The phenomenal growth of the Malaysian economy: a guiding model for developing countries…

The phenomenal growth of the Malaysian economy: a guiding model for developing countries…

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Malaysia is one of the seven Asian tigers that has emerged from the stalemate and phase of colonialism to rise to the ranks of developed countries in two decades, providing a successful and pioneering experience in the coexistence of human groups belonging to multiple religions and nationalities, including four races and five basic religions: Indians account for 7%, most of whom are Hindu, 9% are Christian, 2% are Confucian.
Malaysia is Located in South-East Asia, composed of 13 states and three federal regions, with an area of 329,845 square kilometers and a population of 30 million. About four decades ago, it was an agricultural community that only knew how to grow rice, rubber and some plants and fruit . But the huge development that took place has reduced the poverty rate from 70% to 5% and annual per capita income from $ 350 to $ 18,000.
Malaysia has been a model of comprehensive development for the third world countries and is characterized by its importance and specialty. It has risen in the economic field during the past four decades. It has succeeded in reconciling between the two directions: the first is the integration into the economies of globalization and the other: keeping the national economy approach, as it has been turned from a country depends on the export of basic raw materials to the largest exporter of industrial goods and technology in the Southeast Asia region.
A delicate policy of ethnic and political balance has been taken in dealing with the components of society, which has helped to avoid conflicts and disputes , and has pursued a system of governance that attempts to combine overall economic development with economic policies that promote equitable participation of all races in Malaysia.

Malaysia Independence:
Malaysia gained independence from Britain in 1957 and in 1963 became known as the Union of Malaysia because of the accession of the Malay, Surawak, and Sabah and Singapore regions. In 1965, Singapore withdrew from the Malaysian federation and formed an independent state. On May 13, 1969, the most serious problem in Malaysia’s modern and contemporary history exploded and threatened the fate of cohabitation in the country, and almost overwhelmed the Malaysian Federation.
There were bloody clashes in the capital Kuala Lumpur between the majority Malayans and the minority Chinese, due to the large disparities in living standards, the economic imbalance between the two groups, the unequal distribution of wealth, the Chinese controlling the country’s economy and trade, and the Malays complaining of poverty and low standards of living.

The problem was the traumatic shock that had warned all Malaysians in and outside the government that they were in front of a reality of crisis that could not be sustained or ignored. The problem disclosed serious economic and social imbalances that put the issue of coexistence among the components of Malaysian society at risk. This alert to the problem is like the beginning of reform and change paths.
It can be said that Malaysia’s economic and development success is due in large part to the great role played by the state, from the planning of economic policies to the follow-up of its implementation and the regulation of economic activities in various fields. Malaysia’s experience demonstrated the sincerity of the positive impact of local governance in the endeavors of Development through development plans and strategies that enabled it to become a modern industrial state, it provided a unique development model through the introduction of local government.

A man in the size of a nation:
We consider ourselves in Malaysia as our Muslim predecessors during the Golden Age. We have an original vision and approach that is in line with the spirit and essence of Islam. Therefore, we must first begin to achieve growth by applying the principle of equality among all groups and increasing the GDP. This is rejected by the West because the west has a firm belief that survival is only for the strongest and that the wealth is for the rich only at the expense of the poor”
These were one of the most prominent words of former Malaysian Prime Minister Mahathir Mohamad or as he was called by the title of “Malaysian Renaissance Maker”.

The period of Mahathir Mohammed’s presidency from 1981-2003 was the era in which the Malaysian model of development was launched. The average per capita income has doubled. The number of exports has increased. There has been a remarkable growth in foreign investment and the share of foreign direct investment in GDP has increased. This was due to the laws of seventies of the last century, which led to the transfer of responsibility to the local level or what is known as administrative decentralization
He fought against corrupt practices, laziness and lethargy and wrote about his society an whipped his society by writing in his book ” the Malay Dilemma” and his reforms began to include vital sectors, especially education and industry that work tirelessly.
Mahathir Mohammed warned of the danger of following the conditions of the International Monetary Fund and his advice, presented to Malaysia at the beginning of its rise and turned out to be misleading and was avoided and Malaysia decided to deal with its own problems without reference to the advice of the Fund, which began to pressure Malaysia to frustrate its experience. He explained that the experience of renaissance of Malaysia is not an easy experience, but everyone put its interests in front of their eyes. And about the most important problems that faced Malaysia
“Mahathir said:” It is the problem of unemployment, so it has to provide many job opportunities for young people by setting up big projects, attracting foreign investments, focusing on agriculture and industry, offering exemptions and tax breaks on foreign investment for ten years. ” He stressed that «Malaysian industry to take a new step in the path of the Renaissance, attention should be paid to the electronics industry, which required the development of the human component, and the development and adjustment of Malaysian educational curricula, so that students are built to be able to keep pace with progress».
Mahathir’s interest was in pre-primary education; it was part of the federal system of education. All kindergartens and preschools were registered with the Ministry of Education and were committed to a curriculum.
In addition to the sciences and literature, the students study subjects related to the professional and technical fields that allow students to develop and improve their skills.
In addition, the establishment of many vocational training institutes that accommodate high school students and qualify them to enter the labor market in the field of mechanical and electrical engineering and plastic technology, the most famous of which is the Institute of Industrial Training of Malaysia, sponsored by the Ministry of Human Resources.
The Malaysian experience is one of development experiences that deserve attention and study for its great achievements which can be used by developing countries to rise from underdevelopment and stagnation. Malaysia is an Islamic country with great fundamentals that have achieved enormous leaps in human and economic development over the past four decades. In the area of exports and imports in South-East Asia, and has been able to establish advanced infrastructure and diversify its national income sources from industry, agriculture, minerals, oil and tourism, and has made remarkable progress in the fields of poverty alleviation and job search. And there was a reduction of debt ratios to significant levels.

The application of positive globalization:
Malaysia has benefited from the great openness to the outside through its integration into the economics of globalization while maintaining the pillars of the development of its national economy, and we see the features of progress are clear by transforming it from a country that relies mainly on agriculture to a country to export industrial and technical goods, especially in the electrical and electronic industries. The United Nations Development Program (UNDP) for 2001, monitored the world’s leading exporter of technology, and Malaysia ranked ninth, ahead of Italy and Sweden, as it had a very successful experience in the face of the economic crisis of 1997 that faced the whole of East Asia , a proof of its successful program through its commitment to implementing a national plan of action here it has imposed firm restrictions on its monetary policy and gave the central bank broad powers to implement a contingency plan to face the flight of foreign capital and bring in foreign exchange and Malaysia managed to get out of its financial crisis within 2 years .
The success of the Malaysian experience, based on the presence of leaders of developmental thought, enabled it to reach the high level of development that is distinguished by its noble values and to make it a daily behavior to deal with. This has pushed it to progress internally and externally in concert with Asian values. The Malaysian economic model is a model referred to as the model taking advantage of the model of the Japanese development.

Method of political reform:
This policy is based on two main pillars: poverty eradication and the restructuring of society. Thus, the equitable distribution of wealth and the equal opportunity of citizens to education, health and employment were priorities of the new policy.
After years of implementing this reform policy, Malaysia has achieved more stability and prosperity. Ethnic tension has disappeared and justice has spread throughout the country. The first criterion is not color, language or race, but science, work and devotion to the country.
The reform development program achieved more than expected results. Malaysia’s poor wealth ratio rose from 4 percent in 1970 to 20 percent in 1997, the national product rose and the economy recovered. The per capita income level moved from 1,140 ringgit (Malaysian currency) in 1970 to 12,102 ringgit in 1997, unemployment fell from 50% to 6.8%. For the day the Malaysian ringgit exchange rate against the dollar was 4.22.
In a few years, Malaysia has been able to transform itself from a backward country whose inhabitants live in primitive forests to a modern state with a strong infrastructure, a thriving economy, and advanced education.
Development experts wonder how the Malaysians managed to conquer this rugged mountainous nature and turn it into gardens that appeal to everyone who heard about it before it sees it and how they have managed to achieve these remarkable successes in industry, agriculture, tourism and technology through continuous and serious work and fruit to change the human mentality and build itself and develop its scientific and cognitive level and planting Values of Citizenship and Sincerity. Malaysia has achieved great successes in the fields of economy, science and technology and has become an example of people aspiring to change their status and improve the reality and standard of living of their population.

Human Infrastructure and Investment:
The renaissance of Malaysia focused on the building of man and investment in it on the basis that he is the true wealth and the first engine of any economic and scientific renaissance. The result was a renaissance that dazzled the world and was praised by the people eager to change and promote. The foundation of this renaissance and its concentration was the human element and planting values of Creativity and innovation. Thus, education and scientific research were the top priority at the top of the government agenda. Schools, universities, training and research centers were established, and the largest part of the state budget was allocated to achieve the objectives of the educational plan. Tens of thousands of young Malaysians to study at the best foreign universities, especially in Japan.
The result was quick and fruitful, and Malaysia jumped to the ranks of developed countries in Asia. According to the Ministry of Higher Education, there are now more than 1,134,134 postgraduate students and about 100,000 foreign students. There are 49 major universities, 23 sub-universities and 411 colleges, International universities from Britain, Australia, Canada and India.
Malaysia adopted a Transitional Higher Education policy in the late 1990s, where Malaysian students faced financial problems to complete their studies abroad due to the deterioration of the Malaysian currency resulting from the 1997 Asian financial crisis. Thus, with increased tuition fees, and to rationalize expenses and help students, branches of an international universities were opened in Malaysia from Australia, Britain and United States of America.

What does development mean?
Development is a comprehensive process that deals with different aspects of life, political and economic. On the other hand, development is complex and multifaceted, and at the individual level it means an improvement in skill levels, productive efficiency, freedom, creativity, self-reliance, responsibility and determination because achieving any aspect of development is closely linked to the status of society on both internal and external levels and within the political and economic aspects , the development of the concept of development began in the second half of the twentieth century as a result of the changes that took place on the world stage, especially at the end of World War II, and the independence of many third world countries . The concept of development is usually linked to the economic aspect and is confused with other concepts of progress and development. This confusion is due to the fact that the idea of development was understood as a purely economic process linked to the increase of national output.

Industrial Development:
The electronic and electrical industry can be divided into four sections: electronic components, industrial electronics, consumer electronics, and electrical products. The electrical and electronic industry in Malaysia emerged in 1960 with initial manufacturing operations for light purposes that were used at that time. Over the past decades, it has become one of the most important highlights of the world of products.
Malaysian exports of electronic and electrical products reached 20 billion ringgit since the beginning of 2014, accounting for 32.1 percent of the total exports of goods exported by Malaysia, an increase of 14.6 percent over the previous year. China comes at the forefront of Malaysia’s major export of electronic and electric products with more than 31 billion ringgit, followed by the United States 24.7 billion ringgit and Singapore 24.1 billion ringgit, the European Union and Hong Kong 17.4 billion ringgit and Japan 12.4 billion ringgit and Taiwan.

The Malaysian industries are the most important pillars of Malaysian economy. Malaysian products which are exported every year recorded a steady rise, with 6.2% growth since the beginning of the current year compared to the same period in 2013, which reached 4.2%, which led to the growth of the total Malaysian trade worth 715 billion ringgit, and exports recorded an increase of 12.5% as a result of increased demand for Malaysian commodities.
Among the industries that are an important pillar in the Malaysian trade revenue are the electronics and electrical appliances industry, which are one of the leading industries with a contribution of 24.5% of domestic product.

International standards:
Electronic and electrical industrial companies are part of a representative body called TEAM, which was established in 1952 to work closely with government departments in Malaysia and legislative bodies, as well as the private sector, to ensure the development and enhancement of electronic and electrical industries and to overcome obstacles to them in addition of exchanging experiences between them and international companies. , And the products produced by these companies of high quality spread in all the global markets and of these products that are manufactured in Malaysia: – Electronic semiconductors and integrated circuits, transistors and valves, Manufacturing of electrical and electronic components, computer spare parts , household appliances , electrical appliances of cables, connectors, wires, LED lamps, car batteries and other products. These products meet international standards, and Malaysian electronic industries are now turning to the curve of environmentally friendly products that can be recycled after its use.

Transformative Industries:
The government supports Malaysian companies with generous support to further develop of its manufacturing activities, increase their R & D activity and develop the full range of electronic and electrical industries. These sectors are classified as the main engine of the Malaysian economy, contributing to the growth of GDP and foreign investment revenues in addition to accommodating employees in various departments, It is a key factor in the economy and contributing to Malaysia’s industrial and technological progress towards high-income countries by focusing on high value and activities of transformative industries that are high growth sectors. Malaysian companies working in this sector are able to develop its capabilities and skills in terms of manufacturing, assembly and redesign in many sub-sectors such as electronic components and spare parts, industrial electronics and consumer electronics.
We conclude that Malaysia is one of the success stories achieved by developing countries in applying the role of science and work in the Renaissance.

we summarize the factors that have helped the success of the Malaysian Renaissance experience in all aspects of life…
1. The political climate of the State of Malaysia, which represents a special situation among its neighbors, but among many developing countries, characterized by the creation of suitable conditions to the acceleration of economic development.
2. Decisions are always made through ongoing negotiations between ethnically based political parties, making Malaysia’s policy characterized as democratic.
3. Malaysia has adopted a clear policy against nuclear testing, which has demonstrated its strong opposition to France’s nuclear experience and its campaign that culminated in the 1995 signing of the ten South-East Asian countries participating in the ASEAN GATHERING on the South-East Asian Nuclear-Weapon –Free Zone Declaration This has helped to direct the funding available for development primarily instead of spending on armament and weapons of mass destruction.
4. The expenditure on infrastructure projects is the foundation, which is the path of the economy to stable growth in the coming years, thus increasing the ranking of Malaysia to become one of the first five economies in the world in the field of strength of the local economy.
5. Malaysia has adopted a largely self-reliant strategy by relying on indigenous people who represent the Muslim majority of the population.
6. Malaysia’s interest in improving the social indicators of Islamic human capital by improving the living, educational and health conditions of indigenous people, whether indigenous or Muslim immigrants, to whom the authorities welcome their resettlement.
7. Malaysia has relied heavily on internal resources in providing the necessary capital to finance investments. The GDP increased by 40% between 1970 and 1993, while total domestic investment increased by 50% during the same period. In the view of the professor of economics at Cairo University, Dr. Mahmoud Abdul Fadil, that while the countries of the developing world suffer from the triangle of disease, poverty and ignorance, Malaysia has had another triad pushed for development since the early 1980s , the triangle of growth and modernization and industrialization, as these three economic priorities and the concept of “Malaysia as a partnership” was also emphasized as if it were a business conglomerate between the public and private sectors on the one hand and a partnership that combines between multi-ethnic and social groups on the other.
• Malaysia has a future vision for development and economic activity through consecutive and integrated five-year plans since independence and till now, and Malaysia’s early readiness to enter the 21st century by planning Malaysia 2020 and working to achieve what has been planned.
• There is a high degree of diversity in the industrial structure and its coverage of most branches of industrial activity (industries: consumer – intermediate – capital). This has been the outcome of the success of Malaysia’s development policies, which can be considered both a cause and a consequence.

Shatha Khalil
Researcher in Economic Unit
Rawabet Center for Research and Strategic Studies