For the most current version of this Note, see Background Notes A-Z.

PROFILE

OFFICIAL NAME:
Malaysia

Geography
Area: 329,749 sq. km. (127,316 sq. mi.); slightly larger than New Mexico.
Cities: Capital--Kuala Lumpur. Other cities--Penang, Ipoh, Malacca, Johor Baru, Kuching, Kota Kinabalu.
Terrain: Coastal plains and interior, jungle-covered mountains. The South China Sea separates peninsular Malaysia from East Malaysia on Borneo (400 mi.).
Climate: Tropical.

People
Nationality: Noun and adjective--Malaysian(s).
Population (1999): 22.7 million.
Annual growth rate: 2.4%.
Ethnic groups: Malay 47%, Chinese 24%, Indigenous 11%, Indian 7%, non-Malaysian citizens 7%, others 4%.
Religions: Islam, Buddhism, Confucianism, Taoism, Christianity, Hinduism, Sikhism, Baha'i faith.
Languages: Malay, Cantonese, Hokkien, Mandarin Chinese, English, Tamil, indigenous.
Education: Years compulsory--9. Attendance--99% (primary), 82% (secondary). Literacy (1999)--94%.
Health: Infant mortality rate (1999)--7.9/1,000. Life expectancy (2000)--female 75 yrs., male 70.2 yrs.
Work force (9.6 million, 2000): Manufacturing--23.2%; services (includes government)--20.8%; trade and tourism--19.2%; agriculture--18.3%; construction--8.9%; finance--4.9%; transportation and communications--4.6%; utilities--0.5%; mining and petroleum--0.3%.

Government
Type: Federal parliamentary democracy with a constitutional monarch.
Independence: August 31, 1957. (Malaya, what is now peninsular Malaysia, became independent in 1957. In 1963 Malaya, Sabah, Sarawak, and Singapore formed Malaysia. Singapore became an independent country in 1965.).
Constitution: 1957.
Subdivisions: 13 states and two federal territories (capital and Labuan). Each state has an assembly and government headed by a chief minister. Nine of these states have hereditary rulers, generally titled "sultans," while the remaining four have appointed governors in counterpart positions.
Branches: Executive--Yang di-Pertuan Agong ("paramount ruler," who is head of state and customarily referred to as the king and has ceremonial duties), prime minister (head of government), cabinet. Legislative--bicameral parliament, comprising 69-member Senate (26 elected by the 13 state assemblies, 43 appointed by the king on the prime minister's recommendation) and 193-member House of Representatives (elected from single-member districts). Judicial--Federal Court, Court of Appeals, high courts, magistrate's courts, session's courts, and juvenile courts. Syariah courts hear cases on certain matters involving Muslims only.
Political parties: Barisan Nasional (National Front)--a coalition comprising the United Malays National Organization (UMNO) and 13 other parties, most of which are ethnically based; Democratic Action Party (DAP); Parti Se-Islam Malaysia (PAS); Parti Bersatu Sabah (PBS); Parti KeADILan. There are more than 30 registered political parties, including the foregoing, not all of which are represented in the federal parliament.
Suffrage: Universal adult.

Economy (1999)
GNP: $74 billion.
Annual real GDP growth rate: 5.8%.
Per capita income: $3,238.
Natural resources: Petroleum, liquefied natural gas (LNG), tin, minerals. Agriculture: Products--palm oil, rubber, timber, cocoa, rice, tropical fruit, fish, coconut.
Industry: Types--electronics, electrical products, chemicals, food and beverages, metal and machine products, apparel.
Trade: Exports--$84.5 billion: electronics, electrical products, palm oil, petroleum, liquid natural gas, apparel, timber and logs, plywood and veneer, natural rubber. Major markets--U.S. 21.9%, Singapore 16.5%, Japan 11.6%. Imports--$65.5 billion: machinery, chemicals, manufactured goods, fuels and lubricants. Major suppliers--U.S. 17.4%, Japan 20.8%, Singapore 14.0%.

PEOPLE
Malaysia's population of 22.7 million (1999) continues to grow at a rate of 2.4% per annum; about 34% of the population is under the age of 15. Malaysia's population comprises many ethnic groups, with the politically dominant Malays comprising a plurality. By constitutional definition, all Malays are Muslim. About a quarter of the population is Chinese who have historically played an important role in trade and business.

Malaysians of Indian descent comprise about 7% of the population and include Hindus, Muslims, Buddhists, and Christians. About 85% of the Indian community is Tamil.

Non-Malay indigenous groups make up more than half of Sarawak's population and about 66% of Sabah's. They are divided into dozens of ethnic groups, but they share some general patterns of living and culture. Until the 20th century, most practiced traditional beliefs, but many have become Christian or Muslim. The "other" category includes Malaysians of, inter alia, European and Middle Eastern descent. Population distribution is uneven, with some 15 million residents concentrated in the lowlands of Peninsular Malaysia, an area slightly smaller than the State of Michigan.

HISTORY
In the first century AD, two far-flung but related events helped stimulate Malaysia's emergence in international trade in the ancient world. At that time, India had two principal sources of gold and other metals: the Roman Empire and China. The overland route from China was cut by marauding Huns, and at about the same time, the Roman Emperor Vespasian cut off shipments of gold to India. As a result, India sent large and seaworthy ships, with crews reported to have numbered in the hundreds, to Southeast Asia, including the Malayan Peninsula, to seek alternative sources. In the centuries that followed, rich Malaysian tin deposits assumed great significance in Indian Ocean trade, and the region prospered. As maritime trade among Middle Eastern, Indian, and Chinese ports flourished, the peninsula benefited from its location as well as from development of its diverse resources, including tropical woods and spices. Malay ships became prominent in that trade, and Malay ports served as transshipment centers. Indian trade brought Indian culture, economy, religion, and politics, with historic results for what is now Malaysia.

The early Buddhist Malay kingdom of Srivijaya, based at what is now Palembang, Sumatra, dominated much of the Malay Peninsula from the 9th to the 13th centuries AD. The powerful Hindu kingdom of Majapahit, based on Java, gained control of the Malay Peninsula in the 14th century. Conversion of the Malays to Islam, beginning in the early 14th century, accelerated with the rise of the state of Malacca under the rule of a Muslim prince in the 15th century.

Malacca was a major regional entrepot, where Chinese, Arab, Malay, and Indian merchants traded precious goods. Drawn by this rich trade, a Portuguese fleet conquered Malacca in 1511, marking the beginning of European expansion in Southeast Asia. The Dutch ousted the Portuguese from Malacca in 1641 and, in 1795, were themselves replaced by the British, who had occupied Penang in 1786.

In 1826, the British settlements of Malacca, Penang, and Singapore were combined to form the Colony of the Straits Settlements. From these strong points, in the 19th and early 20th centuries, the British established protectorates over the Malay sultanates on the peninsula. Four of these states were consolidated in 1895 as the Federated Malay States.

During British control, a well-ordered system of public administration was established, public services were extended, and largescale rubber and tin production was developed. This control was interrupted by the Japanese invasion and occupation from 1942 to 1945 during World War II.

Popular sentiment for independence swelled during and after the war and, in 1957, the Federation of Malaysia, established from the British-ruled territories of Peninsula Malaysia in 1948, negotiated independence from the United Kingdom under the leadership of Tunku Abdul Rahman, who became the first prime minister. The British colonies of Singapore, Sarawak, and Sabah (called North Borneo) joined the Federation to form Malaysia on September 16, 1963. Singapore withdrew from the Federation on August 9, 1965, and became an independent republic. Neighboring Indonesia objected to the formation of Malaysia and pursued a program of economic, political, diplomatic, and military "confrontation" against the new country, which ended only after the fall of Indonesia's President Sukarno in 1966.

Following World War II, local communists, nearly all Chinese, launched a long, bitter insurgency, prompting the imposition of a state of emergency in 1948 (later lifted in 1960). Small bands of guerrillas remained in bases along the rugged border with southern Thailand, occasionally entering northern Malaysia. These guerrillas finally signed a peace accord with the Malaysian Government in December 1989. A separate smallscale communist insurgency that began in the mid-1960s in Sarawak also ended with the signing of a peace accord in October 1990.

GOVERNMENT
Malaysia is a constitutional monarchy, nominally headed by the Yang di-Pertuan Agong ("paramount ruler"), customarily referred to as the king. Kings are elected for 5-year terms from among the nine sultans of the peninsular Malaysian states. The king also is the leader of the Islamic faith in Malaysia.

Executive power is vested in the cabinet led by the prime minister; the Malaysian constitution stipulates that the prime minister must be a member of the lower house of parliament who, in the opinion of the Yang di-Pertuan Agong, commands a majority in parliament. The cabinet is chosen from among members of both houses of parliament and is responsible to that body.

The bicameral parliament consists of the Senate (Dewan Negara) and the House of Representatives (Dewan Rakyat). All 69 Senate members sit for 6-year terms; 26 are elected by the 13 state assemblies, and 43 are appointed by the king. Representatives of the House are elected from single-member districts by universal adult suffrage. The 193 members of the House of Representatives are elected to maximum terms of 5 years. Legislative power is divided between federal and state legislatures.

The Malaysian legal system is based on English common law. The Federal Court reviews decisions referred from the Court of Appeals; it has original jurisdiction in constitutional matters and in disputes between states or between the federal government and a state. Peninsular Malaysia and the East Malaysian states of Sabah and Sarawak each have a high court.

The federal government has authority over external affairs, defense, internal security, justice (except civil law cases among Malays or other Muslims and other indigenous peoples, adjudicated under Islamic and traditional law), federal citizenship, finance, commerce, industry, communications, transportation, and other matters.

Principal Government Officials
Prime Minister--Dato' Seri Dr. Mahathir bin Mohamad
Foreign Minister--Datuk Seri Syed Hamid Albar
Ambassador to the U.S.--Dato' Ghazzali Sheikh Abdul Khalid
Ambassador to the UN--Dato' Hamsy bin Agam

Malaysia maintains an embassy in the U.S. at 2401 Massachusetts Ave. NW, Washington, DC 20008, tel. (202) 328-2700; a Consulate General in the World Trade Center, 350 South Figueroa Street, Los Angeles, CA, tel. (213) 621-2991; and a Consulate General at 140 E. 45th Street, New York, NY 10017, tel. (212) 490-2722.

POLITICAL CONDITIONS
Malaysia's predominant political party, the United Malays National Organization (UMNO), has held power in coalition with other parties since Malaya's independence in 1957. In 1973, an alliance of communally based parties was replaced with a broader coalition--the Barisan Nasional--composed of 14 parties. In early September 1998, Prime Minister Mahathir dismissed Deputy Prime Minister Anwar Ibraham and accused Anwar of immoral and corrupt conduct.

Anwar said his ouster actually owed to political differences and led a series of demonstrations advocating political reforms. Later in September, Anwar was arrested, beaten while in prison, and charged with corrupt practices, i.e., obstruction of justice and sodomy. In April 1999, he was convicted of four counts of corruption and sentenced to 6 years in prison. In August 2000, Anwar was convicted of one count of sodomy and sentenced to 9 years to run consecutively after his earlier 6-year sentence. Both trials were viewed by domestic and international observers as unfair. In the November 1999 general election, the Barisan Nasional was returned to power with three-fourths of the parliamentary seats, but UMNO's seats dropped from 94 to 72. The opposition Barisan Alternatif coalition, led by the Islamic Party of Malaysia (PAS), increased its seats to 42. PAS retained control of the state of Kelantan and won the additional state of Terengganu.

ECONOMY
After nearly a decade of strong economic growth averaging 8.7% annually, Malaysia was hard hit by the regional financial crisis of 1997-99. The economy suffered a sharp 7.5% contraction in 1998 but rebounded in 1999 to grow by 5.6% for the year. The Government of Malaysia predicts 5.8% real GDP growth in the year 2000, but most analysts predict growth will exceed 8% for the year. The 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 remain benign, and, as a result, Bank Negara, the central bank, has been able to follow a low interest rate policy. Since September 1998, the Malaysian ringgit has been pegged at an exchange rate of RM3.8/U.S.$1.0. Most analysts believe that, with consumer demand and investment finally recovering from the crisis, Malaysia should broaden its economic growth this year.

Malaysia remains 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' 12th-largest trading partner and its 17th-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.

At independence, Malaysia inherited an economy dominated by two commodities--rubber and tin. In the 40 years thereafter, Malaysia's economic record had been one of Asia's best. From the early 1980s through the mid-1990s, the economy experienced a period of broad diversification and sustained rapid growth averaging almost 8% 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.

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 exceeds $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.

Malaysia's New Economic Policy (NEP), first established in 1971, seeks to eradicate poverty and end the identification of economic function with ethnicity. In particular, it was designed to enhance the economic standing of ethnic Malays and other indigenous peoples (collectively known as "bumiputeras" in Bahasa Malaysia). Rapid growth through the mid-1990s made it possible to expand the share of the economy for bumiputeras without reducing the economic attainment of other groups. One controversial NEP goal was to alter the pattern of ownership of corporate equity in Malaysia, with the government providing funds to purchase foreign-owned shareholdings on behalf of the bumiputera population. In June 1991, after the NEP expired, the government unveiled its National Development Policy, which contained many of the NEP's goals, although without specific equity targets and timetables.

DEFENSE
In the early 1990s, Malaysia undertook a major program to expand and modernize its armed forces. This included procurement of F/A-18 and C-130 aircraft from the U.S. However, budgetary constraints imposed by the 1997 financial crisis slowed military procurement. The recent economic recovery may lead to relaxation of budgetary constraints on the resumption of major weapons purchases. In October 2000 the Defense Minister announced a review of national defense and security policy to bring it up to date. This review will address new security threats that have emerged in the form of low intensity conflicts, such as the kidnapping of Malaysians and foreigners from resort islands located off the East Malaysian state of Sabah.

FOREIGN RELATIONS
As a founding member of the Association of Southeast Asian Nations (ASEAN--established 1967), Malaysia views regional cooperation as the cornerstone of its foreign policy. Malaysia was a leading advocate of expanding ASEAN's membership to include Laos, Vietnam, and Burma, arguing that "constructive engagement" with these countries, especially Burma, will help bring political and economic changes. In world affairs, Malaysia maintains cooperative relations with the United States, the European Union, and Japan. Malaysia is an active member of the Commonwealth, the UN, the Organization of Islamic Conference, and the Non-Aligned Movement. Malaysia also is a member of APEC and hosted the 1998 Leaders' Meeting. Malaysia maintains diplomatic relations with North Korea. In January 1999 Malaysia began a 2-year stint as a non-permanent member of the UN Security Council.

International affiliations: UN and many of its specialized agencies, including UNESCO; World Bank, International Monetary Fund, International Atomic Energy Agency; General Agreement on Tariffs and Trade; Association of Southeast Asian Nations; Asian Development Bank; Five-Power Defense Arrangement; South-South Commission (G-15); Asia-Pacific Economic Cooperation (APEC); Commonwealth; Non-Aligned Movement; Organization of Islamic Conference; and INTELSAT.

U.S.-MALAYSIAN RELATIONS
The United States has maintained friendly relations with Malaysia since its independence in 1957. Despite sometimes strident rhetoric, the U.S. and Malaysia have a solid record of cooperation in many areas, including trade and investment, defense, counter-terrorism, and counter-narcotics.

Cultural and educational exchanges have been another fruitful area of cooperation. Malaysians studying in the U.S., now numbering about 14,000, represent one of the largest foreign student groups enrolled in American colleges and universities. The United States took steps to assist Malaysian students in the U.S. through the uncertainties of the recent economic downturn.

Trade and Investment
Malaysia's economic recovery, which began in 1999, appears likely to continue apace into 2001. The U.S. is currently Malaysia's largest trading partner and largest investor. Malaysia possesses abundant resources and land, a well-educated work force, adequate infrastructure, and a relatively stable political environment. The return of economic growth should boost U.S. exports, particularly in priority areas of development, including high-technology fields, industrial automation, medical products and services, education/distance learning, and the environment. Of particular interest to the Malaysian Government is the development of the Multimedia Super Corridor (MSC), Malaysia's effort to create a Silicon Valley in Asia. Malaysia, a member of the World Trade Organization (WTO), has few restraints on trade goods. Its service sector, however, remains protected, particularly in financial services.

Principal U.S. Embassy Officials
Ambassador--B. Lynn Pascoe
DCM--Robert Reis
Political Counselor--James Entwistle
Economic Counselor--Christopher Marut
Commercial Counselor--Michael Hand
Public Affairs Officer--James Warren (Acting)
Agricultural Counselor--Bernadette Borris
Consul--Sylvia Johnson

The U.S. Embassy in Malaysia is located at 376 Jalan Tun Razak, 50400 Kuala Lumpur (tel. 60-3-2168-5000, fax 60-3-242-2207).

[This is a mobile copy of Malaysia (10/00)]