MALAYSIA

CAPITAL: Kuala Lumpur FLAG: The national flag consists of 14 alternating horizontal stripes, of which 7 are red and 7 white; a gold 14-pointed star and crescent appear on a blue field in the upper left corner. ANTHEM: Negara Ku (My Country). MONETARY UNIT: The Malaysian ringgit (M$), or dollar, is divided into 100 sen, or cents. There are coins of 1, 5, 10, 20, and 50 sens and 1 ringgit, and notes of 1, 5, 10, 20, 100, 500, and 1,000 ringgits. M$1 = US$0.2652 (or US$1 = M$3.77) as of May 2003. WEIGHTS AND MEASURES: The metric system became the legal standard in 1982, but some British weights and measures and local units also are in use. HOLIDAYS: National Day, 31 August; Christmas, 25 December. Movable holidays include Vesak Day, Birthday of His Majesty the Yang di-Pertuan Agong, Hari Raya Puasa, Hari Raya Haji, the 1st of Muharram (Muslim New Year), Milad an-Nabi, Dewali, Thaipusam, and the Chinese New Year. Individual states celebrate the birthdays of their rulers and other holidays observed by native ethnic groups. TIME: 7 PM = noon GMT. 1LOCATION, SIZE, AND EXTENT Situated in Southeast Asia, Malaysia, with an area of 329,750 sq km (127,317 sq mi), consists of two noncontiguous areas: Peninsular Malaysia (formerly West Malaysia), on the Asian mainland, and the states of Sarawak and Sabah, known together as East Malaysia, on the island of Borneo. Comparatively, the area occupied by Malaysia is slightly larger than the state of New Mexico. Peninsular Malaysia, protruding southward from the mainland of Asia, comprises an area of 131,587 sq km (50,806 sq mi), extending 748 km (465 mi) SSE-NNW and 322 km (200 mi) ENE-WSW. It is bordered on the N by Thailand, on the E by the South China Sea, on the S by the Strait of Johore, and on the W by the Strait of Malacca and the Andaman Sea, with a total boundary length of 2,068 km (1,285 mi). Sarawak, covering an area of 124,449 sq km (48,050 sq mi), on the northwest coast of Borneo, extends 679 km (422 mi) NNE-SSW and 254 km (158 mi) ESE-WNW. It is bounded by Brunei on the N, Sabah on the NE, Indonesia on the E and S, and the South China Sea on the W. Sarawak’s total boundary length is 2,621 km (1,629 mi). Situated at the northern end of Borneo, Sabah has an area of 74,398 sq km (28,725 sq mi), with a length of 412 km (256 mi) E-W and a width of 328 km (204 mi) N–S. To the N is the Balabac Strait, to the NE the Sulu Sea, to the SE the Celebes Sea, to the S Indonesia, to the SW Sarawak, and to the W the South China Sea, with a total boundary length of 2,008 km (1,248 mi). The total boundary length of Malaysia is 7,344 km (4,563 mi), of which 4,675 km (2,905 mi) is coastline. Malaysia claims several atolls of the Spratly Island group in the South China Sea. The claim, in a region where oil is suspected, is disputed by China, the Philippines, Taiwan, and Vietnam. Malaysia’s capital city, Kuala Lumpur, is located in the western part of Peninsular Malaysia. 2TOPOGRAPHY Four-fifths of Peninsular Malaysia is covered by rainforest and swamp. The northern regions are divided by a series of mountain ranges that rise abruptly from the wide, flat coastal plains. The highest peaks, Gunong Tahan (2,190 m/7,185 ft) and Gunong Korbu (2,183 m/7,162 ft), are in the north central region. The main watershed follows a mountain range about 80 km (50 mi) inland, roughly parallel to the west coast. The rivers flowing to the east, south, and west of this range are swift and have cut some deep gorges, but on reaching the coastal plains they become sluggish. The western coastal plain contains most of the country’s population and the main seaports, George Town (on the offshore Pulau Pinang) and Kelang (formerly Port Swettenham). The eastern coastal plain is mostly jungle and lightly settled. It is subject to heavy storms from the South China Sea and lacks natural harbors. Sarawak consists of an alluvial and swampy coastal plain, an area of rolling country interspersed with mountain ranges, and a mountainous interior. Rain forests cover the greater part of Sarawak. Many of the rivers are navigable. Sabah is split in two by the Crocker Mountains, which extend north and south some 48 km (30 mi) inland from the west coast, rising to over 4,100 m (13,450 ft) at Mt. Kinabalu, the highest point in Malaysia. Most of the interior is covered with tropical forest, while the western coastal area consists of alluvial flats making up the main rubber and rice land. 3CLIMATE The climate of Peninsular Malaysia is equatorial, characterized by fairly high but uniform temperatures (ranging from 23° to 31°C/73° to 88°F throughout the year), high humidity, and copious rainfall (averaging about 250 cm/100 in annually). There are seasonal variations in rainfall, with the heaviest rains from October to December or January; except for a few mountain areas, the most abundant rainfall is in the eastern coastal region, where it averages over 300 cm (120 in) per year. Elsewhere the annual average is 200–300 cm (80–120 in), the northwestern and southwestern regions having the least rainfall. The nights are usually cool because of the nearby seas. The climate of East Malaysia is relatively cool for an area so near the equator. Malaysia 399 4FLORA AND FAUNA About 70% of Malaysia consists of tropical rain forest. In Peninsular Malaysia, camphor, ebony, sandalwood, teak, and many varieties of palm trees abound. Rain forest fauna includes seladang (Malayan bison), deer, wild pigs, tree shrews, honey bears, forest cats, civets, monkeys, crocodiles, lizards, and snakes. The seladang weighs about a ton and is the largest wild ox in the world. An immense variety of insects, particularly butterflies, and some 508 breeding species of birds are found. On Sabah and Sarawak, lowland forests contain some 400 species of tall dipterocarps (hardwoods) and semihardwoods; fig trees abound, attracting small mammals and birds; and groves are formed by the extensive aerial roots of warangen (a sacred tree to indigenous peoples). As altitude increases, herbaceous plants— buttercups, violets, and valerian—become more numerous, until moss-covered evergreen forests are reached from 1,520 to 1,830 m (5,000–6,000 ft). Butterflies, brilliantly colored birds of paradise, and a great wealth of other insect and bird species inhabit the two states. 5ENVIRONMENT The Environmental Quality Act of 1974 and other environmental laws are administered by the Division of Environment of the Ministry of Science, Technology, and Environment. Discharge of untreated sewage has contaminated the nation’s water; the most heavily polluted areas are along the west coast. Malaysia’s water pollution problem also extends to its rivers, of which 40% are polluted. The nation has 580 cu km of water with 76% used for farming and 13% used for industrial activity. Malaysia’s cities produce an average of 1.5 million tons of solid waste per year. Clean-air legislation limiting industrial and automobile emissions, was adopted in 1978. However, air pollution from both of these sources is still a problem. In the mid-1990s, Malaysia ranked among 50 nations with the world’s highest industrial carbon dioxide emissions, which totaled 70.5 million metric tons per year, a per capita level of 3.74 metric tons per year. Discharge of oil by vessels in Malaysian waters is prohibited. Of Malaysia’s total land area, 59% is tropical rainforest. Malaysia has the world’s fifth most extensive mangrove area, which total over a half a million ha (over 1.2 million acres). The country’s forests are threatened by commercial interests. In 2001, 42 of the nation’s mammal species and 34 bird species were endangered. Endangered species in Malaysia include the orangutan, tiger, Asian elephant, Malayan tapir, Sumatran rhinoceros, Singapore roundleaf horseshoe bat, four species of turtle (green sea, hawksbill, olive ridley, and leatherback), and two species of crocodile (false gavial and Siamese). 6POPULATION The population of Malaysia in 2003 was estimated by the United Nations at 24,425,000, which placed it as number 44 in population among the 193 nations of the world. In that year approximately 4% of the population was over 65 years of age, with another 33% of the population under 15 years of age. There were 103 males for every 100 females in the country in 2003. According to the UN, the annual population growth rate for 2000–2005 is 1.93%, with the projected population for the year 2015 at 29,563,000. The population density in 2002 was 74 per sq km (191 per sq mi). It was estimated by the Population Reference Bureau that 57% of the population lived in urban areas in 2001. The capital city, Kuala Lumpur, had a population of 1,348,000 in that year. According to the United Nations, the urban population growth rate for 2000–2005 was 2.8%. 7MIGRATION Not until British economic enterprise first attracted foreign labor after 1800 did large-scale Chinese, Indian, and Malaysian migration (nonnative Indonesians and Borneans) take place. The early migrants were transients: in 1921, only 20.3% of the Chinese and 11.9% of the Indians were Malayan-born. However, migration data for subsequent years show a general tendency toward permanent settlement by these nonindigenous portions of the population. The percentages of the total Chinese population reporting Peninsular Malaysia as their birthplace were 29.1%, 62.5%, and 74.4% for the years 1931, 1947, and 1957, respectively; the percentages of Indians reporting their birthplace as Peninsular Malaysia were 21.1%, 51.4%, and 64.6% for the same respective years. By 1953, the Malays were a minority in their own territory. The government enacted legislation restricting further immigration, and by 1968 the Malays formed slightly more than 50% of the population. Regulations which took effect in 1968 concerning passports and border crossings between Malaysia and Indonesia and between Malaysia and the Philippines were also intended to restrict immigration. By 1970, more than four-fifths of the Chinese and Indians were born in Peninsular Malaysia. Between 1975 and 1996, Malaysia hosted more than 250,000 Indo-Chinese refugees and permitted the local integration of some 45,000 Filipino refugees in Sabah. Between 1975 and 1989, more than 250,000 Vietnamese refugees found asylum in Malaysia; the vast majority subsequently migrated to other countries. Some 3,797 Vietnamese refugees still remain in Malaysia, but are to return home according to government authorities. The legal position of the 5,000 or so Muslims from Myanmar, who possess no documentation as citizens of Myanmar, had not been addressed by the government as of 1999. The net migration rate in 1999 was zero; however, this figure does not reflect the number of illegal immigrants, including large numbers from Indonesia and smaller numbers from the Philippines, Bangladesh, Myanmar (Burma), China, and India. In 2000 there were 1,392,000 migrants living in Malaysia, including 50,500 refugees. The net migration rate in that year was 0.4 migrants per 1,000. These numbers do not reflect the unknown number of illegal immigrants from other countries in the region. The government views the immigration level as too high, but the emigration level as satisfactory. 8ETHNIC GROUPS The population of Malaysia consists of three main ethnic groups—Malays, Chinese, and peoples of the South Asian subcontinent. Malays and other indigenous groups are known as Bumiputras (“sons of the soil”). Estimates for 2000 reported the following distribution: Malays and other indigenous groups (Bumiputras), 58%; Chinese, 24%; persons of Indian descent, 8%; and other groups, 10%. Malays predominate in the rural areas, while the Chinese are concentrated in urban and mining areas, where they control much of the nation’s wealth; enmity between the two communities has occasionally erupted into violence. The non-Malay indigenous groups on the peninsula are collectively called the Orang Asli (aborigines) and number about 50,000. Non-Malay indigenous tribes constitute about half of Sarawak’s residents; the largest indigenous group consists of the Sea Dayaks, or Ibans, followed by the Land Dayaks, or Bidayuh. The majority of Sabah’s population consists of indigenous peoples, principally Kadazans, Bajaus, and Muruts. The balance is dominated by Chinese. 9LANGUAGES Bahasa Malaysia, or Malay, is the national language and the lingua franca of all Malaysia. The traditional Bahasa Malaysia script is Jawi, which derives from Arabic script, but Rumi, based 400 Malaysia on the Roman alphabet, is officially used in government, education, and business. English is widely employed in government and commerce and is a compulsory subject in all schools. Chinese (notably the Mandarin, Cantonese, Hokkien, Hakka, Hainan, and Foochow dialects), Tamil, Telugu, Malalalam, Punjabi, and Thai are spoken. In addition, in East Malaysia several indigenous languages are spoken, the largest of which are Iban and Kadazan. Most Malaysians are bilingual or multilingual. 10RELIGIONS Islam is the official religion. The head of state, the yang dipertuan agong, is also the national leader of the Islamic faith. The constitution, however, guarantees freedom to profess, practice, and propagate other religions. Religious lines generally follow ethnic lines. Almost all Malays are Muslims; most Indians are Hindus, with a substantial minority of Muslims, Sikhs, and Parsees; and most Chinese are Confucian-Buddhists, with a minority Muslim representation. Christianity has won some adherents among the Chinese and Indians. The indigenous peoples of Sabah and Sarawak are still largely animist, although many have become Christian. Shamanism is also practiced on East Malaysia. According to a 2000 government census, about 60% of the population are Muslim, 19% Buddhist, 9% Christian, and 6% Hindu. About 3% practice Confucianism, Taoism, or other traditional Chinese religions. Other faiths include animism, Sikhism, and the Baha’i Faith. 11TRANSPORTATION In 2002, the highway system of Malaysia consisted of 64,672 km (40,187 mi) of roads, of which 40,707 km (25,295 mi) were paved, including 1,192 km (741 mi) of expressways. The major highways on Peninsular Malaysia run north-south along the east and west coasts; east-west links connect George Town and Kota Baharu in the north and Kuala Lumpur and Kuantan farther south. As of 1991, (according to the Malaysian Highway Authority) the East-West Highway (Federal Route 2) crossing Peninsular Malaysia, as well as the Klang Valley Expressway connecting Kuala Lumpur to Port Klang were completed. The 924 km (574 mi) North-South Highway along the west coast of Peninsular Malaysia connects Thailand and Singapore. In 2000, registered vehicles included 2,639,423 automobiles and 954,737 commercial vehicles. The national Malayan Railway Administration operates some 1,801 km (1,119 mi) of Peninsular Malaysia, which provides links to Thailand, Singapore, and eastern parts of the peninsula. Sabah State Railways provides diesel service along the west coast and in the interior for 136 km (85 mi). There are no railroads in Sarawak. There are 7,296 km (4,533 mi) of waterways in all of Malaysia: 3,209 km (1,994 mi) in Peninsular Malaysia; 1,569 km (975 mi) in Sabah; and, 2,518 km (1,565 mi) in Sarawak. Cameron Highlands Mt. Tahan 7,174 ft. 2187 m. Mt. Kinabalu 13,455 ft. 4101 m. Tanjong Sirik HOSE MTS. CROCKER RANGE BRASSEY RANGE Langkawi Pinang Natuna Besar Is. Pemanggil Banggi B O R N E O Pahang Perak Rajang Baram Strai t o f Malacca Sulu Sea Celebes Sea Alor Setar Kota Baharu South China Sea Kuala Terengganu Telok Anson Kuantan Chukai Seremban Keluang Batu Pahat Malacca Muar Sandakan Miri Tawau Bintulu Sibu Kuching Kota Kinabalu Sarawak Sabah Kuala Lumpur George Town Ipoh Johor Baharu I N D O N E S I A BRUNEI SINGAPORE INDONESIA W S N E Malaysia MALAYSIA 0 300 Miles 0 100 200 300 Kilometers 100 200 LOCATION: Peninsular Malaysia: 1°17' to 6°43' N; 99°38' to 104°39' E. Sarawak: 0°52' to 4°59' N; 109°38' to 155°43' E. Sabah:
4°6' to 7°22' N; 115°7' to 119°17' E. BOUNDARY LENGTHS: Peninsular Malaysia: Thailand, 506 kilometers (316 miles); coastline, 2,068 kilometers (1,292 miles). East
Malaysia: Brunei, 381 kilometers (238 miles); Indonesia, 1,728 kilometers (1,080 miles); coastline, 2,607 kilometers (1,629 miles). Total boundary length, land and
coastline: 7,290 kilometers (4,555 miles). TERRITORIAL SEA LIMIT: 12 miles. Malaysia 401 The three leading ports, all located on the busy Strait of Malacca, are Kelang (the port for Kuala Lumpur), Johor Baharu, and George Town. Kuching is the main port for Sarawak, and Kota Kinabalu the main port for Sabah. The Malaysian merchant fleet in 2002 consisted of 363 ships with a combined capacity of 4,952,119 GRT. Also in 2001, there were 116 airports, 35 of which had paved runways. Most international flights enter or leave Malaysia through Kuala Lumpur International Airport. Other principal airports include Kota Kinabalu, Kuching, and Penang. The Malaysian Airline System (MAS) provides domestic service to most major cities of the peninsula and to Sarawak and Sabah. In 2001, 16,310,500 passengers were carried on scheduled domestic and international flights. 12HISTORY The ancestors of the Malays came down from South China and settled in the Malay Peninsula about 2000 BC. Sri Vijaya, a strong Indo-Malay empire with headquarters at Palembang in southern Sumatra, rose about AD 600 and came to dominate both sides of the Strait of Malacca, levying tribute and tolls on the ships faring between China and India. In the 14th century, however, Sri Vijaya fell, and Malaysia became part of the Majapahit Empire centered in Java. About 1400, a fugitive ruler from Temasik (now Singapore) founded a principality at Malacca (now Melaka) and embraced Islam. It was at Malacca that the West obtained its first foothold on the peninsula. At the height of glory and power, the Malacca principality fell to Portugal in 1511. In their turn, the Portuguese were driven out by the Dutch in 1641. The British East India Company laid the groundwork for British control of Malaya in 1786 by leasing from the sultan of Kedah the island of Pinang, off the west coast of Malaya, about 800 km (500 mi) north of Singapore. Fourteen years later, it obtained from him a small area on the mainland opposite Pinang. In 1819, Sir Thomas Stamford Raffles obtained permission to establish a settlement at Singapore; in 1824, by agreement and financial settlement, the island was ceded to the British East India Company. In the following year, the Dutch settlement at Malacca was ceded to Great Britain. Pinang, Singapore, and Malacca were combined under British rule in 1829 to form the Straits Settlements. The states of Perak and Selangor in 1874 secured treaties of protection from the British. Similar treaties were subsequently made with the sultans of Negri Sembilan (1874–89) and Pahang (1888). In 1895, these four states became a federation (the Federated Malay States), with a British resident-general and a system of centralized government. In 1909, under the Bangkok Treaty, Siam (now Thailand) ceded to British control the four northern states of Kelantan, Trengganu, Perlis, and Kedah. These four, together with Johor, which in 1914 was made a British protectorate, became known as the Unfederated Malay States. Separate British control was extended to Sabah, then known as North Borneo, in 1882. Six years later, North Borneo and Sarawak each became separate British protectorates. Tin mining and rubber grew rapidly under British rule, and large numbers of Chinese and Indian laborers were imported, respectively, for these industries. Japanese forces invaded Malaya and the Borneo territories in December 1941 and occupied them throughout World War II. Within a year after the Japanese surrender in September 1945, the British formed the Malayan Union, consisting of the nine peninsular states, together with Pinang and Malacca; also in 1946, Singapore and the two Borneo protectorates became separate British crown colonies. The Malayan Union was succeeded by the Federation of Malaya on 1 February 1948. Over the next decade, the British weathered a Communist insurgency, as Malaya progressed toward self-government. On 31 August 1957, the Federation of Malaya became an independent member of the Commonwealth of Nations. On 1 August 1962, Great Britain and Malaya agreed in principle on the formation of the new state of Malaysia—a political merger of Singapore and the British Borneo territories (Sarawak, Brunei, and North Borneo) with the Federation. On 1 September 1962, by a 70% plurality, Singapore voted in a referendum for incorporation in the proposed Malaysia, but an abortive revolt staged by Brunei’s ultranationalist Brunei People’s Party in December 1962 eliminated the sultanate from the proposed merger. On 16 September 1963, the Federation of Malaya, the State of Singapore, and the newly independent British colonies of Sarawak and Sabah merged to form the Federation of Malaysia (“Federation” was subsequently dropped from the official name). On 7 August 1965, Singapore seceded from the Federation and established an independent republic. From the outset, Indonesia’s President Sukarno attempted by economic and military means to take over the young nation as part of Indonesia; cordial relations between the two countries were not established until after Sukarno’s ouster in 1966. Internal disorders stemming from hostilities between Chinese and Malay communities in Kuala Lumpur disrupted the 1969 national elections and prompted the declaration of a state of emergency lasting from mid-1969 to February 1971. Successive governments managed to sustain political stability until 1987, when racial tensions between Chinese and Malay increased over a government plan to assign non-Mandarin-speaking administrators to Chinese-language schools. In October 1987 the Malaysian government, under provisions of the Internal Security Act (ISA) which allows detention without trial on grounds of national security, arrested 79 political and civil leaders and closed four newspapers in an effort to stifle dissent. The government called its actions necessary to prevent racial violence, but many prominent Malaysians, including Tunku Abdul Rahman, the country’s first prime minister, condemned the actions. At the same time the government clamped down on all news sources disseminating what the government considered false news, and new legislation denied licensing to news sources not conforming to Malaysian values. In 1981 Dato’ Hussein bin Onn was succeeded as prime minister by Sato’ Sei Dr. Mahathir Mohamad, whose leadership came under criticism from within the United Malays National Organization (UMNO) and other political parties as racial tensions increased. Part of the challenge to Dr. Mahathir’s party leadership came in the form of a legal suit claiming that some of the delegates to the UMNO elections of 1987 had not been legally registered, therefore, the election should be declared null and void. The High Court ruled that due to the irregularities UMNO was an unlawful society and that in effect the election was invalid. Dr. Mahathir held that the ruling did not affect the legal status of the government; he was supported by the ruling Head of State, Tunku Mahmood Iskandar. In 1988 Dr. Mahathir formed a New UMNO, Umno Baru, and declared that party members would have to reregister to join. (Umno Baru was thereafter referred to as UMNO.) Under provisions of the ISA four people linked to the Parti Bersatu Sabah (PBS) were detained over alleged involvement in a secessionist plot in Sabah in June 1990. In July 1990 elections the PBS won 36 of 48 seats in the Sabah State Legislative Assembly. Prior to the general election of 1990 the PBS aligned itself with the opposition, which had formed an informal electoral alliance, Gagasan Rakyat (People’s Might). The National Front (BN) won 127 of the 180 seats, thus maintaining control of the House of Representatives with the two-thirds majority necessary to amend the Constitution. The opposition increased its seats from 37 to 53. In 1992 the People’s Might registered as a political organization and Tengku Razaleigh was elected chairman. In 1990 the restructuring of the portfolio of the Ministry of Trade and Industry was rationalized into two new Ministries, the Ministry of International Trade and Industry (MITI) and the 402 Malaysia Ministry of Domestic Trade and Consumer Affairs (MDTCA). In an action that was widely regarded as politically motivated, Datuk Seri Joseph Pairin Kitingan, chief minister of Sabah and president of the PBS, was arrested in January 1991 and charged with corruption, then released on bail. After subsequent meetings with Dr. Mahathir it was announced that the PBS state government had proposed power sharing with United Sabah National Organization (USNO). The head of USNO, Tun Mustapha Harun, resigned from USNO and joined UMNO. This switch necessitated a by-election and in May 1991 UMNO took its first seat in Sabah. The rise of Dayak nationalism in Sarawak was considered as less of a threat after the 1991 state elections. The Sarawak Native People’s Party (PBDS, Parti Bansa Dayak Sarawak) retained only 7 of the 15 seats it had won in the 1987 election. A High Court ruling in 1991 upheld a ruling by the Ministry of Home Affairs banning the public sale of party newspapers. Speculation was that by targeting limited media outlets the government was muzzling the opposition press. In 1991 UMNO raised the issue of the alleged abuse of privilege by Malaysia’s nine hereditary rulers. A resolution tabled in 1990 had demanded the rulers be restrained from interfering in politics. In November 1992 the issue of the constitutional status of the sultans again arose when it was proposed that the rulers’ immunity from prosecution be removed. The cases in point were the recent alleged assault on a hockey coach by the sultan of Johore, and the 1981 incident in which the sultan of Johore (before he became sultan) was convicted of homicide but pardoned by his father the previous sultan. In January 1993 these proposed amendments to the constitution were passed. Immediately after passage of the bill royal privileges other than those sanctioned and allocations not expressly provided in the constitution were withdrawn. The nine hereditary rulers first rejected the constitutional changes; however, they agreed to a compromise formula on the bill that effectively removed the blanket legal immunity granted to them. The compromise upheld the constitutional stipulation of royal assent for laws affecting the monarchy. Criticism arose over Dr. Mahathir’s handling of this situation as it emphasized the antipathy between his authoritarian style and the “Malay way.” These constitutional changes also highlighted Dr. Mahathir’s previous moves to strengthen executive power at cost of the judiciary, to consolidate UMNO’s control of the legislature, and to control the press. On 17 January 1994 Sabah’s chief minister, Datuk Joseph Pairin Kitingan, was found guilty of corruption. The fine imposed on him fell short of the minimum required to disqualify him from office. Although PBS won the Sabah polls in February 1994, Pairin resigned as the PBS’s leading members joined the National Front, and the Sabah wing of UMNO (with 18 of 48 seats) was about to be installed. In August 1994 the government moved to ban the radical Islamic sect, Al-Arqam. Between 1978 and 1989 Malaysia provided asylum to about 230,000 Vietnamese refugees as they awaited resettlement in the West. In March 1989 Malaysia responded to the continuing influx of refugees and the Western nations’ slow efforts to place them with a plan to screen refugees in order to separate economic migrants from political refugees. This policy was confirmed by the United Nations. In its biggest victory ever, the ruling National Front captured 162 parliamentary seats out of a possible 192 in the general election held 25 April 1995. The coalition won 64% of the popular vote and easily retained its two-thirds parliamentary majority. The Asian economic crisis of 1997 affected both the economy and the political landscape in Malaysia. By the beginning of 1998, the Malaysian economy had undergone its first downturn in 13 years, and tensions over the handling of the crisis erupted between Prime Minister Mahathir, an economic isolationist, and his deputy, Anwar Ibrahim, who favored open-market policies. In September 1998, Mahathir removed Anwar from his cabinet and party posts and imposed currency controls. When Anwar publicly protested these moves and attempted to rally opposition to his former mentor’s policies, he was arrested and later tried for corruption and sexual misconduct. In 1999 Anwar was sentenced to six years in prison, and his wife launched a new political party to contest the upcoming national elections. The economy began to recover by the end of 1998, and the government officially announced that the recession into which it had been plunged was over by August 1999. Responding to an April 2000 deadline for national elections, Mahathir called a snap election in November 1999. Although the arrest of Anwar and his treatment while in custody ignited widespread criticism of Mahathir and his government, the UMNO-led coalition maintained its two-thirds majority in parliament and Mahathir remained in power. However, electoral gains by the Islamic Party of Malaysia (Parti Se-Islam Malaysia or PAS) suggested a significant challenge to the popularity of the government and made PAS the country’s largest opposition party. On 9 March 2001, a wave of intercommunal violence between Malays and ethnic Indians began on the outskirts of Kuala Lumpur, the worst in more than 30 years. Six people, including five of Indian origin, were killed, and over 50 were injured. Most of the wounded were ethnic Indians. Opposition leaders claimed the casualty figures were higher; the government threatened to charge them with sedition (no charges were brought). In early April 2001, days before public protests were scheduled for the second anniversary of the sentencing of Anwar, 10 opposition leaders were detained under Malaysia’s Internal Security Act (ISA). The ISA allows the detention of suspects for up to two years without trial. Most of the detainees were members of the opposition party Keadilan (Justice), founded by Anwar’s wife, Wan Aziziah. The government used a variety of laws to restrict freedom of expression, and peaceful rallies were broken up by the police. An Anti-ISA Movement (AIM) was formed to work for the repeal of the ISA. In September 2001, Malaysia and Singapore came to a series of agreements over issues that had strained relations between them for years. Largely prodded by concern over the growing influence of Islam in Malaysian politics, Singapore agreed to a Malaysian proposal that the causeway linking the two countries be demolished and replaced by a bridge and undersea tunnel after 2007. Malaysia agreed to supply water to Singapore after two water agreements expire in 2011 and 2061. Also discussed were disputes over the use of Malaysian-owned railway land in Singapore, and requests by Singapore to use Malaysian air space. With the rise in popularity of the Islamic Party of Malaysia, Malaysia’s image as a moderate Islamic state began to be questioned. In the aftermath of the 11 September 2001 terrorist attacks on the United States, countries in Southeast Asia were asked by the United States to increase their security plans and efforts to combat terrorism. However, many nations have been cautious of a broad sweeping link between Islam and terrorist activities. In May 2002, members of ASEAN met in Kuala Lumpur to form a united anti-terror front (including strengthening laws to govern the arrest, investigation, prosecution, and extradition of suspects), and pledged to set up a strong regional security framework. Alleged militants with suspected ties to Osama bin Laden’s al-Qaeda organization have been arrested in Malaysia. After the UN Security Council passed Resolution 1441 on 8 November 2002, calling on Iraq to disarm itself of weapons of mass destruction (chemical, biological, and nuclear weapons), adhere to all previous UN resolutions, and allow UN weapons inspectors to return to the country, Malaysia supported the authority of the UN in resolving the crisis in Iraq, as opposed to following a possible course of war indicated by the United States. Mahathir stated that any war with Iraq “will lengthen the antiterrorist campaign.” “It will undermine the world economy. It Malaysia 403 will create a climate of uncertainty and fear throughout the world,” he said. In June 2002, Mahathir announced that he would resign in October 2003, news that shocked the country. It will be the first transfer of the prime ministerial office in over 20 years. His successor is predicted to be Abdullah Ahmad Badawi, one of three UMNO vice presidents. 13GOVERNMENT Malaysia is a constitutional monarchy consisting of 13 states, 9 of which were formerly sultanates under British protection and 4 of which (Melaka, Pulau Pinang, Sarawak, and Sabah) were former British settlements ruled by appointed governors. The constitution, promulgated on 31 August 1957 and subsequently amended, derives from the former Federation of Malaya, with provisions for the special interests of Sabah and Sarawak. It provides for the election of a head of state, the yang di-pertuan agong, or paramount ruler, for a single term of five years by the Conference of Rulers. The constitution also provides for a deputy head of state, chosen in the same manner and for the same term. The Conference of Rulers consists of the nine hereditary sultans. Its consent must be obtained for any law that alters state boundaries; affects the rulers’ privileges, honors, or dignities; or extends any religious acts, observances, or ceremonies to the country as a whole. The conference must also be consulted on proposed changes of administrative policy affecting the special position of the Malays or the vital interests of other communities. The yang di-pertuan agong, who must be one of the hereditary sultans, is commander-in-chief of the armed forces and has the power to designate judges for the federal court and the high courts on the advice of the prime minister, whom he appoints. Until January 1984, the paramount ruler had the right to veto legislation by withholding his assent; this right was lost in a constitutional compromise that gave the paramount ruler the right to delay new laws for up to 60 days but also stipulated that, if passed by a two-thirds majority, a bill may become law after six months without his signature. The yang di-pertuan agong from 1979 to 1984 was Ahmad Shah al-Musta’in Billah Ibni al-Marhum, the sultan of Pahang. The leading candidate to succeed him was Idris al-Mutawakil Allahi Shah Ibni al-Marhum, the sultan of Perak, but when Idris died of a heart attack on 31 January 1984, the Conference of Rulers selected Mahmud Iskandar Ibni al-Marhum Sultan Ismail. As crown prince of Johor he had been convicted of homicide in a shooting incident in 1977 but had been pardoned by his father and became sultan in 1981. In 1989 the sultan of Perak, Azlan Muhibuddin Shah, became the yang di-pertuan agong. He was succeeded in 1994 by Tuanku Ja’afar ibni Al-Marhum Tuanku Abdul Rahman, who was in turn succeeded in 1999 by Salehuddin Abdul Aziz Shah ibni Al-Marhum Hismuddin Alam Shah. Salehuddin died in office on 21 November 2001 and was succeeded by Tuanku Syed Sirajuddin ibni Almarhum Tuanku Syed Putra Jamalullail, the sultan of Perlis. Executive power rests with the cabinet, chosen by the prime minister, who is the leader of the majority party or coalition of the house of representatives (Dewan Rakyat), the lower house of parliament. The 193 members of the house of representatives must be at least 21 years old; they are elected by universal adult suffrage (at age 21). Their term is five years unless the house is dissolved earlier. The 69-member senate (Dewan Negara) consists of 26 elected members (two from each state); 2 members appointed by the paramount ruler to represent the federal territory of Kuala Lumpur and 1 to represent the island of Labaun; and 40 members appointed by the paramount ruler on the basis of distinguished public service or their eligibility to represent the ethnic minorities. Senators must be at least 30 years old; they hold office for six-year terms. 14POLITICAL PARTIES Before World War II, there was limited political activity in Malaya, but the Japanese occupation and its aftermath brought a new political awareness. Postwar political parties sought independence, and although the Malays feared domination by the populous minorities, particularly the economically stronger Chinese. The United Malays National Organization (UMNO), the leading Malay party, and the Malaysian Chinese Association (MCA) formed the Alliance Party in 1952. This party was later joined by the Malaysian Indian Congress (MIC) and became the nation’s dominant political party. The Malayan Communist Party, a powerful and well-organized group after the war, penetrated and dominated the trade unions. In 1948, after the Communists had resorted to arms, they were outlawed. In the elections of April 1964, the Alliance Party won a majority of 89 of the 154 House seats. The third general election since independence was held in Peninsular Malaysia on 10 May 1969; in the balloting, the Alliance Party suffered a setback, winning only 66 seats. The election was followed by communal rioting, mainly between Malays and Chinese, resulting in much loss of life and damage to property. The government suspended parliament and declared a state of emergency; elections in Sarawak and Sabah were postponed until July 1970. By the time parliament was reconvened on 22 February 1971, the Alliance had achieved a two-thirds majority (required for the passage of constitutional amendments) with the addition of 10 unopposed seats from Sabah and through a coalition with the Sarawak United People’s Party, which controlled 12 seats. The elections for state assemblies also resulted in a setback for the Alliance Party, which before the elections had controlled 10 of the 13 state assemblies, but after the elections only 7. In September 1970, Tunku Abdul Rahman retired as prime minister and was replaced by the deputy prime minister, Tun Abdul Razak. In 1973, the Alliance Party formed a broader coalition consisting of the UMNO, MCA, MIC, and eight minority parties. Known as the National Front and led by the UMNO, the ruling coalition was returned to power in the 1974, 1978, 1982, and 1986 elections with overwhelming majorities (148 of 177 seats in 1986). The principal opposition parties, which win few seats owing to a legislative apportionment scheme that heavily favors Malay voters, are the Chinese-based Democratic Action Party (DAP), founded in 1966, and the Pan-Malayan Islamic Party, dedicated to establishing an Islamic state. In July 1981, Datuk Seri Mahathir bin Mohamad replaced Datuk Hussein bin Onn as prime minister. As of 1986, the National Front also had majorities in 11 of 13 state legislatures; the state assembly of Sabah, the lone exception, was under the control of the Sabah People’s Union (Berjaya). In the 1986 elections, Chinese voters moved away from the MCA and toward the DAP. In April 1987, Mahathir narrowly overcame a challenge to his leadership of the UMNO. As of 2003 there were more than 20 registered parties. The governing coalition is the Barisan Nasional (National Front), led by the United Malays National Organization (UMNO) and comprising 13 other parties, most ethnically based. Major opposition groups are the Muslim Unity Movement (APU), dominated by the Parti Se-Islam Malaysia (PAS), the Democratic Action Party (DAP), which is predominantly Chinese and socialist, the Parti Bersatu Sabah (PBS), and the newly formed National Justice Party formed by Wan Aziziah Wan Ismail, the wife of jailed government official Anwar Ibrahim. In the election held 28 and 29 November 1999, the 193 seats of the lower house were distributed as follows: National Front (148 seats), DAP (10), PBS (3), and PAS (27), and Parti Keadilan Nasional (5). In the election, PAS won control of the state governments of Kelantan and Terengganu, giving it two of Malaysia’s 13 states. The next elections must be held by 20 404 Malaysia December 2004, but because Mahathir has announced he will resign by October 2003, an election is expected to be called before he leaves office in the hope of capitalizing on voters’ goodwill towards the UMNO. 15LOCAL GOVERNMENT Of the 11 Peninsular Malaysian states, nine are headed by sultans, who act as titular rulers and as leaders of the Islamic faith in their respective states. The other two Peninsular states, Pinang and Melaka, are headed by federally appointed governors. State governments are parliamentary in form and share legislative powers with the federal parliament. Effective executive authority in each state is vested in a chief minister, selected by the majority party in the state legislature. The legislative assembly, composed of elected members, legislates in conformity with Malaysian and state constitutions, subject to the sultan’s assent. In Peninsular Malaysia the states are divided into districts, each of which consists of 5 to 10 subdistricts, called mukims (derah in Kelantan). Each mukim is responsible for varying numbers of kampongs (villages or compounds). The mukim may include villages or consist of large, sparsely populated tracts of land. Each one is headed by a penghulu (penggawa in Kelantan), a part-time official locally elected for five years, who serves as the principal liaison between the district and the village. The village elects a chief (ketua). Upon incorporation into the Federation of Malaysia in 1963, both Sabah and Sarawak adopted separate constitutions for their local self-government; each is headed by a chief minister, appointed by the majority party of the elective legislature. In Sarawak, divisions and districts are the main subdivisions; in Sabah their counterparts are residencies and districts. The district officer is the most important link between the governing and the governed. His responsibilities are administrative, fiscal and judicial. Kuala Lumpur, the national capital and former capital of Selangor State, was constituted as a separate federal territory, under the national government, on 1 February 1974. The mayor is appointed by the paramount ruler on the advice of the prime minister. 16JUDICIAL SYSTEM Malaysia has a unified judicial system, and all courts take cognizance of both federal and state laws. The legal system is founded on British common law. Most cases come before magistrates and sessions courts. Religious courts decide questions of Islamic law and custom. The Federal Court, the highest court in Malaysia, reviews decisions referred from the High Court of Peninsular Malaysia, the High Court of Sabah and Sarawak, and subordinate courts. The Federal Court, of which the yang dipertuan agong is lord president, has original jurisdiction in disputes among states or between a state and the federal government. The Federal Court consists of the chief justice, the two chief judges from the High Courts, and seven other judges. Administrative detention is permitted in security cases, in which certain other guarantees of due process are reportedly suspended. The judiciary has traditionally functioned with a high degree of independence. Most civil and criminal cases are fair and open. The accused must be brought before a judge within 24 hours of arrest. Defendants have the right to counsel and to bail. Strict rules of evidence apply in court and appeal is available to higher courts. Criminal defendants may also appeal for clemency to the paramount ruler or to the local state ruler. Severe penalties, including the death penalty, are imposed for drug-related offenses. High courts have jurisdiction over all serious criminal cases and most civil cases. The sessions courts hear the cases involving landlord-tenant disputes and car accidents. Magistrates’ courts hear criminal cases in which the maximum sentence does not exceed 12 months. The Court of Appeals has jurisdiction over high court and sessions court decisions. 17ARMED FORCES In 2002 Malaysia had active armed forces numbering 100,000 with reservists of 41,600. The total strength of the army was 80,000, including infantry and armored battalions, artillery regiments, and supporting air defense, signal, engineer, special forces, and administrative units. Equipment included 26 Scorpion tanks. The navy had 12,000 personnel, 4 frigates, 8 missile craft, and 27 patrol craft. The air force had 8,000 personnel and 95 combat aircraft. Paramilitary forces numbered 20,100, and the People’s Volunteer Corps had 240,000. Malaysia provides support to six peacekeeping missions. Australia provides a small training mission. Expenditures on defense were estimated at $1.7 billion in 2000 or 2.1% of the GDP. 18INTERNATIONAL COOPERATION Malaysia is a member of the UN, having joined on 17 September 1957, and participates in ESCAP and all the nonregional specialized agencies. It also belongs to the Asian Development Bank, ASEAN, the Commonwealth of Nations, and G-77. Malaysia is a signatory of the Law of the Sea and a member of the WTO. Before the 1970s, Malaysia pursued a pro-Western policy, but it later promoted the neutralization of Southeast Asia while establishing ties with China, the Democratic People’s Republic of Korea, and Cuba and strengthening relations with the former USSR and other East European states. Links with its traditional allies, including the United States, remained strong in the course of this transition. Relations with the United Kingdom were strained in the early 1980s, after the British imposed surcharges on foreign students attending universities in the United Kingdom and issued new regulations reducing opportunities for foreign takeovers of British-owned companies. Malaysia agreed to drop its “buy British last” campaign in 1983 after the United Kingdom expanded scholarship opportunities for Malaysian students. In 1986 there was some friction with Singapore because of its improved relations with Israel. Malaysia shares the anti-Zionist ideology of the Arab League countries. Malaysia in the new millennium has been building better relations with its neighbors. Malaysia has cooperated with the ASEAN Regional Forum (ARF), a 23-member Asian security network, helping to reduce tensions over the disputed Spratley Islands in the South China Sea. Malaysia also seeks increased economic integration in Southeast Asia. In 1990, Prime Minister Mahathir proposed the creation of an East Asian Economic Caucus, an idea that was initially regarded with skepticism, but was subsequently taken up by the ASEAN+3 group (the ten ASEAN members plus China, Japan, and South Korea), as a way of strengthening financial and trade ties between those states. 19ECONOMY Malaysia was one of the most prosperous nations in Southeast Asia before 1998, albeit with the mood swings inherent in an export-oriented economy. Until the 1970s, Malaysia’s economy was based chiefly on its plantation and mining activities, with rubber and tin the principal exports. Since then, however, Malaysia has added palm oil, tropical hardwoods, petroleum, natural gas, and manufactured items, especially electronics and semiconductors, to its export list. This diversification greatly reduced the nation’s dependence on overseas commodity markets. By 1980, rubber accounted for about 7.5% of the value of all exports, down from 30% in the 1970s, and tin for about 4.3%, down from about 20% in the 1970s. The worldwide recession in 1981–82 hurt the Malaysian economy. Prices of Malaysia’s traditional commodity exports were depressed, growth slowed, and investment fell. Government efforts to stimulate the economy Malaysia 405 through spending on heavy industry and infrastructure projects financed by borrowing pushed foreign debt from $4 billion in 1980 to $15 billion in 1984. In 1985, the GDP in current prices was estimated at $31 billion, up from $25 billion in 1981. Real growth rates rose to 6.9% in 1981, and 7.6% in 1984, but declined 1.0% in 1985. In 1985–86 Malaysia’s period of high growth was halted abruptly as both oil and palm oil prices were halved. Recovery began in late 1986 and 1987, spurred by foreign demand for exports. Growth rates reached an average 8–9% from 1987–92, and for most of the 1990s, the economy annually by just under 9%. The Asian financial crisis put an end to 13 years of uninterrupted growth with a decline in GDP of -7.4% in 1998. The government’s response was to embark on a massive economic recovery program, aimed at stabilizing the currency, restoring market confidence, maintaining market stability, strengthening economic fundamentals, furthering socioeconomic goals, and reviving badly affected sectors. The program featured two fiscal stimulus packages amounting to 2.25% of GDP and the establishment of three special purpose agencies: the Danaharta—also known as the National Asset Management Co.—to acquire and dispose of non-performing loans (NPLs); the Danamodal, charged with implementing government policy on recapitalizing financial institutions, and the Corporate Debt Restructuring Committee (CDRC), to facilitate voluntary debt restructuring between creditors and viable corporate debtors. More controversially, the government has proceeded, in 2000, with previous directed merger plans to consolidate Malaysia’s banks into 10 “anchor” banks, and to consolidate Malaysia domestic brokerage houses into 15 “universal brokers,” the rationale being that larger entities would be better able to compete with international counterparts. Gross domestic product growth recovered to 6.3% in 1999 and increased to 7.9% in 2000, but was reduced to .7% in 2001 as the global economic slowdown and the aftermath of the 11 September 2001 terrorist attacks on the United States helped produce a 10.6% reduction in exports. In 2002, the economy continued to recover, reaching an annual growth rate of about 3.5%. Since late 2001, Malaysia has taken a leading role, with Bahrain, in seeking to institutionalize Islamic banking. In November 2001 Malaysia signed an agreement along with Bahrain, Indonesia, Sudan and the Saudi-based Islamic Development Bank (IDB) to establish the International Islamic Financial Market (IIFM). This is an extension of its domestic efforts to foster Islamic banking going back to the Islamic Banking Act of 1983, under which it was the first Islamic economy to issue bonds on an Islamic basis. In June 2002 Malaysia took the lead in offering the world’s first Islamic global bond issue. The Islamic bond is a problem because Islam forbids paying or receiving interest. The 144a offering (not subject to SEC disclosure regulations) in the name of an SPV (special purpose vehicle), the Malaysia Global Sukuk (MGS), involves MGS buying from the Malaysian government the Ministry of Finance building, two hospitals and a civil service accommodation, and leasing them back to the government for a period of five years, during which time the government issues trust certificates to the investors with payments payable exactly equal to lease rental payments being made by the government to MGS. At the end of five years, in 2007, the government will buy back the properties at the face value of the bond. These arrangement were judged compliant with Islamic law. The Trust Certificates had their primary listing on the Luxembourg Stock Exchange in August 2002, and their secondary listing on Malaysia’s Labuan International Financial Exchange (LFX) in September 2002. The LFX is part of Malaysia’s Labuan International Offshore Financial Centre (IOFC), established in October 1990 by the government to provide a full array of financial services for multinational corporations and investors. The MSG Certificates are part of a recent effort to provide Sharia-compliant instruments for a growing Islamic financial market, estimated in 2002 at $200 billion. The Labuan Offshore Financial Services Authority (OFSA) takes credit for initiating the idea for the establishment of the IIFM in November 2001. A Malaysian heads the IIFM, and the Islamic Financial Service Organization (IFSO) is headquartered in Malaysia. As host country for the IFSO, Malaysia will lead in formulating and developing standards for the regulation of Islamic financial institutions In 1990, Malaysia was the world’s largest producer of natural rubber accounting for one-quarter of world production. By 1993, however, production was overtaken by both Thailand and Indonesia. During the late 1990s, production of synthetic rubbers undercut the natural rubber industry. In 1990 Malaysia was the world’s largest exporter of tropical hardwood, the world’s fourthlargest producer of cocoa, and the source of 60% of the world’s palm oil (1990). By 2001, Malaysia exported over half of the world’s fixed vegetable oils, accounting for approximately 6.7% of Malaysia’s exports. The manufacturing sector made up about 90% of exports in 2002, up from about 69% of exports for 2002, with electronics accounting for two-thirds of total exports. Malaysia remains a major producer of commodities including rubber, tin, palm oil, tropical hardwoods, cocoa and pepper. It also produces and exports oil, petroleum products and liquefied natural gas, amounting to 5% of total exports in 1998. Government or government-owned entities dominate a number of sectors (plantations, telecommunications, and banking). Since 1986 the government has moved toward corporatization and the eventual privatization of telecommunications, ports, highways, and electricity production and distribution. In the 1990s, the government embarked on a privatization program aimed at creating a Malaysian business elite as part of the its bumiputura (literally, “sons of the soil”) policy. However, virtually all the major privatized companies failed in the Asian financial crisis, 1997–98, including the carmaker Proton, Malaysian Airlines, the engineering group Renong and the media group, Malaysian Resources, and were renationalized in the aftermath, and in 2002, the business remains dominated by non-Malays. The official unemployment rate at 2.6% in 1996, had risen to 3.6% in 2001. The inflation rate as measured by consumer prices, at 5.1% for 1998, fell sharply in the succeeding years to 1.6% in 2000, 1.4% in 2001, and 1.8% in 2002. Sarawak’s basic economy is subsistence agriculture, supplemented by petroleum production and refining, the collection of forest produce, fishing, and the cultivation of cash crops, primarily rubber, timber and pepper. Sabah’s economy rests primarily on logging and petroleum production. 20INCOME The US Central Intelligence Agency (CIA) reports that in 2001 Malaysia’s gross domestic product (GDP) was estimated at $200 billion. The per capita GDP was estimated at $9,000. The annual growth rate of GDP was estimated at 0.3%. The average inflation rate in 2001 was 1.5%. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange. It was estimated that agriculture accounted for 12% of GDP, industry 40%, and services 48%. Foreign aid receipts amounted to about $1 per capita. The World Bank reports that in 2001 per capita household consumption (in constant 1995 US dollars) was $2,129. Household consumption includes expenditures of individuals, households, and nongovernmental organizations on goods and services, excluding purchases of dwellings. The richest 10% of the population accounted for approximately 38.4% of household consumption and the poorest 10% approximately 1.7%. It was 406 Malaysia estimated that in 1998 about 8% of the population had incomes below the poverty line. 21LABOR In 2001, Malaysia’s total labor force was estimated at 9.9 million. Of these, approximately 28% were in trade and tourism, 27% in manufacturing, 16% in agriculture; 10% in services; 10% in government; and 9% in construction. Unemployment in 2001 was estimated at 3.7%. Workers have the right to engage in union activity, but only about 8% of the workforce was unionized in 2002. There are 544 trade unions and two national trade confederations. Negotiations between unions and employers are voluntary; strikes are permitted but limited due to many restrictions. If the dispute has been referred to an industrial court for settlement, the employees are prohibited from engaging in a strike. Employment by children under the age of 14 is prohibited by law. However, child labor persists in some areas of the country. Protective labor legislation in Malaysia is more extensive than in most Asian countries. Commerce and industry operate on a 48- hour week, although actual weekly hours tend to be closer to 44 hours. There is a legal requirement of one rest day per week. There is no national minimum wage, but a minimum wage does exist on a sector or region basis. In 2002, the government was considering a minimum wage of $237 per month. Occupational safety and health provisions are set by law but are erratically enforced. The provisions are more rigorously enforced in the formal economic sector and are least enforced on plantations and construction sites where immigrant workers are employed. These foreign workers have no legal protections and are prohibited from forming unions. 22AGRICULTURE Agriculture is no longer the most important sector of the Malaysian economy, contributing 12% of GDP in 2001 (down from 38% in 1960) and occupying about 16% of the employed work force in that year. Nevertheless, agriculture still accounted for 6.3% of export earnings in 1997. Diversification—including development of such newer crops as oil palm, cocoa, and pineapples—is promoted by the government. Much of Sabah and Sarawak is covered with dense jungle and is not conducive to farming. Peninsular Malaysia, however, is predominantly an agricultural region. Cultivation is carried out on the coastal plains, river valleys, and foothills. Domestic rice furnishes Peninsular Malaysia with about 80% of its requirements; most of the rice supply for Sabah and Sarawak, however, must be imported. Milled rice production for 1999 totaled 1,934,000 tons, of which about 70% came from Peninsular Malaysia. Rubber production totaled 886,000 tons in 1999. The government, through the Rubber Research Institute of Malaysia, has concentrated on improving production, but many estates have switched to production of the more profitable oil palm. Although Malaysia produced 14% of the world’s rubber in 1999, and typically accounts for over one-third of the world’s rubber exports, rubber is no longer the country’s primary source of export income. Competition from Thailand and Indonesia has recently diminished the Malaysian market share for rubber. Production of palm oil and palm kernel oil totaled 10,553,000 and 3,026,000 tons respectively in 1999, more than any other country in the world. More than 90% of all rubber and palm oil is produced in Peninsular Malaysia. Black and white peppers are grown on Sarawak; pepper exports amounted to $49.3 million in 2001. Output of lesser agricultural products in 1999 included copra, 13,000 tons; coconuts, 711,000 tons; cocoa, 100,000 tons; and pineapple, 143,000 tons. 23ANIMAL HUSBANDRY Peninsular Malaysia is free of most of the infectious and contagious diseases that plague livestock in the tropical zone, but the livestock industry is of minor importance. The livestock population in 2001 included 1,972,000 hogs, 742,000 head of cattle, 247,000 goats, 129,000 sheep, and 148,000 buffalo. The swamp buffalo and indigenous breeds of cattle are used mainly as draft animals. Production of meat in 2001 included (in tons): poultry, 780,000; pork, 168,000; and beef (cattle). Malaysia is self-sufficient in pork and poultry production and also exports to other countries in the region, particularly Singapore and Japan. Sarawak’s poultry sector is growing by 7% annually in response to increased demand from neighboring Kalimantan, Indonesia, where during certain festive months there is a poultry shortage. Hog raising and export are handled mainly by non-Muslim Chinese. The government prohibits the importation of chicken and chicken parts in order to protect domestic producers. Milk production was 32,000 tons in 2001. 24FISHING Fishing is being developed both as a means of reducing unemployment and as a primary source of protein in the country’s diet. The total catch in 2000 was 1,289,245 tons, as compared with 296,300 tons in 1966; the increase has been largely the result of expanded and improved marketing facilities. Exports of fisheries products were valued at $349 million in 2000, with imports of $296.8 million that year. A government training program in navigation and engine care is also accelerating the use of powered boats. Freshwater fishing, which accounts for 2% of the total catch, occurs in paddy fields or irrigation ditches and is integrated with rice farming and hog production. 25FORESTRY Malaysia produced an estimated 26.4 million cu m (932 million cu ft) of roundwood from a forest area of 19.3 million ha (47.7 million acres) in 2000. About 32% of the forest area is located in Peninsular Malaysia, 22% in Sabah, and 46% in Sarawak. After 40 years of large scale conversion of lowland forest areas into agricultural plantations, the pace of new land development declined in the mid-1990s. Reduced land availability and a growing need to preserve remaining forests have resulted in a 60% reduction from the government’s 1991–95 plan in the total acreage of land scheduled for development. Of the total natural forest area, 15.7 million ha (38.8 million acres) of forested land is designated as Permanent Forest Estate, of which 70% is available for sustainable production. Exports of timber products in 2000 amounted to $3.8 billion, or 4.2% of total exports. Exports of tropical hardwoods in 2000 included (in thousands of cubic meters): logs, 6,802; lumber, 2,901; veneer, 902; and plywood, 3,355. Malaysia is the world’s third leading producer (after Brazil and Slovakia) of veneer sheets, accounting for 7% of global production in 2000. In keeping with the National Forestry Policy of 1978, exports of sawlogs are being progressively reduced in favor of domestic development of veneer, plywood, furniture, and other wood-using industries. Many states ban the export of logs. Only Sarawak exports tropical hardwood logs, but its state government has also placed further restrictions on exporting logs in order to encourage expansion of value-added activities. 26MINING Petroleum and liquefied natural gas (mainly from Sabah and Sarawak) was Malaysia’s second top export commodity in 2002, and tin mining and smelting were a top industry in Peninsular Malaysia. Production and employment in the tin sector have declined significantly in recent decades, as most of Malaysia’s Malaysia 407 extensive resources (ranked second in the world) were depleted or were beneath developed lands. In 2001, Malaysia mined and processed some 4,973 tons of tin metal and concentrates—falling below the 5,000-ton level for the first time in the country’s mining history—down from 6,307 in 2000, 7,340 in 1999, and 36,900 in 1985; production decreased because of depleted highgrade reserves and lower tin prices in the Kuala Lumpur Tin Market. The number of working mines also declined, from 1,000 in 1974 to 37–46 in 2001. To revitalize the tin-mining industry, the Malaysian Chamber of Mines recommended that the government of Perak, one of the two main tin-mining states (Selangor being the other), change the royalty rate to a flat rate. Malaysia was the second-largest producer of refined tin in 1997. Malaysia also had substantial resources of such tin-associated minerals as ilmenite, monazite, struverite (a columbium [niobium]/tantalum-bearing mineral), and zircon. Malaysia ranked 10th in the world in rare earths reserves, and struverite output increased tenfold in 2001 because of world demand for the production of tantalum metal products; all struverite was exported to China. Malaysia also had important mineral resources of barite, bauxite, carbonate rocks, clays, coal, copper, gold, iron ore, and silica. Subsoil resources were public property of the states, which granted prospecting licenses and mining leases. Royalties on coal and gold accrued to the states, and export duties were levied on other minerals by the government, which returned a portion to the states. GDP grew by 0.4% in 2001, compared with 8.3% in 2000. The mining and quarrying sector grew by 0.2% in 2001, compared with 3.1% in 2000, and mining and quarrying contributed 6.9% to GDP in 2001. Mineral exports totaled $8.5 billion in 2001, or 9.7% of total exports; of those, nonfuel minerals accounted for $566 million. The major export-earning nonfuel minerals in 1997 were: refined tin ($176 million); copper concentrates ($45 million); and other minerals, including ilmenite, kaolin, bauxite, clays, iron ore, monazite, silica, zircon concentrate, and mica ($28 million). The Malaysian Nature Society submitted a proposal to the Perak State government in 2000 to convert a tract of old tin mining land in Batu Gajah into a recreation and conservation site, to be called Kinta Park, which would also promote the area’s tin-mining heritage. In 2001, the Penang Island Municipal Council announced that tantalumbearing minerals were discovered underneath Malaysia’s oldest stadium, in Georgetown, and called for interested parties to prospect and mine out the minerals before renovation work could be started on the stadium. Iron ore production increased markedly after World War II, under the stimulus of Japanese demand, but production subsequently dwindled from a peak of 3.9 million tons (iron ore and concentrate) in 1965 to a low of 181,600 in 1985 and 376,000 in 2001. The output of bauxite, all of which was exported, decreased from 703,561 tons (gross weight) in 1975 to 279,000 in 1997, 223,000 in 1999, 123,000 in 2000, and 64,000 in 2001; annual capacity, at the Teluk Rumania and Sg. Rengit mines, in Johor, was 400,000 tons. Malaysia ceased copper production, all of it at the Mamut Mine, in 1999; there were large reserves on Sabah, and output was 131,832 tons in 1985, before dropping to 13,907 in 1998 and 4,600 in 1999. As a result, silver production, most of which was a byproduct of copper mining, dropped from 9,647 kg in 1997 to 4 and 3 kg in 2000 and 2001, respectively. Other metal minerals extracted included gold, columbite, monazite, kaolin, ilmenite, zircon concentrate, and titanium dioxide (from Terangganu). Malaysia was a net exporter of all its coal, copper concentrate, ilmenite, rare earths, and zircon concentrate, and most of its smelted tin. Industrial minerals produced in 2001 included barite, hydraulic cement, clays and earth metals (80 million tons, up from 33 million tons in 1999), dolomite, feldspar, fertilizers, kaolin, limestone, mica, nitrogen, salt, sand and gravel, silica sand, and stone. Silica sand came mainly from natural sand deposits in Sarawak (56.6 million tons of estimated reserves) and Johor and from tin mine tailings sand in Perak and Selangor; 85% was exported and 63% of exports went to Singapore. 27ENERGY AND POWER Malaysia’s net installed electrical generating capacity in 1998 stood at 13,541 MW. Electrical energy production increased from 1,622 million kWh in 1963 to 4,971 million kWh in 1974 and 57,435 million kWh in 1998. In 1996, 16% of electrical production was hydrogenerated, and over 83% was of thermal origin. The National Electricity Board, a state-owned corporation, supplies the greater part of the nation’s power. Crude oil, developed in the 1970s, is now the chief mineral produced, with reserves estimated at 3 billion barrels in early 2002. In 2001, output averaged 659,205 barrels per day. Malaysia’s oil is produced offshore, primarily in the peninsular region. Of new and increasing importance are large offshore natural gas deposits, with reserves estimated at more than 2.1 trillion cu m (74 trillion cu ft). Production in 2000 totaled 42.5 billion cu m (1.5 trillion cu ft). The principal gas fields are the Trengganu, off the east coast of Peninsular Malaysia, and the Central Luconia, Bintulu, and Labuan fields, located off the coasts of Sabah and Sarawak. In 2000, liquefied natural gas (LNG) exports totaled 20 billion cu m. Production of oil and natural gas is controlled by the National Petroleum Co. (PETRONAS). Since reserves of oil are limited and local coal is of an inferior grade, the government has greatly expanded efforts to harness the country’s hydroelectric potential and natural gas as alternative energy sources. In 1994, the government approved the construction of the 2,400 MW Bakun hydroelectric project in Sarawak. However, after a 1996 high court ruling halting the project on environmental grounds, it was suspended indefinitely in 1997 because its unexpectedly high costs made it unfeasible in light of the country’s unfavorable economic climate. 28INDUSTRY Early industrialization efforts centered on the establishment of import-substitution industries (ISI) and resulted in construction of sugar refineries and motor vehicle assembly plants. Industrialization accelerated after the mid-1960s under the provisions of the Investment Incentives Act and the formation of the Malaysian Industrial Development Authority (MIDA). Special incentives were offered for industries that were labor intensive or export oriented or that utilized domestic rubber, wood, and other raw materials. In the mid-1980s the Malaysian economy changed from a commodity-based to a manufacturingbased economy. In 1986, the leading manufacturing industries included rubber processing, the manufacture of tires and other rubber products, palm oil processing, tin smelting, and the manufacture of chemicals, plywood, furniture, and steel. Other industries were textiles, food processing, and the manufacture of electronic and electrical components. Industrial products in 1985 included 3,128,000 tons of cement, 13,839 tons of cigarettes, 70,147 passenger cars, 568,387 television sets, 3,600,000 tires, and 180,746 m of cotton fabric. Most early industries were controlled by ethnic Chinese and foreigners, but current policies call for greater participation by ethnic Malays. In 2001 the manufacturing sector accounted for 40% of GDP, up from 33% in 1996, and for almost 90% of exports. Of total exports in October 2002, electronics and electrical products accounted for 52%; chemicals and chemical products, 5%; liquefied natural gas (LNG) 3.65%; wood products, 3%; machinery, 2.9%; optical and scientific equipment, 2.6%; textiles and clothing, 2.4%; and refined petroleum, 2.3%. In 2001, Malaysia produced about 15% of the world’s DVD players, behind China’s 54.1% and Japan’s 7.7%. In peninsular Malaysia, the leading industries by value of annual output are rubber and 408 Malaysia oil palm processing and manufacturing, light manufacturing industries, electronics, tin mining and smelting, and logging and processing timber. In Sabah, the leading industries are logging and petroleum production, while in Sarawak, they are agricultural processing, petroleum production and refining, and logging. Malaysia has six oil refineries, with a total capacity of 514,500 barrels per day. Oil production 1996 to 2002 varied between 650,000 bpd and 730,000 bpd, with the 2001 daily average at 659,205 barrels. Proven reserves have dropped from 4.3 billion in 1996 to 3 billion in 2002, and Malaysia’s national oil and gas company, PETRONAS, has invested in oil exploration projects in Syria, Turkmenistan, Iran, Pakistan, China, Vietnam, Burma, Algeria, Libya, Tunisia, the Sudan and Angola. Overseas operations made up one-third of PETRONAS’ operations in 2002. Japan, Thailand, South Korea and Singapore continue to be the major customers for Malaysian crude oil. Malaysia’s domestic oil fields are split between the South China Sea off Borneo and those off Peninsular Malaysia. All exploration is conducted under production-sharing contracts (PSCs) between PETRONAS, the national oil company, and foreign companies. In 1999, foreign oil companies involved in the production of oil and gas in Malaysia included Exxon, Shell, Sonoco, Statoil, Union Carbide, Amerada, and Lundin. Gas reserves are being developed to fuel power stations and to supply industries in Peninsular Malaysia and Singapore. In 2000, Malaysia accounted for 15% of the world’s exports of LNG, down from 18% in 1998. A top industrial priority in Malaysia economic plans is the development of the “multimedia super corridor” (MSC), an ambitious project underway to transform a 15-by-40 km (9.3-by- 25 mi) area south of Kuala Lumpur into Asia’s version of California’s Silicon Valley. It is composed of a number of projects: the tallest building in the world, the 450-m (1,483-ft) Petronas Twin Towers; two of the world’s first Smart Cities—Putrajaya, the $8 billion new seat of government and administrative capital of Malaysia, where the concept of electronic government will be implemented, and Cyberjaya, an intelligent city with multimedia industries, research and development centers, a multimedia university and operational headquarters for MNCs; the construction of a $3.6 billion international airport; and the installation of a fiber-optic telecommunications system linking them all. In 1998, as part of its policy to encourage manufacturing industries, the government relaxed restrictions on foreign ownership of new manufacturing projects. Any new manufacturing project for which the Malaysian Industrial Authority (MIDA) approves a license may have up to 100% foreign ownership regardless of its involvement in exporting. This liberalized policy, originally scheduled to expire at the end of 2001 has been extended to the end of 2003. 29SCIENCE AND TECHNOLOGY Training in science, technology, and related subjects was promoted at all levels during the 1970s and 1980s. Enrollment at technical and vocational secondary schools rose from 4,510 in 1970 to 20,720 in 1985. The National University of Malaysia at Selangor, the University of Malaya at Kuala Lumpur, the University of Agriculture at Selangor Darul Ehsan, the University of Science at Penang, the Technological University at Johor Bahru, Kolej, Damansaura Utama College at Selangor, Politeknik Kuching at Surawak, and Tunku Abdul Rahman College at Kuala Lumpur offer degrees in basic and applied sciences. In 1987–97, science and engineering students accounted for 54% of college and university enrollments. National science policy is administered by the Ministry of Science, Technology, and Environment. The Ministry of Agriculture undertakes all aspects of research for improvement of crops. The Institute of Medical Research is a branch of the Ministry of Health. At Kuala Lumpur are located the Forest Research Institute Malaysia (FIRM), the Freshwater Fish Research Center, the Malaysian Agricultural Research and Development Institute (MARDI), the Malaysian Institute of Microelectronic Systems (MIMOS), and the Rubber Research Institute of Malaysia. In 1987–97, total expenditures on research and development amounted to 0.24% of GNP. During the same period, 93 scientists and engineers per million population were engaged in research and development. In 1998, high-tech exports were valued at $31.4 billion and accounted for 54% of manufactured exports. 30DOMESTIC TRADE Imported goods are channeled into the Malaysian market through local branches of large European mercantile firms; by local importers with buying agents abroad; through branch offices and representatives of foreign manufacturers; by local Chinese, Indian, and Arab merchants who import directly; and by commission agents. Chinese merchants occupy an important place in the marketing structure and control a large share of the direct import trade. For warehousing of imported goods, the facilities of the port of Singapore are used, while rubber for export is warehoused mainly on plantations. The usual business hours are from 8:00 AM to 4:15 PM, Monday–Friday including an hour long lunch break, with generally a half-day on Saturday. In Kelantan, Terengganu, Johor, Perlis, and Kedah states, Thursday is a half-day and (in keeping with Islamic practice) Friday is the day of rest. English is widely used in commerce and industry. Newspaper and motion picture advertising is directed toward the higher-income consumer, while radio advertising, outdoor displays, and screen slides are used for the lower-income consumer, who is less likely to be literate. A code of practice and ethics governing advertising is in force, with restrictions on advertising of some products, such as alcohol and tobacco. Trade fairs are supervised by the Ministry of Trade and Industry. 31FOREIGN TRADE During the 1970s, petroleum and manufactures displaced rubber and tin as Malaysia’s leading exports. Malaysia now exports over a third (37%) of the world’s fixed vegetable oil, and a considerable portion (14%) of the world’s radio broadcast receivers, but its largest export revenues come from sales of office machines. The top eight exports are: % OF COUNTRY TOTAL Office machines and parts 21 Transistors and valves 19 Telecommunications equipment 13 Crude petroleum 4.0 Natural and manufactured gas 3.7 Fixed vegetable oil 2.7 Electrical breakers 2.6 Apparel 2.3 In 2000 Malaysia’s imports were distributed among the following categories: Consumer goods 4.4% Food 3.6% Fuels 4.8% Industrial supplies 21.3% Machinery 60.2% Transportation 4.1% Other 1.6% Exports went primarily to the US (21%), Singapore (18%), and Japan (13%). Imports came primarily from Japan (21%), the Malaysia 409 US (17%), and Singapore (14%). Principal trading partners in 2000 (in millions of US dollars) were as follows: COUNTRY EXPORTS IMPORTS BALANCE United States 20,160 13,637 6,523 Singapore 18,046 11,762 6,284 Japan 12,834 17,240 -4,406 China (inc. Hong Kong) 7,464 5,494 1,970 Netherlands 4,110 578 3,532 Thailand 3,549 3,154 395 Korea 3,280 3,663 -383 United Kingdom 3,044 1,600 1,444 Germany 2,457 2,442 15 Indonesia 1,706 2,269 -563 32BALANCE OF PAYMENTS Malaysia sustained a favorable trade balance throughout the 1960s and 1970s, recording its first trade deficits in 1981 and 1982, as world prices for tin, crude oil, rubber, and palm oil, the major exports, weakened simultaneously. Malaysia’s balance of payments, like that of many other producers of primary products, was adversely affected in 1981–82 by the prolonged recession in the world’s industrial nations. From 1983 to 1986, however, Malaysia registered trade surpluses. In the 1990s, a significant growth in exports and a decrease in imports led to trade surpluses, along with a fairly large services deficit. In the early 2000s, however, exports declined, but so did imports of intermediate components used in the manufacture of the country’s electronics exports; this contributed to continuing strong trade surpluses. The US Central Intelligence Agency (CIA) reports that in 2001 the purchasing power parity of Malaysia’s exports was $94.4 billion while imports totaled $769 million resulting in a trade surplus of $93.631 billion. The International Monetary Fund (IMF) reports that in 2000 Malaysia had exports of goods totaling $98.4 billion and imports totaling $77.6 billion. The services credit totaled $13.8 billion and debit $16.7 billion. The following table summarizes Malaysia’s balance of payments as reported by the IMF for 2000 in millions of US dollars. Current Account 8,409 Balance on goods 20,854 Balance on services -2,951 Balance on income -7,514 Current transfers -1,979 Capital Account … Financial Account -6,276 Direct investment abroad -2,026 Direct investment in Malaysia 3,788 Portfolio investment assets … Portfolio investment liabilities -2,472 Other investment assets -5,565 Other investment liabilities … Net Errors and Omissions -3,142 Reserves and Related Items 1,009 33BANKING AND SECURITIES In 1958, the Bank Negara Tanah Melayu (renamed the Bank Negara Malaysia in 1963) was created as the central banking institution. Bank Negara requires banks to maintain a minimum risk-weighted capital ration (RWCR) of 8%. At the end of 2002, Malaysia had 31 licensed commercial banks, 19 finance companies, 12 merchant banks, two Islamic banks, and 7 discount houses. A total of 36 foreign banks have offices in Malaysia, but their banking privileges are restricted. Specialized credit institutions include the Federal Land Development Authority (FELDA), the Agricultural Bank of Malaysia (Bank Pertanian Malaysia), and Bank Rakyat, serving rural credit cooperative societies. International trade is financed mainly by the commercial banks. Total banking system assets were $179.1 billion in 2000. There were 51 offshore banks operating on the island of Lauban in 1997, and a total of more than 1600 companies in operation. Malaysia offers Islamic banking, which is based on the concept of profit sharing as opposed to the use of interest in the conventional banking system. One such Islamic bank is Bank Islam Malaysia Berhad. The central bank has embarked on a plan to develop Malaysia as a regional Islamic financial center. Toward this end, the central bank formed a consultative committee on Islamic banking in January 1996 to serve as a think-tank group to develop strategies and proposals to map out the future direction of Islamic banking. Although Islamic operations are still only a small proportion of total business, Malaysia has achieved more than most other Islamic countries in this respect, and its developments are regarded as models by them. The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $22.1 billion. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $93.9 billion. The money market rate, the rate at which financial institutions lend to one another in the short term, was 2.79%. The principal market for securities is the Kuala Lumpur Stock Exchange (KLSE), which separated from the joint Stock Exchange of Malaysia and Singapore in 1973. A second, smaller exchange has operated since 1970 to serve indigenous Malay interests. In October 1991 the Kuala Lumpur Stock Exchange completely severed its links with the Singapore Stock Exchange. As of 2001, the KLSE was capitalized at approximately $120 billion. Foreign investors are permitted to buy and sell on the stock market, subject only to compliance with regulatory requirements. In June 1995, a wide range of measures liberalizing the Malaysian capital market were introduced. These included the lowering of commission rates on the KLSE, the easing of controls on loans secured against shares and less stringent conditions for overseas fund managers. Overseas funds can now set up 100% subsidiaries for conducting non-Malaysian business, and rules on work permits for expatriate staff have been relaxed. By the end of 1997, the Kuala Lumpur Stock Exchange Composite Index (KLCI) capitalization had declined 53% from its high that year of 1271.57. The KLCI hit a low of 262.70 in September 1998, but had climbed back up to 696.1 by the end of 2001, still barely over half its peak value. 34INSURANCE In Malaysia, third-party automobile liability, workers’ compensation, and social security are compulsory insurance. The law requires insurance firms to maintain a minimum of 80% of their assets in authorized Malaysian holdings, including (by an amendment passed in 1978) 24% in government securities. Foreign insurance companies may operate by obtaining a license. The government’s insurance branch, the Malaysian National Reinsurance Berhad, covers 25% of all fire and personal accident, 10% of aviation and automobile, and 20% of all other classes of insurance. 35PUBLIC FINANCE Malaysia’s economy, heavily industrial and heavily dependent on export revenues, experienced a bump in the road when the US economy began to slow down at the end of 2000. The United States is a key trading partner for Malaysia, so as exports to the United States fell, so did Malaysia’s economy. The government introduced two fiscal stimulus packages in 2001, but neither did the job; at the time, analysts suspected that GDP would grow less than 1% on the year. 410 Malaysia The US Central Intelligence Agency (CIA) estimates that in 2001 Malaysia’s central government took in revenues of approximately $20.3 billion and had expenditures of $27.2 billion including capital expenditures of $9.4 billion. Overall, the government registered a deficit of approximately $6.9 billion. External debt totaled $44.7 billion. The following table shows an itemized breakdown of government revenues and expenditures. The percentages were calculated from data reported by the International Monetary Fund. The dollar amounts (millions) are based on the CIA estimates provided above. REVENUE AND GRANTS 100.0% 20,294 Tax revenue 81.9% 16,618 Non-tax revenue 17.9% 3,638 Capital revenue 0.2% 38 EXPENDITURES 100.0% 31,573 General public services 11.0% 2,994 Defense 11.1% 3,031 Public order and safety 5.3% 1,439 Education 22.8% 6,202 Health 6.3% 1,702 Social security 7.2% 1,959 Housing and community amenities 7.3% 1,988 Economic affairs and services 21.6% 5,881 Other expenditures 11.5% 3,118 Interest payments 12.0% 3,258 36TAXATION Income tax is levied on all individual and corporate income accrued in Malaysia during the previous year. As of 2000, income of resident individuals is taxed at rates ranging from 2% to 29%. Resident and nonresident companies are charged a flat rate of 28%. A 38% income tax is levied on petroleum corporations. Incentives are available for pioneer industries and for certain capital investments. Capital gains taxes are levied on real estate. Indirect taxes include a general 10% sales tax (5% for more essential items, and 15% for liquor and cigarettes), and a services tax. 37CUSTOMS AND DUTIES Import tariffs on textiles and other items already produced in Malaysia are applied in order to protect domestic industries. Rates vary from 0% to 300% and imports are also subject to a 10% sales tax and excise taxes. However, the average duty rate is less than 8.1%. In 2000, the government reduced duties on 136 categories of food products from 5–20% to 2–12%. Imported luxury goods have the highest rates. Items imported for industrial development, including machinery and raw materials imported for processing and re-export, are usually duty-free. Exports are generally free of control, except that licenses and export duties apply to exports of petroleum (25%), rubber, tin, palm oil, timber, and pepper. As a member of the ASEAN free trade area, Malaysia is a part of the Common Effective Preferential Tariff Scheme (CEPT), which aims to liberalize trade in the region. By 2003, all tariffs on manufactured goods will be reduced to 0–5% between member countries, including Singapore, Brunei, Thailand, Philippines, and Indonesia. Vietnam, Laos, Myanmar, and Cambodia are scheduled to join the CEPT by 2008. Malaysia has bilateral trade agreements with 59 countries as well. There are several free zones and a free port at Port Klang. 38FOREIGN INVESTMENT The government encourages foreign investors with a tax holiday of up to 10 years for investments in new industries and assurance of convertibility and repatriation of capital and profits. In 1975, the Industrial Coordination Act established new equity participation guidelines that required a substantial majority of Malaysian ownership of new import-substitution industries catering to the domestic market and using local technology; 70% Malaysian ownership was stipulated for export industries. Export industries using imported raw materials could be 100% foreign owned. Some of these restrictions were eased under the fifth Malaysia plan (1986–90). The Promotion of Investment Act of 1986 allowed 100% foreign ownership if a company exported at least 50% of its product and did not compete with local industry, or if it exported at least 80% of its product regardless of competition. In 1998, 100% foreign ownership was granted to projects exporting at least 80% of output, 79% foreign ownership for exports of at least 51% of output, up to 50% foreign ownership for exporting at least 20% of output, and a maximum foreign ownership of 30% for projects exporting less than 20%, regardless of the origin of raw materials. Also, for new manufacturing projects, in a policy originally set to expire at the end of 2000, and now set to expire at the end of 2003, 100% foreign ownership is permitted in any project approved by the Malaysian Industrial Development Authority (MIDA). The MIDA screens all proposals for manufacturing projects to determine if they are compatible with the Second Industrial Master Plan (1996–2005), and government strategic and social policies. In October 1990 the government established on the Federal Territory of Labuan as an International Offshore Financial Center (IOFC) to provide offshore banking and insurance, trust fund management, offshore investment holding and licensing companies, and other financial services for multinational companies. In the period following the 11 September 2001 terrorist attacks on the United States, Malaysia took the lead in seeking to institutionalize Islamic banking and attract Islamic investment. In November 2001 Malaysia was a founding member, along with Bahrain, Indonesia, Sudan and the Saudibased Islamic Development Bank (IDB), of the International Islamic Financial Market (IIFM). Effective 1 April 2002, Malaysian banker Abdul Rais Abdul Majid became the IIFM’s chief executive officer. In June 2002 the Malaysian government took the lead in putting together the world’s first global Islamic bond issue, whose underlying assets were lease payments for five years by the Malaysian government on its Ministry of Finance building, two hospitals and a civil service accommodation. Trust certificates with amounts payable exactly equal to the government’s lease payments were listed on the Luxembourg Stock Exchange in August 2002, and, in September 2002, as a second listing on Labuan International Financial Exchange (LFX), part of the Labuan IOFC. The Labuan Offshore Financial Services Authority (OFSA) takes credit for initiating the idea of the establishment of the IIFM, and the Islamic Financial Service Organzation (IFSO), which is taking the lead in formulating and developing standards for the regulation of Islamic financial institutions, is headquartered in Malaysia. More conventionally, as of 2002, eleven free-trade zones (FTZs) have been established in Bayan Lepas, Bukit Baru, Mukim Damansara, Mukim Pringgit, Mukim Plentong, Prai, Tanjong Kling, Telok Panglima Garang, Ulu Kinta, and Ulu Klang in the states of Johor, Melaka, Perak, Penang, and Selangor. (FTZs are specially designated geographic areas with regulations, including minimum customs controls and formalities when importing raw materials, parts, machinery, and equipment, specifically designed to serve exportoriented industries.) There are specially designated FTZs for businesses engaged in commercial activities including trading, breaking bulk, grading, repacking, relabeling, and transit. Within an FTZ, goods are allowed to be imported without being subject to customs procedures, provided the goods are ultimately exported after processing. Two FTZs have been established for trading purposes in Bukit Kayu Hitam, Kedah and Pengkalan Malaysia 411 Kubor, Kelantan. A third in Mukim of Plentong, Johor, has been established for commercial activities other than trading. Assets attracting foreign investors to Malaysia are location, cultural ties with Singapore and Taiwan, its economic and political stability, an increasingly competent labor force, and good infrastructure. The main barriers have been restrictions put on foreign investment and ownership as a part of the government’s bumiputura policy, which sought particularly to insure Malay dominance of domestic markets. Nevertheless, before the sharp reduction in 2001, Malaysia was regularly listed among the top 25 best destinations for foreign investments. According to UNCTAD’s World Investment Report 2002, annual average foreign direct investment (FDI) in Malaysia 1985–1995 was close to $3 billion, amounting to an average 14.5% of the country’s annual gross fixed capital formation. In 1996, annual FDI rose above $7 billion to a record high. A strong first half in 1997 brought the year’s total to $6.3 billion before falling over 57% to $2.7 billion in 1998 reflecting the rapid disinvestments that precipitated the Asian Financial Crisis. Recovery was sharp, if incomplete, however, and FDI reached $3.89 billion in 1999, 22.2% of the gross fixed capital formation (GFCF), and $3.8 billion, 16.5% of GFCF, in 2000. However, in 2001, in the context of a worldwide contraction in foreign investment of almost 50%, FDI to Malaysia fell a precipitous 85.4% to $554 million. Total stocks of FDI in Malaysia grew 83.6% in period 1995 to 2000, from $28.7 billion to $52.7 billion, and from 32.3% to 58.8% as a percent of GDP. In 2001, the total FDI stock increased only 1% as the total reached $53.3 billion. The largest investment sources are the United States, Japan, Germany, Taiwan, Singapore, and Korea. In 1996 the government announced a list of 31 major infrastructure projects to be built between 1995 and 2020 at a cost of M$163 billion. The Second Industrial Master Plan (1996 to 2005) outlined investment opportunities. These have drawn a huge influx of foreign investment. They include the Bukun hydroelectric dam in Sarawak, Southeast Asia’s largest; and the projects involved in the development of the Multimedia Super Corridor (MSC): the Petronas Twin Towers, the world’s tallest; one of the region’s most modern airports; and Putrajaya, the new capital city and administrative center for electronic government, and Cyberjaya, Malaysia’s center for computer technology. The United States emerged as an important investment source in recent years, with manufacturing investments in 1998 totaling $1.7 billion. Most foreign investment is concentrated in the production of electronic components, consumer electronics, and electrical goods (dominated by US and Japanese firms), petroleum production and distribution, textiles, vehicle assembly, steel, cement, rubber products, and electrical machinery. Malaysian outward investments 1985 to 1995 amounted to less than a quarter of inward investments, with an annual average of $677 million. However, in 2001 and 2002, this ratio had more than doubled to about 50%. A significant source of outward investments is Petroliam Nasional Berhad (PETRONAS), the state oil company incorporated in 1974 during the first oil shock. In 2002, domestic petroleum reserves had fallen to about 3 billion barrels of oil and 2.34 trillion cu m (82.5 trillion cu ft) of gas. Overseas investments in the upstream sectors (exploration, development and production) of the petroleum industries in 20 countries have, as of 2002, yielded an additional 3.25 billion barrels of oil equivalent. In international investments involving downstream operations (refining, distribution, marketing), PETRONAS’s acquisition of the entire share holding of Engen Ltd., a South African oil company, increased its net refining capacity by almost 40%, to 361,500 bpd. The state company’s other downstream activities include liquefied petroleum gas (LPG) terminalizing, bottling, and distribution in China, Vietnam and the Philippines, and refining and retailing in the Cambodia and Thailand. 39ECONOMIC DEVELOPMENT In the last 20 years, Malaysia economy has been transformed from a protected low income supplier of raw materials to a middle income emerging multi-sector market economy driven by manufactured exports, particularly electronics and semiconductors, which constitute about 90% of exports. Since 1970, and the institution of the New Economic Policy (NEP) following deadly riots in 1969 against economically dominant ethnic Chinese, the government’s commitment to the free market has been hedged by its bumiputurna (literally, “sons of the soil”) policies aimed at providing “constructive protection” for Islamic Malays against economic competition from other ethnic groups and foreign investors, particularly in the domestic market. In the Asian financial crisis of 1997, most of the major companies that the government had privatized and reserved for bumiputurna leadership, including Proton, the national car company, Malaysian Airlines, the Renong engineering group, and the Malaysian Resources media group, had to be renationalized to prevent their collapse. A vigorous recovery program mounted by the government that was showing positive results in 1999 and 2000 ran abruptly into the wall of the 2001 global slowdown. Worldwide, foreign direct investment dropped almost 50%, and in Malaysia the decline was an even more precipitous 85%. Gross domestic product growth dropped to 0.7% for 2001, from its usual 7% to 9%. Business in Malaysia remains dominated by non-Malays. Annual growth rates, which had been running 7% to 9%, came abruptly up against a wall in 2001. The government remains generally committed to a policy of free enterprise, although it owns and operates the railway and the majority of the communications systems and has become increasingly involved in certain key industries. In 1970, a government holding company, Perbadanan Nasional (PERNAS), was created to encourage Malay-controlled businesses; in 1975, the government attempted, through PERNAS, to strengthen Malaysian interests in the tin-mining sector. Also in 1974, the government established the National Oil Co. (PETRONAS), with the overall aim of acquiring majority control of the country’s petroleum operations. The Industrial Coordination Act of 1975 attempted to accelerate indigenous Malay participation in the economy by setting limits on foreign participation in the processing, domestic distribution, and export of local raw materials. In 1971, the New Economic Policy (NEP) was adopted, with the aim of channeling a greater share of future economic growth into Malay hands. It specifically called for raising the level of corporate ownership by Malays to 30% by 1990, reducing corporate ownership by other Malaysians (i.e., Chinese and Indians) to 40%, and restricting foreigners to ownership of no more than 30%. Short-term investment strategies are set forth in a series of economic plans. The fourth Malaysia plan (1981–85) proposed a level of development spending of M$42.8 billion and called for acceleration of the NEP goals for Bumiputra economic participation. Major industrial and infrastructural development projects included a M$900- million bridge between Pulau Pinang and the mainland and a M$600-million automobile-manufacturing plant, both of which opened in 1985. Recent economic planning has stressed a “look East” policy, with Malaysia attempting to emulate the economic successes of Japan and the Republic of Korea by importing technology from those countries. In response to deteriorating prices for oil and other exports, the fifth Malaysia plan (1986– 90) has moved away from the goals of the NEP, aiming instead at promoting foreign investment, particularly in export industries. The year 1990 marked the culmination of several economic development plans: the fifth Malaysia plan (FMP), 1986–90; the conclusion of the first outline perspective plan (OPP1) 1971– 1990; and the completion of the new economic policy (NEP) 1971–1990. The FMP emphasized industrialization. Specific 412 Malaysia targets were formulated to ensure that the distribution of ownership and participation in the commercial and industrial sector would be characterized by ethnic group participation, 30% bumiputra—Malays and other indigenous peoples of Malaysia, 40% other Malaysians (Chinese and Indian descent), and 30% foreign. The government provided funds to purchase foreignowned shareholding on behalf of the Bumiputra population, increasing their equity to 20% by 1990. These policies are part of the new national development policy, although specific targets and time tables have been dropped. A post-1990 NEP defined Malaysian economic strategy for full development by 2020. Three ten-year outline perspective plans, which included a new development plan and six five-year plans, made up the NEP. A second outline perspective plan (OPP2) 1991–2000 aimed to sustain growth momentum and to achieve a more balanced development of the economy. The sixth Malaysia plan called for an average annual growth rate of 7.5%, and expenditures on infrastructure were included to ensure prospects for further development. Development trends are toward privatization, encouraging the spread of industry throughout the country, increasing manufacturing in the free trade zones, and providing financing for industry through the establishment of specialized financing institutions. A five-year development plan announced by Dr. Mahathir on 6 May 1996 forecasted average growth of 8% per year from 1996 to 2000. But it also tackled issues that bothered skeptics of the Malaysian economy: low rises in productivity, a skills shortage, and a gaping current-account deficit. In 1997 and 1998, these issues, along with a global financial crisis based in Asia caused the downturn that skeptics expected. Prospects for continuation of the second industrial master plan for 1996 through 2005 seemed grim, although the economy began to rebound in 1999. Massive capital and infrastructure projects have attracted foreign investment and international respect. 40SOCIAL DEVELOPMENT Public financial assistance should be considered within the framework of Malaysian society, with its highly developed sense of family and clan responsibility. The government has generally encouraged volunteer social welfare activities and has subsidized programs of private groups. The Department of Social Welfare, under the Ministry of Welfare Services, administers and coordinates social assistance programs. The government’s program of public assistance takes the form of cash, commodities, and institutional care. Children’s services provide case-work services and administer children’s homes. A probation service provides care and assistance for juvenile delinquents and dependents, and a handicapped persons’ service aids the deaf, mute, and blind. In addition, care is provided for the aged and chronically ill. A provident fund has provided lump-sum benefits for old age, disability, and death. Pensions are funded by 11% contributions of earnings by workers, and 12% of payroll by employers. The retirement age is 55. Work injury insurance and disability pensions to low-income workers is available, with a special system for public employees. The government has taken active measures to improve the rights and standing of women. The Islamic Family Law was revised to strengthen the inheritance rights of Muslim women and to increase their access to divorce. The government passed a domestic violence bill that allows the courts to protect victims of spousal abuse. However, this law falls short of making domestic violence a criminal act that may be tried under the existing law regarding assault and battery. Most Muslim women play subordinate roles in public and private life in spite of their growing legal rights. In family and religious matters, Muslim women are subject to Islamic law, which allows polygyny. Custom favors men in matters of inheritance. Some Malays practice a modified form of female genital mutilation. Except in teaching and nursing, women are underrepresented in professional occupations. Human rights abuses include arbitrary arrest and detention, torture, and other types of prisoner abuse. Caning is still used for some crimes. 41HEALTH Malaysia enjoys a comparatively high standard of health, the result of long-established health and medical services. The country has improved its health care and social conditions and is considering a national health insurance plan. There are three main hospitals in Malaysia, all located in the capital, Kuala Lumpur: Subang Jaya Hospital, General Hospital, and Penang Adventist Hospital. Approximately 80% of the population had access to health care in 1993. As of 1999, there were an estimated 0.7 physicians and 2.0 hospital beds per 1,000 people. In the same year, total health care expenditure was estimated at 2.5 % of GDP. As of 2002, the crude birth rate and overall mortality rate were estimated at, respectively, 24.22 and 5.2 per 1,000 people. In 1990–95, 51% of married women (ages 15 to 49) used contraception. Life expectancy has risen over the last decade and was 73 years in 2000. In 1994–95, 90% of the population had access to safe water, and 94% had adequate sanitation. Under the tuberculosis control campaign, begun in 1961, the number of annual deaths from tuberculosis declined to 971 in 1970 and 672 in 1983. In 1999, there were only 111 reported cases of tuberculosis per 100,000 people. As a result of the yaws elimination campaign, begun in 1954, the disease was virtually eliminated in the late 1960s. A malaria eradication program, begun in 1967, resulted in a drop in the number of hospital admissions for malaria from 25,400 in 1970 to 8,274 in 1984. Malaria remains a common disease in Malaysia. At least 39,890 cases of malaria were reported in 1993. In 1989–95, 23% of children under five years of age were still considered malnourished. Immunization rates from 1990–94 for children up to one year old were quite high: tuberculosis, 99%; diphtheria, pertussis, and tetanus, 90%; polio, 90%; and measles, 81%. In 1999, rates for DPT and measles were, respectively, 93% and 88%. Tobacco use has increased since the mid-1980s. As of 1995, each adult smoked an average of 1.9 kg (4.2 lbs) of tobacco per year. Between 1970 and 1989, cardiovascular disease death rates more than doubled. Among the main ethnic groups in Malaysia, those of Indian origins have the highest mortality rates compared to the Chinese and Malay. Similar trends exist for diabetes mortality. As of 1999 the number of people living with HIV/AIDS was estimated at 49,000 and deaths from AIDS that year were estimated at 1,900. HIV prevalence was 0.42 per 100 adults. Infant mortality in 2000 was 8 per 1,000 live births. The maternal mortality rate in 1998 was 39 per 100,000 live births. The total fertility rate has dropped from 4.2 in 1980 to 3 in 2000. 42HOUSING A total of 744,000 new housing units were built during 1970–80, and an estimated 923,300 units—43% public and 57% private— were planned under the 1981–85 development plan. About 92% of all housing units were detached houses, 7% were apartments, and 1% were single rooms. The need for urban housing is acute: an estimated 24% of Kuala Lumpur’s population consists of recently arrived squatters living in overcrowded shantytowns with few urban amenities. A government plan for low-cost housing was expected to provide 80,000 units per year from 1986 to 1988. In the mid-1990s, the total number of housing units was 3,403,000. Malaysia 413 43EDUCATION Six years of free primary education are followed by three years of comprehensive general and prevocational education. Two further years of education at the post-comprehensive level, in either a vocational or an academic program, are offered. A two-year preuniversity course prepares students for admission to the universities. Malay is the medium of instruction in primary and secondary schools, with English as a compulsory second language. Muslim religious instruction is compulsory for all Muslim children while private Christian schools offer religious training to their students. For the year 2000, an estimated 12.5% of the adult population (males, 8.5%; females, 16.4%) was illiterate. As of 1999, public expenditure on education was estimated at 4.6% of GDP. In 1997, primary schools enrolled 2,840,667 pupils, instructed by 148,000 teachers. Student-to-teacher ratio stood at 19 to 1. In secondary schools, there were 1,889,592 pupils, instructed by 102,139 teachers, in 1998. The pupil-teacher ratio at the primary level was 20 to 1 in 1999. In 1996, 210,724 students were enrolled and 14,960 teaching faculty were employed in institutions of higher education, which include the Universiti Kebangsaan Malaysia (the National University of Malaysia), the University of Malaya, and the Technological University of Malaysia, all in or near Kuala Lumpur, and the University of Science Malaysia (formerly the University of Pinang). The MARA Institute of Technology is the largest post-secondary institute in the country. 44LIBRARIES AND MUSEUMS The National Library of Malaysia, with more than 1.3 million volumes, was established in 1971 and has been charged with wide responsibilities under the National Library Act. Both the National Library and the National Archives are in Kuala Lumpur. The National University of Malaysia (Universiti Kebangsaan Malaysia) in Bargi has 945,000 volumes. Other important libraries are those at the universities; the Sabah (380,000) and Sarawak (500,000) state libraries; Tun Abdul Razak Library at the MARA University of Technology (569,000); and the library of the Malaysian Rubber Board (120,000). The largest public libraries are in Denang, Malacca, and Selangor. The National Museum of Malaysia in Kuala Lumpur, constructed on the site of the former Selangor Museum (destroyed in World War II), houses extensive collections of Malayan archaeology, ethnography, and zoology. The Perak Museum in Taiping, founded in 1883, has a varied collection exhibiting antiquities, ethnographic, and zoological materials. Also in Kuala Lumpur are the Museum of Asian Art (1974), the Postal Museum, the Air Force Museum, and the National Art Gallery (1958). Sabah and Sarawak maintain anthropological and archaeological collections pertinent to East Malaysia. There is an Aboriginal Affairs Museum in Gombak. 45MEDIA The government owns and operates a well-developed and wellequipped telecommunications system. In 2000, Malaysia had over 4.6 million mainline telephones, including private wire and public coin stations. The same year, there were an additional 5 million cellular phones in use throughout the country. Automatic dialing for the majority of exchanges is provided by a VHF radio circuit. Telegraph and radiotelephone connections link Peninsular Malaysia with most foreign countries. Radio-Television Malaysia (RTM) operates radio and television stations in Kuala Lumpur, Sabah, and Kuching, and there is a commercial station, Sistem TV-3 Berhad, in Kuala Lumpur as well. Broadcasts are in English, Malay, five Chinese dialects, Tamil, and numerous local languages and dialects. As of 2001 Malaysia had 35 AM and 391 FM radio stations and 1 television station. In 2000, there were 420 radios and 168 televisions sets for every 1,000 people. In 2001, there were 4.1 million Internet subscribers served by seven service providers. Malaysia generally has enjoyed a large measure of press freedom. In October 1987, however, the government closed four newspapers in an effort to end criticism of its policies. While the press is normally moderate and objective, it treads carefully when dealing with Malaysia’s plural ethnic and cultural foundations. There are about 80 English, Malay, Chinese, and Tamil daily and weekly newspapers. The Malay-language press is the largest segment, followed by English, Chinese, Tamil, Punjabi, and Kadazan. The leading Kuala Lumpur dailies (with their 2002 circulations) are as follows: LANGUAGE CIRCULATION Berita Harian Malay 350,000 Utusan Malaysia Malay 240,000 China Press Chinese 210,000 New Straits Times English 190,000 Nanyang Siang Pau Chinese 183,800 Malaysian Nanban Tamil NA Major Papers in Petaling Jaya include: LANGUAGE CIRCULATION New Life Post (every other week) Chinese 231,000 Sin Chew Jit Poh (daily) Chinese 227,070 The Star (daily) English 220,490 Though the constitution provides for freedom of speech and a free press, in practice the government is said to restrict the flow of information deemed “sensitive” including issues regarding citizenship of non-Malays and the special position of Malays in society. The media generally practices self censorship, providing laudatory, noncritical coverage of government activities. 46ORGANIZATIONS The Malaysian government promotes thrift, credit, processing, marketing, farming, consumer, and housing cooperatives. The cooperative movement was introduced in Malaya in 1922. The Chinese are organized along clan, common dialect, or occupational lines into rural credit associations. These local associations set up and maintain schools, build temples, and provide burial, relief, and employment services. In the larger cities, chambers of commerce, organized along ethnic lines, promote the economic welfare of the group represented. Cultural organizations include the multinational Royal Asiatic Society and the International Institute of Islamic Thought and Civilization. Educational and research organizations include the Malaysian Medical Association and the Malaysian Scientific Association. Kiwanis and Lion’s clubs have programs in the country. Youth organizations include the Federation of Malay Student Unions, Girl Guides Association of Malaysia, Malaysia Council of Churches Youth Division, Muslim Youth Movement of Malaysia, National Union of Malaysian Muslim Students, and the United Malaysian Youth Movement. YMCA/YWCA chapters are also active. The Red Crescent Society is active in the country. 47TOURISM, TRAVEL, AND RECREATION In 2000, Malaysia had 134,503 hotel rooms with an occupancy rate of 58%. Most large hotels are in the major cities of Kuala Lumpur and George Town. The best-known hill resort areas are Cameron Highlands, Raub, and Pinang Hill. Island resorts off the coast of the peninsula are Langkawi and Pangkor. Horse racing, soccer, rugby, cricket, and sepak raga (a form of badminton) are popular spectator sports. Kite fighting and top spinning are traditional pastimes for children and adults, and silat (a Malay martial art) is popular in rural areas. 414 Malaysia Passports are required of all entrants, although Malaysia has visa abolition agreements with all Commonwealth countries, the US, and other countries. Yellow fever inoculations are necessary for those arriving from infected areas. Tourists numbered 10,221,582 in 2000 with receipts of about $4.9 billion. The estimated cost of staying in Kuala Lumpur, according to 2002 US government estimates, was $129 per day. 48FAMOUS MALAYSIANS Among the foremost Malaysian leaders of the past was Sultan Mahmud, 16th-century ruler of Malacca. A great figure in Malay culture was ‘Abdallah bin ‘Abd al-Kabir (surnamed Munshi’, 1796–1854), sometimes called the greatest innovator in Malay letters. The best-known figure in the political life of modern Malaysia is Tunku Abdul Rahman Putra bin Abdul Hamid Halimshah (1903–1990), first prime minister of the Federation of Malaysia. Other political leaders are Tun Abdul Razak (1922– 76), the nation’s second prime minister (1970–76); Datuk Seri Mahathir bin Mohamed (b.1925), prime minister since 1981; Dato Onn bin Ja‘afar (1895–1962), a founder of the United Malays National Organization; and Sir Cheng-lock Tan (1883– 1960), leader of the Malaysian Chinese Association. 49DEPENDENCIES Malaysia has no territories or colonies. 50BIBLIOGRAPHY ABECOR. Malaysia and Brunei Darussalam. London: Barclays Bank, 1993. Ahmad, Zakaria Haji (ed.). Government and Politics of Malaysia. New York: Oxford University Press, 1987. American University. Malaysia: A Country Study. Washington, D.C.: Government Printing Office, 1985. Bowie, Alasdair. Crossing the Industrial Divide: State, Society, and the Politics of Economic Transformation in Malaysia. 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