Malaysia: Model for successful economic development in a multi-ethnic society

Malaysia exemplifies the power of unity in diversity, fostering the right conditions to emerge as a developed nation

Malaysia celebrates its 77th Independence Day, also known as ‘Hari Merdeka’ or National Day, ‘Hari Kebangsaan’, on 31 August 2024. This day commemorates the Federation of Malaya’s independence from the British Empire, marked by the Malayan Declaration of Independence on 31 August 1957, as defined in Article 160 of the Constitution of Malaysia. The day is observed across the nation with both official and unofficial ceremonies.

Malaysia’s economy ranks as the sixth largest in Southeast Asia and the 36th largest globally by nominal GDP. When adjusted for purchasing power parity, its GDP climbs to the 30th largest in the world. By the close of 2024, Malaysia’s nominal GDP is projected to approach half a trillion US Dollars.

Malaysian labour productivity is the third highest in ASEAN, significantly outpacing Indonesia, Vietnam, and the Philippines. The 2024 Global Competitiveness Report ranks Malaysia as the 34th most competitive economy worldwide.

As the 25th most export-intensive economy globally, Malaysia surpasses even Switzerland, with export activities constituting over 76% of its GDP. The country has developed vertical and horizontal integration across key export-linked industries, gaining significant global market shares in sectors like integrated circuits, semiconductors, palm oil, and liquefied natural gas. Malaysia also plays a pivotal role in the global semiconductor market, standing as the third-largest exporter of semiconductor devices worldwide. With ambitious plans to attract $ 100 billion in investments for its semiconductor industry, Malaysia is positioning itself as a global semiconductor hub.

By mid-2024, Malaysia had successfully attracted significant foreign direct investment, driven by the global artificial intelligence boom. Tech giants such as Google, Microsoft, and ByteDance invested $ 2 billion, $ 2.2 billion, and $ 2.1 billion respectively, drawn by Malaysia’s competitive advantages in data centres and hyper scale construction. These advantages include a highly educated workforce, affordable land, low utility costs, and most notably, the absence of natural disasters. This influx of investment is expected to cement Malaysia’s position as a cloud computing hub for Asia, enhance its high-value sectors, and propel the nation towards its high-income economy goal.

Malaysia’s economy is robust and diversified, with the value of high-tech exports in 2022 totalling approximately $ 66 billion, the third highest in ASEAN. Malaysians enjoy a relatively high standard of living compared to many of their Southeast Asian neighbours, driven by a fast-growing export-oriented economy, low national income taxes, affordable local food and fuel, and a fully subsidised single-payer public healthcare system. As a newly industrialised market economy, Malaysia is relatively open and state-oriented, contributing to its sustained growth and stability.

Living in a diverse society offers people the opportunity to learn from one another, support each other, and contribute to both personal and national growth. Malaysia exemplifies the power of unity in diversity, fostering the right conditions to emerge as a developed nation.

(The writer is President of the Sri Lanka-Malaysia Business Council. He holds an MBA (University of West England), and Diploma in Professional Diplomacy and World Affairs (BIDTI).)