Country Risk Analysis For Malaysia

Introduction

To establish a business in another country, you need to analyse different aspects of the country such as culture, economy, politics, demographic data, and financial. All this is to be able to learn more about the country and to find out if it is risky or safe enough.

During the late 18th and 19th centuries, Great Britain established colonies and protectorates in the area of current Malaysia; these were occupied by Japan from 1942 to 1945. In 1948, the British ruled territories on the Malay Peninsula formed the Federation of Malaya, which became independent in 1957. Malaysia was formed in 1963 when the former British colonies of Singapore and the East Malaysian states of Sabah and Sarawak on the northern coast of Borneo joined the Federation. In the first several years of the country's history, many things happened such as the Indonesian efforts to control Malaysia, Philippine's claim to Sabah, and Singapore's secession from the Federation in 1965.

During the 22 year term of Prime Minister MAHATHIR bin Mohamad (1981-2003), Malaysia was successful in diversifying its economy from dependence on exports of raw materials, to expansion in manufacturing, services, and tourism. Since its independence, Malaysia has known a strong and fast economic growth compared to some other countries in the area. Malaysia has 2 main regions separated by the South China Sea. This Peninsula has a central position in the trades between Asia and the Middle East.

Malaysia has come a long way since gaining independence in 1957: from living standards and access to education and health care to sanitation, infrastructure, and economic diversification, significant strides have been achieved toward an advanced economy status in a relatively short time.

Demographic

Malaysia is well known as a country that has achieved industrialization at a faster pace than its neighbors in South East Asia. Although blessed with rich natural resources and primary products, its human resource development policy made a positive impact on Malaysia's economic growth.

Its economic policies have a strong focus on human resource development, and believed that workers are valuable human resources for social development. Malaysia has been addressing the issue of human resource development by formulating a medium-term economic plan centered on training policies.

The Government established an economic development plan centered on training policies which are based on the Malaysia Plan (MP), which had been created in order to follow industrialization policies launched by Prime Minister Abdul Ruzak in 1966. It has been handed down from one prime minister to another since the launch of the First Malaysia Plan (MP-1: 1966-1970). During the Second Malaysia Plan (MP-2: 1991-2000), the industrial foundation was firmly established. The manufacturing and service sectors achieved remarkable growth, with the former accounting for 33.4% of GDP and the latter for 52.4% (in 2000).

Thanks to a stable economic growth, the labor market is doing very well with an unemployment rate around 2 to 3.5% since the mid 90s. However, the unemployment rate began to increase in recent years, despite the expanding employment opportunities but it is still at a rather good level.

The population of Malaysia is divided into two main groups, bumiputera and non-bumiputera. The first represents ethnic Malays and other indigenous people, and non-bumiputera represents other ethnic groups including Chinese, Indians, Caucasians and people of other ethnic minority groups. The ethnic diversity is a major aspect to be considered for national projects, education, social and cultural policies. To eradicate poverty and have a fair distribution of wealth among all ethnic groups and social classes, the government introduced in 1971 the famous Bumiputera Policy that favors the bumiputera population. Today, there is a quota across all economic and social spheres, from the number of people to be enrolled at a university, the number of employees to be hired at a company, or the number of people for each job a little like the Americans government does.

The Eighth Malaysia Plan is currently under way. All of the Malaysia Plans stress the importance of human resource development and present measures to address that issue. These plans urge Malaysians to recognize that it is essential to improve human resources to facilitate industrialization and achieve economic growth, and that human resource development is the most important political agenda among national policies. The goal of human resource development stipulated in the Eighth Malaysia Plan is to transform Malaysia into a knowledge-based economy and develop human resources to produce a pool of highly-skilled workers.

Despite relatively stable labor market conditions, the youth unemployment rate has been increasing, as if following the footsteps of developed countries in Europe and the US.

Youth unemployment is due to many reasons. Young people moved from rural areas