleum and manufacturing. The leading manufacturing sector is electrical and computer components. In commodities Malaysia is the largest exporter of palm oil in the world. Other major commodities are rubber, cocoa, pepper and timber. In manufacturing Malaysia is the leading exporter of rubber gloves and computer chips. The country exports high grade oil and gas found in Malaysia. Petronas is a Malaysian petroleum company founded in 1974. The oil and gas from Malaysia is a Sovereign Asset. The country imports oil and gas from the Middle East for its own consumption.
Malaysia had a growth rate of 5% in 2015. With a downturn of the commodity exports and a dramatic drop from the revenue of the oil and gas sector projected overall GDP growth is at 4% in 2016. The private investment growth is expected to be moderate in 2016 considering low commodity prices and global economic growth to remain subdued in 2016. The National Petroleum Company, Petronas, has just released their Financial Accounts for the second quarter with a loss of RM1 billion mainly due to impairment of assets. They have also announced a reduction of one million employees. In 2017 GDP growth is expected to be 4.5% as commodity prices recover and due to expected significant increases in prices of oil and gas.
The World Bank in its forecast for Malaysia in 2017 reported the economy is expected to rebound gradually as it predicted commodity prices to recover and reform investment planned in 2016 is to show results in 2017. Domestic demand continues to be the engine of growth by increasing at 5%. Export demand is expected to improve by growing at 3%. The inflation rate is expected to remain at 3%. The country has an ambitious plan to attain developed status by 2020 which is only three years away. It can only be achieved with political stability, tackling corruption and constant economic growth in the next three years.