Malaysia remains an attractive venue for many foreign firms to enter. Although surrounded by controversy in 1999, the Malaysian government has continued to promote foreign investment.

Malaysia, a middle income country, transformed itself from 1971 through the late 1990s from a producer of raw materials into an emerging multi-sector economy. Growth is almost exclusively driven by exports, particularly electronics. As a result, Malaysia was hit hard by the global economic downturn and the slump in the Information Technology (IT) sector in 2001. GDP in 2001 grew by only 0.3% due to a drop off in exports by approximately 11%. However, the economy is expected to grow by 2% to 3% in 2002 as the world economy rebounds. This is due to an economic package that has helped stimulate the economy; therefore, lessening the effects of the recession. Kuala Lumpur’s healthy foreign exchange reserves and relatively small external debt make it unlikely that Malaysia will experience a crisis similar to the crisis of 1997. Nevertheless, the economy remains vulnerable to a more prolonged downturn in the US and Japan, which are top export destinations and key sources of foreign investment.

Natural Resources include tin, petroleum, timber, copper, iron ore, natural gas and bauxite. Industries include rubber, oil palm processing, manufacture, electronics, tin mining, logging and timber processing. Main agriculture products include natural rubber, palm oil, rice, coconuts, pepper and timber. Major exports are petroleum, electronic equipment, palm oil, wood and wood products, rubber and textiles. Major imports are machinery and equipment, chemicals, and food. Singapore, Japan, and U.S.A include their major trading partners.

There are many new policies and supporting mechanisms that exist for entrepreneurs. The Malaysian Government, in 1995, established a new department, the Ministry of Entrepreneur Development. This move shows the importance the government places on entrepreneurs and their confidence that entrepreneur success in Malaysia will be a critical success factor for the economy in the future. The Malaysian economy grew an average of 4.7% during 1996-2000. Although Malaysia has grown up drastically, their historical business practices were to divide economic activity along racial lines. Indian workers were kept separate from the Chinese workers. This was a British-imposed practice that does not hold today. Eventually, positive discrimination helped the Malays gain equality with the rest of the races. As workers were historically segregated, so was the attitude toward business generation and entrepreneurial activity.



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