Flag of Malaysia

Malaysia country brief

Introduction

Geography

Located just north of the equator, Malaysia borders Thailand, Indonesia and Brunei, and has maritime boundaries with Indonesia, Singapore and the Philippines.

Both West (or Peninsular) Malaysia (area 131,794 square km) and East Malaysia (198,000 square km) consist of rugged forested mountainous interiors descending to coastal plains. The total area is about half that of New South Wales. Malaysia's highest peak is Mount Kinabalu at 4,100 meters in East Malaysia. Malaysia's climate is hot (up to 34°C) and humid (2 to 4 meters of rain annually).

Population

According to the Department of Statistics Malaysia, Malaysia's population was 29.8 million at the end of 2013. The country's ethnic groups include Malay and indigenous (62.4 per cent), ethnic Chinese (22 per cent), ethnic Indians (6.6 per cent) and others (0.8 per cent). Sunni Islam is the predominant religion but a range of religions are represented, including Buddhism, Hinduism and Christianity. The official language is Bahasa Malaysia (Malay), but English is widely used, as are Chinese and Tamil dialects within those communities.

Political overview

The Federation of Malaya was established on 31 August 1957. On 16 September 1963, the Federation was enlarged by the accession of Singapore, Sabah (formerly British North Borneo) and Sarawak. The name 'Malaysia' was adopted from that date. Singapore left the Federation on 9 August 1965.

Malaysia is a federal constitutional monarchy and a parliamentary democracy. The Head of State is the Yang di-Pertuan Agong (King). The Head of Government is the Prime Minister, who is also the head of the Cabinet.

Malaysia's 13 states are: Johor, Kedah, Kelantan, Melaka, Negeri Sembilan, Pahang, Perak, Perlis, Pulau Pinang, Sabah, Sarawak, Selangor and Terengganu. There are three Federal Territories: Labuan, Putrajaya and Wilayah Persekutuan – the capital, Kuala Lumpur, is located in Wilayah Persekutuan. Nine of the 13 states have hereditary rulers (eight Sultans and one Rajah) who share the position of King on a five-year rotating basis. The King's functions are largely ceremonial since constitutional amendments in 1993 and 1994.

Legislative power is divided between federal (bicameral) and state (unicameral) legislatures. The Federal Parliament comprises the House of Representatives (Dewan Rakyat) and the Senate (Dewan Negara). The House of Representatives has 222 members elected for five-year terms in single-seat constituencies. The Senate consists of 26 members elected by State Legislative Assemblies and 44 appointed by the King on the advice of the Prime Minister. The tenure of office is a three-year term for a maximum of two terms. States have their own elected Legislative Assemblies. Federal and state elections are generally held concurrently, with the exception of state elections in Sarawak, which are held separately.

The governing Barisan Nasional (National Front) coalition comprises the United Malays National Organisation (UMNO), the Malaysian Chinese Association, the Malaysian Indian Congress, plus a number of other parties including some based in East Malaysia. This coalition, in which UMNO is the dominant voice, has been in power at the federal level in one form or another since the first elected government in 1955.

The Barisan Nasional Government is led by Prime Minister Dato' Sri Najib Razak, who succeeded former Prime Minister Tun Abdullah Badawi on 3 April 2009.

Barisan Nasional was returned to power with a reduced majority of 133 seats in the General Election on 5 May 2013, down from the 140 seats won in the 2008 Elections. The Opposition Pakatan Rakyat (People’s Pact) alliance won 89 seats.

Malaysia's foreign policy

The principles of national sovereignty and mutual respect for territorial integrity, mutual non-aggression, and non-interference in domestic affairs of other countries are central tenets of Malaysia's foreign policy. This is reflected in Malaysia's membership of the United Nations and prominent roles in organisations such as the Association of Southeast Asian Nations (ASEAN), the Organisation of the Islamic Conference (OIC), which Malaysia chaired from 2003 to March 2008, and the Non-Aligned Movement (NAM), which Malaysia chaired from 2003 to 2006.

Malaysia was one of ASEAN's five original members (founded in 1967).

Economic overview

Since independence in 1957, Malaysia has been transformed from a commodity-based economy focusing on rubber and tin to one of the world's largest producers of electronic and electrical products. Malaysia is a significant trading nation as measured by trade as a share of gross domestic product (GDP), with its goods and services exports amounting to nearly 85 per cent of GDP.

According to the Malaysian Government, manufactured goods made up 67 per cent of Malaysia’s exports in 2012, with electronic and electrical products comprising 32.9 per cent of the value of total merchandise exports for the year.

Malaysia is also the world's second-largest exporter of palm oil and one of the region's major oil and gas exporters.

According to key development indicators, Malaysia is now a high middle-income, export-oriented economy, with per capita GDP (in current prices) of US$10,345 in 2012, life expectancy of 74 years and gross primary school enrolment of 100 per cent of the school-age population.

Malaysia's economic development policies are enunciated in a number of guiding documents which include: Vision 2020; the National Mission (2006-2020); the Tenth Malaysia Plan (2011-2015); the New Economic Model (2010); and the Economic Transformation Program (2010).

Vision 2020, launched in 1991, sets out Malaysia's plan to achieve developed-economy status by 2020. Specific targets include increasing real GDP eightfold between 1990 and 2020 – translating to average annual growth of seven per cent – and increasing per capita income by a factor of four.

The National Mission provides a framework for Malaysia to achieve Vision 2020. It builds on previous policies including the National Vision Policy (introduced in 2001), the National Development Policy (introduced in 1991) and the New Economic Policy (introduced in 1970). These policies were designed to eradicate poverty and advance the economic position of Bumiputeras ('sons of the soil' – mainly Malays but also other indigenous groups). While the Government's target of 30 per cent Bumiputera ownership of capital has not been achieved (and the timeline has been extended to 2020), there has been a significant shift in the balance of ownership, coinciding with the emergence of an influential new class of Bumiputera entrepreneurs.

The Tenth Malaysia Plan (2011-2015) is the Malaysian Government's economic blueprint. The plan places an emphasis on becoming a high-income nation, inclusiveness and sustainability.

Since his appointment in April 2009, Prime Minister Najib has set out a number of reforms aimed at liberalising the economy, especially the services sector. Service sector liberalisation has included the removal of the 30 per cent Bumiputera equity ownership requirement in 27 service sub-sectors, issuance of new foreign commercial banking and insurance licenses, and the removal of the 30 per cent Bumiputera equity requirement for publicly listed companies.

In October 2010, Prime Minister Najib launched an Economic Transformation Program, which proposes to facilitate private-public partnership projects to promote Malaysia's economic growth. In December 2010, the National Economic Advisory Council New Economic Model for Malaysia, presenting an overall framework for transforming Malaysia from a middle income to an advanced nation by 2020.

On 1 April 2015, a Goods and Services Tax (GST) will be introduced, fixed at 6 per cent.  This will bring Malaysia into line with the majority of countries internationally.

Recent economic performance and outlook

Malaysia's economy is the third-largest in South-East Asia behind Indonesia and Thailand. Real GDP growth in 2012 was 5.6 per cent, following growth in 2011 of 5 per cent.

Malaysia continues to have a large trade surplus (with continuous monthly trade surpluses since November 1997). Inflation was 3.2 per cent in 2011 and 1.7 per cent for 2012. Malaysia has run a budget deficit since 1998. In 2012, the budget deficit reached 4.5 per cent of GDP.

Malaysia's trade and foreign investment policy

Malaysia is a strong supporter of the multilateral trading system, in particular the World Trade Organization. Malaysia participates actively in regional economic arrangements such as the ASEAN Free Trade Area (AFTA) and the Asia-Pacific Economic Cooperation (APEC). Malaysia is also a member of the Cairns Group, which advocates more liberalised global trade in agriculture. In 2013, Malaysia's largest trading partners were the United States, Singapore, Japan and China.

Malaysia has concluded and implemented bilateral FTAs with Australia, Japan, Pakistan, New Zealand, Chile and India. ASEAN has concluded FTAs with China, Japan, South Korea, Australia, India and New Zealand. Malaysia is also pursuing bilateral FTA negotiations with the European Union and Turkey. Malaysia and Australia are negotiating the Trans-Pacific Partnership Agreement, along with the United States, New Zealand, Singapore, Brunei, Peru, Vietnam, Chile, Canada, Japan and Mexico. Malaysia is also participating in Regional Comprehensive Economic Partnership (RCEP) negotiations, an ASEAN-centered proposal for a regional free trade area.

Foreign Direct Investment (FDI) has played a large part in Malaysia's development, although over the past decade, annual net FDI inflows have fallen to an average of 3 per cent of GDP, compared with 6.4 per cent in the 1990s. The Government has sought to channel investment into export-oriented manufacturing and capital-intensive and high technology industries.

Australia-Malaysia relations

Historical background

In the 19th century Malays participated in the pearling industry off Australia's north coast. William Light, the son of Francis Light (who acquired Penang on behalf of the British East India Company in 1786), planned the city of Adelaide in 1837. Today, Georgetown in Penang and Adelaide commemorate this link as sister cities.

Australian troops have fought on a number of occasions alongside Malaysians. This included during the Malayan Campaign of World War II, as part of the Commonwealth force that defeated the Malayan Communist insurgency during the Malayan Emergency (1950-60) and during the period of Confrontation (1963-66).

Australia was closely associated with the establishment of the Federation of Malaya in 1957 and sponsored Malaya's application for membership of the United Nations. Sir William McKell, a former Governor-General of Australia, together with four other Commonwealth jurists, helped draft the nation's Constitution. Australia also took a close and positive interest in the formation of Malaysia.

Malaysia celebrated the 50th anniversary of its independence in 2007. The then Governor-General, His Excellency Major General Michael Jeffery AC CVO MC, represented Australia at independence (Merdeka) celebrations in Kuala Lumpur on 31 August 2007. With support from the Australia Malaysia Institute (AMI), the Department of Foreign Affairs and Trade (DFAT) released a bilingual photographic publication entitled Australia-Malaysia: Celebrating 50 Years, which chronicles some of the important events and achievements shared by Australia and Malaysia over more than five decades.

Government relations

Australia's formal relations with Malaysia date back to 1955 when our Commission (later High Commission) was established in Kuala Lumpur. Australia was one of 15 countries to establish formal diplomatic relations with the Federation of Malaya in 1957 soon after independence. The current relationship draws on many long-standing associations including:

The Australian Parliament's Joint Standing Committee on Foreign Affairs, Defence and Trade tabled a report into Australia's Relationship with Malaysia in March 2007. The report noted the changing nature of Australia's relationship with Malaysia – from one of support in the early years of Malaysia's formation to the present wide-ranging and extensive collaboration across all fields.

Bilateral visits

Australia's relationship with Malaysia is underpinned by strong people-to-people links and a significant program of two-way, high-level visits across a broad range of portfolios.

Most recently in February 2014, Foreign Minister Julie Bishop visited Malaysia to promote our trade and investment links as well as to advance further our strong education cooperation.

In November 2013, the Malaysian Minister of Foreign Affairs, Dato’ Anifah Aman, visited Australia to participate in the Council of Ministers meeting of the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC) in Perth. He met bilaterally with the Minister for Foreign Affairs, Julie Bishop.

From 23-24 October 2013, the Minister for Immigration and Border Protection, Scott Morrison, visited Malaysia to advance bilateral cooperation to combat transnational crime.

From 3 to 7 November 2012, former Minister for Foreign Affairs, Bob Carr, visited Malaysia and announced a new cultural exchange program between Malaysia and Australia.

On 22 May 2012, the former Minister for Trade and Competitiveness, Dr Craig Emerson, visited Malaysia to sign the Malaysia-Australia Free Trade Agreement (MAFTA) with the Malaysian Minister of International Trade and Industry, Dato' Sri Mustapa Mohamed.  Dr Emerson and Dato' Sri Mustapa co-chaired the 16th Australia-Malaysia Joint Trade Committee meeting in Kuala Lumpur in January 2012 (see below).

From 31 October to 1 November 2010, former Prime Minister Julia Gillard visited Malaysia.  Malaysian Prime Minister Najib visited Australia from 2 to 4 March 2011.

From 14 to 16 August 2010, the Governor-General, HE Ms Quentin Bryce AC, visited Sabah in East Malaysia for the 65th anniversary of the Sandakan Death Marches.

Former Prime Minister Kevin Rudd made two official visits to Malaysia in July 2008 and in July 2009.

Defence and security links

Australia's defence relationship with Malaysia dates back to well before Malaysia's independence in 1957, and reflects a common commitment to the security and stability of the region. The relationship is based on practical cooperation including the Malaysia-Australia Joint Defence Program, an ongoing Australian presence at the Royal Malaysian Air Force (RMAF) Base at Butterworth, and common membership of the Five Power Defence Arrangements (FPDA).

Bilateral defence cooperation occurs through the Malaysia-Australia Joint Defence Program, which formally commenced in 1992 under this name (although Australian defence assistance to Malaysia dates back to 1964). The program includes training of Malaysian military personnel in Australia, attachments of Armed Forces personnel from each country to the other, and annual combined field exercises. Australia is Malaysia's major source of external military training.

Formally established in 1971, the FPDA commits Australia, New Zealand and the United Kingdom to consult on a response to any armed attack or threat against Malaysia or Singapore. The FPDA marked its 40th anniversary in 2011 and provides a valuable framework for conducting combined training exercises. More recently, the FPDA has expanded its focus to address non-conventional security threats facing the region, including terrorism and maritime security.

Australia and Malaysia cooperate closely on security issues, with good links between police and immigration agencies. In August 2002, Australia and Malaysia signed a memorandum of understanding on cooperation to combat international terrorism. Bilateral agreements on mutual assistance in criminal matters and extradition entered into force on 28 December 2006. Australia and Malaysia signed a Memorandum of Understanding on Combating Transnational Crime and Developing Police Cooperation on 13 May 2009 and a Memorandum of Understanding on Maritime Security on 12 July 2011.

Education

Australian expertise in education and training is highly regarded in Malaysia. Bilateral links in this sector date back before the Colombo Plan. Education for many Malaysian students has traditionally been provided at universities in Australia, but university twinning arrangements and Australian campuses in Malaysia now allow Malaysian students to undertake Australian courses in Malaysia. Three Australian universities have campuses in Malaysia – Monash University, Curtin University and Swinburne University of Technology.

In 2012, approximately 22,000 Malaysian students were enrolled in Australian education institutions onshore, and approximately 21,000 Malaysian and international students were studying for Australian qualifications in Malaysia. Malaysia ranks second as a source country for international students in higher education in Australia and fourth overall across all sectors. It is estimated more than 300,000 Malaysians have undertaken courses in Australia.

In March 2011, Australia and Malaysia signed a Memorandum of Understanding on Education, followed by a Memorandum of Understanding on Higher Education in 2012.

In July 2008, former Prime Minister Rudd announced the launch of a pilot Sister Schools Program which linked six schools in Malaysia with six schools in Victoria. In July 2009, the former Minister for Foreign Affairs, Stephen Smith, announced the expansion of this program to double the number of participating schools in Australia and Malaysia. The Sister Schools Program is managed by the Australia-Malaysia Institute (see below).

The Malaysian Australian Alumni Council (MAAC) is a national organisation in Malaysia for Malaysian alumni associations of Australian universities. The MAAC spearheads the Malaysia Australia Colombo Plan Commemoration Scholarship initiative, which provides for a two-way exchange of scholars between Australia and Malaysia.

Migration/tourism

According to the latest Census in 2011, 116 196 Malaysia-born people lived in Australia, an increase of 25.8 per cent from the 2006 Census.

In the year to 31 January 2012, Australia welcomed 241,600 short-term visitor arrivals from Malaysia, making it Australia's second-largest source of visitors from South-East Asia after Singapore.

An air services agreement is in place between Australia and Malaysia. In November 2007, Malaysian airline AirAsia commenced direct flights between Malaysia and Australia.

Work and holiday arrangement

Australia has a Work and Holiday arrangement with Malaysia which allows Australians and Malaysians aged between 18 to 30 years to holiday and work in each other's country for up to12 months. For information about the requirements for this visa and how to apply, visit the Malaysian High Commission website.

Australia-Malaysia Institute

The Australia-Malaysia Institute was established by the Australian Government in April 2005 to strengthen people-to-people and institutional links with Malaysia, and to deepen mutual understanding and cooperation. It offers a grants program and organises visits by young leaders and journalists, and interfaith visits, between Australia and Malaysia.

Australia-Malaysia economic and trade relations

In terms of two-way goods and services trade, Malaysia is Australia's third-largest trading partner in ASEAN and our 9th-largest partner overall. In 2012/13 financial year, total merchandise trade between Australia and Malaysia was $14.1 billion, with Australian exports of $5.2 billion and imports of $8.9 billion. Total two-way services trade in 2012/13 was $3 billion, with Australian exports of $1.7 billion and imports of $1.3 billion.

Major merchandise exports from Australia to Malaysia include crude petroleum, copper, nickel and coal. Australia is a major provider of education services to Malaysia. Major Malaysian merchandise exports to Australia include crude petroleum, monitors, projectors and televisions, computers and refined petroleum.

In 2012, Malaysian investment in Australia was $14.9 billion. Australian companies continue to pursue opportunities in Malaysia, with the stock of Australian foreign investment in Malaysia at $7.9 billion in 2012.

The Australia Malaysia Business Council (AMBC) and the Malaysia Australia Business Council (MABC) are important coordinating bodies for commercial linkages, and conduct regular dialogue with both governments, including through participation in the Joint Trade Committee meetings. They are an important source of information and advice for businesses active in Australia and Malaysia and play an important role in promoting strong networks in the respective private sectors.

Australia and Malaysia have a double taxation agreement.

Malaysia-Australia Free Trade Agreement (MAFTA)

The Malaysia-Australia Free Trade Agreement (MAFTA) was signed in Kuala Lumpur on 22 May 2012, and came into force on 1 January 2013.

MAFTA builds on the commitments made by both countries under the ASEAN-Australia-New Zealand FTA (AANZFTA) and provides improved access for Australian exporters to the Malaysian market. Under the Agreement, 97.6 per cent of Australia's exports (2011 figures) became tariff-free on entry into force, rising to 99 per cent in 2017.

Australia-Malaysia Joint Trade Committee

The Australia-Malaysia Joint Trade Committee (JTC) meetings, led by respective Trade Ministers, provide a regular forum for discussions on international and regional trade and economic issues, and ways to expand the bilateral trade and economic relationship.

The 16th meeting of the JTC was held in Kuala Lumpur on 31 January 2012.

Export opportunities

Australian Trade Commission (Austrade)

Austrade has identified potential opportunities for Australian suppliers of goods and services in a number of sectors. Austrade's Malaysia country page supplies general information on doing business in Malaysia and on specific export opportunities. The Austrade website has a database that can be searched by industry. The Austrade office in Kuala Lumpur can also provide advice on accessing opportunities in Malaysia. They can be contacted at kuala.lumpur@austrade.gov.au.