EIU - Malaysia

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Country Report

Malaysia

Generated on December 9th 2012

Economist Intelligence Unit26 Red Lion SquareLondon WC1R 4HQUnited Kingdom

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Malaysia

ForecastHighlights

Outlook for 2013-17 Political stability

Election watch

International relations

Policy trends

Fiscal policy

Monetary policy

International assumptions

Economic growth

Inflation

Exchange rates

External sector

Forecast summary

Data and charts Annual data and forecast

Quarterly data

Monthly data

Annual trends charts

Monthly trends charts

Comparative economic indicators

Summary Basic data

Political structure

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Malaysia 1

Country Report December 2012 www.eiu.com © Economist Intelligence Unit Limited 2012

HighlightsEditor: Fung Siu

Forecast Closing Date: December 2, 2012

Outlook for 2013-17

The political scene is likely to be dominated by preparations for the next general election. The EconomistIntelligence Unit expects the government to complete its full term, which ends in April 2013.We expect the ruling Barisan Nasional (BN) coalition to win the next election. The BN hopes to regain the two-thirds majority in the lower house that it lost at the 2008 poll, but it will struggle to win enough seats toachieve this goal.The government will fail to balance the budget in 2013-17 as it continues to allocate funds to infrastructureprojects. The monetary authorities will maintain a neutral stance in 2013, but will tighten policy from 2014onwards.The economy is expected to remain on a sustainable growth path in the forecast period. The pace of expansionis forecast to slow slightly in 2013, to 4.5%, from an estimated 5.1% in 2012.Annual inflation will average 3% in 2013-17, compared with 2.5% in 2008-12. The planned introduction of a newconsumption tax and the gradual withdrawal of subsidies are expected to push up consumer prices from 2013.The current account will remain in surplus in the forecast period, to the tune of 6.2% of GDP on average,compared with an estimated 6.8% in 2012.

Review

A summit of the Association of South-East Asian Nations (ASEAN) took place in Cambodia in November.Members (including Malaysia) failed to reach consensus on the issue of competing territorial claims in theSouth China Sea.A study presented to the government of Selangor in November expresses concerns over the state's inflatedvoter list.A programme of infrastructure spending and targeted hand-outs helped to boost economic growth in the thirdquarter of 2012, when real GDP expanded by 5.2% year on year, following growth of 5.6% in the secondquarter.The currentaccount surplus stood at M$9.5bn (US$3.1bn) in the third quarter of 2012—down slightly from

M$9.6bn in the second quarter, and the smallest surplus since the third quarter of 2002.Palm oil prices have been under pressure during the past year or so. An expected fall in global commodityprices in 2013 does not bode well for the future of Malaysia's palm oil sector.The country continues to boast one of the lowest rates of consumer price inflation in Asia. The annual rate ofinflation stood at 1.3% in October, unchanged from September.

Malaysia 2


Outlook for 2013-17

Political stabilityThe Barisan Nasional (BN) coalition government is expected complete its full term, which ends in April 2013. TheEconomist Intelligence Unit forecasts that the BN will maintain its hold on power throughout 2013-17, securing victoryin the next general election but not attaining the two-thirds parliamentary majority that it will be seeking. Politicalstability in the coming five years will largely be determined by the levels of internal discipline within both theruling BN and the main opposition Pakatan Rakyat (PR) alliance. The BN is tightly controlled by its largestconstituent party, the United Malays National Organisation (UMNO). Although the results of the last generalelection, in March 2008, revealed that UMNO could no longer count on the strong support of the majority of ethnicMalays, the PR does not offer a sufficiently credible and stable alternative to the BN to give it a strong chance ofwinning enough seats at the next election to form a majority government.

Maintaining internal discipline will be crucial if the BN does not secure a two-thirds parliamentary majority at thecoming election. Under this scenario, the PR alliance is likely to encourage members of parliament (MPs) to "partyhop" as part of a wider plan to wrest control from the BN. This strategy failed in the months following the 2008election, partly because the PR set itself the ambitious target of persuading some 50 MPs to switch political camps.However, the PR's chances of success could increase dramatically if the BN suffers losses and finds itself with merelya simple majority. A two-thirds majority would allow the government to make amendments to the constitution. Toachieve this, the BN would need to win at least 12 more seats than it currently holds. The PR has 75 seats at present,and would need to win 37 more to secure a majority. Both scenarios are unlikely to materialise.

If the BN fails to win at least as many seats as it holds currently at the approaching election, this could damage thecredibility of the prime minister, Najib Razak, and might put at risk his continued tenure of the post as well as hispresidency of UMNO. Under this scenario, conservative elements in the ruling party who are already unhappy withMr Najib's market reform programme and would prefer to maintain policies favouring bumiputera (ethnic Malays andother indigenous peoples) are likely to conspire to oust Mr Najib at UMNO's internal leadership polls next year, whichare likely to be held after the general election. The most likely contender to take over as party head is the deputy primeminister, Muhyiddin Yassin, who would appeal to conservatives in UMNO.

The stability of the PR was improved by the acquittal of Anwar Ibrahim, the leader of the opposition alliance, of asodomy charge in January 2012. Mr Anwar is regarded as the unifying figure who holds together the PR, whichincludes the reformist, multicultural Parti Keadilan Rakyat, the conservative Islamist Parti Islam se-Malaysia and theethnic-Chinese-dominated Democratic Action Party. In the short term, the PR's member parties are likely to present aunited front as they prepare for the general election. However, Mr Anwar has stated that he will step down if the PRfails to secure a majority. Those in the PR who have expressed discontent with Mr Anwar's leadership style willwelcome a challenge to his position, but such a development could bring into sharper relief the ideological differencesbetween the three PR parties. In the absence of an obvious successor to Mr Anwar, a leadership contest couldpresage the demise of the opposition alliance.

Mass protests are not frequent in Malaysia. On occasions when they have occurred, most have been sparked bypolitical concerns. In April a non-governmental group, the Coalition for Free and Fair Elections (Bersih), organised amass rally to press for reforms to the electoral system. Another protest organised by Bersih cannot be ruled outbefore the next election, but we do not expect such an event to affect political stability, primarily because thegovernment will retain firm control over the police, who can be deployed quickly to reinforce law and order (if in aheavy-handed manner).

Malaysia 3


Election watchThe next parliamentary election must be held by April 2013. Mr Najib is likely to make the performance of the economya central plank of the BN's campaign, and will emphasis the fact that, despite the gloomy global economic situation,the government's policies have helped to bolster growth in the domestic economy. The BN will also carefully craft itscampaign to appeal to voters in state assemblies that it lost to the PR at the last election. The opposition alliance,meanwhile, is likely to focus its election campaign on the need to uphold the political and economic rights andinterests of all Malaysians.

The election will see the cash-strapped PR pitted against the BN's well-oiled political machine. The BN is stronglypositioned to win the election, although the likely size of its margin of victory remains unclear. Mr Najib has workedhard to present himself as being committed to economic and social reform. However, this stance has yet to resonatewith Malaysia's ethnic minorities, who make up around one-third of the electorate and who mostly voted for the PR inthe 2008 general election.

International relationsRelations with Singapore have become closer in recent years, and we expect this trend to continue during the forecastperiod, particularly in the area of economic ties. China will become an increasingly important trading partner in the nextfive years. The Malaysian government's apprehension about China's growing economic influence is mixed withambivalence towards the ethnic-Chinese members of its own population and an awareness of the need to attractinvestment. Mr Najib has adopted a conciliatory stance on the issue of Malaysia's maritime claims in the South ChinaSea and the competing claims of other members of the Association of South-East Asian Nations (ASEAN), as well asChina. Mr Najib is keen to achieve a resolution of the dispute with China through dialogue under existing regionalsecurity mechanisms. Malaysia also wishes to strengthen its ties with Australia. Growth in trade with the lattercountry is expected to accelerate in 2013-17, following the signing of a bilateral free-trade agreement in May 2012.

Policy trendsAssuming that the BN wins the next election, its policy agenda over the next five years will centre on a host ofinitiatives outlined in two road maps, aimed at raising income levels and transforming Malaysia into a high-incomecountry by 2020. (High-income countries are defined as those with gross national income per head of at leastUS$12,476, based on 2011 data). One of these plans is the Government Transformation Programme, which outlinesseven main initiatives, including tackling corruption, improving education and upgrading basic rural infrastructure.The other is the Economic Transformation Programme, which identifies 12 national key economic areas (NKEAs). Thegovernment considers the NKEAs, which include tourism and palm oil cultivation, to be the sectors with the greatestpotential to boost economic growth. The Tenth Malaysia Plan (10MP), a spending plan for 2011-15, will support theimplementation of these programmes.

The next government is expected to continue with the current administration's plans for market reform. It is likely tofocus on a few specific reform issues, including the phasing out of price controls and subsidies—a process that the

government will struggle to complete, as it will meet strong resistance from all sections of Malaysian society. Thenext administration will also press ahead with changes to Malaysia's positive-discrimination policies, which favourbumiputera, relaxing further the requirement that companies offer minority equity stakes to bumiputera (so far the rulehas been abolished in some 40 services subsectors). The divestment of state-owned enterprises is expected tocontinue in 2013-17, as both the BN and the PR are in favour of selling off stakes in more than 30 such entities.

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Fiscal policyThe next government will struggle to balance the budget in 2013-17 as it continues to allocate funds to infrastructureprojects. In addition, progress on the subsidy-rationalisation programme is likely to be slow. The intended completiondate for the scheme, which was introduced by the BN government in 2010, has already been put back to 2017, from2015 originally. The government forecasts a slight narrowing of the budget deficit in 2013, to M$40bn (US$13.2bn),equivalent to 4% of GDP, from an estimated 4.5% in 2012. However, we forecast the deficit at 4.2% of GDP in 2013, aswe believe that the government will fail to prevent a significant increase in the subsidy bill, amid elevated global oilprices and a rise in the cost of emoluments following the BN's decision in September 2012 to give civil servantsbonuses for 2013 equal to one and a half months' pay. Assuming that the authorities manage to widen the tax basethrough the introduction (probably in late 2013) of a goods and services tax (GST), and that rates of other direct taxes—such as income and corporate tax—are not lowered, we expect the deficit to narrow slightly in the remainder of the

forecast period, to an average of 4% of GDP.

Monetary policyWe expect Bank Negara Malaysia (BNM, the central bank) to keep its main policy interest rate, the overnight policyrate (OPR), unchanged at 3% in the early part of the forecast period. Given that global economic growth is likely to belacklustre in 2013, BNM will probably place greater emphasis on measures to boost economic growth. Malaysia's wasone of the first central banks in Asia to normalise monetary policy following the 2008-09 global financial crisis, but ithas kept the OPR steady at 3% since June 2011. Anaemic global economic growth will have an adverse impact onMalaysia's export-dependent economy, as exports of goods and services are equivalent to around 90% of GDP.Despite this, BNM has been reluctant to join the growing number of central banks in the region that have sanctionedcuts in interest rates. This is primarily because domestic demand is expanding at a fast clip—growth reached 11.4%

year on year in the third quarter of 2012—despite the weakness of the external environment. A pickup in global

economic activity in 2014, coupled with continued expansion in domestic demand, is expected to prompt BNM totighten monetary policy in that year. However, given the central bank's cautious approach, the initial rate rises duringany new phase of monetary tightening are likely to be modest.

International assumptions 2012 2013 2014 2015 2016 2017

Economic growth (%)

US GDP 2.1 2.1 2.3 2.3 2.4 2.4

OECD GDP 1.3 1.4 2.1 2.1 2.2 2.2

World GDP 2.2 2.3 2.8 2.9 3.0 3.0

World trade 2.9 4.3 5.2 5.5 5.5 5.6

Inflation indicators (%)

US CPI 2.1 2.5 2.4 2.2 2.3 2.3

OECD CPI 2.2 2.3 2.3 2.2 2.2 2.2

Manufactures (measured in US$) -0.5 0.4 0.7 0.8 1.2 1.8

Oil (Brent; US$/b) 111.9 103.8 104.5 107.3 110.0 115.0

Non-oil commodities (measured in US$) -10.2 1.0 -1.3 -0.7 2.0 2.1

Financial variables

US$ 3-month commercial paper rate (av; %) 0.2 0.2 0.2 0.3 1.2 2.2

¥ 3month money market rate (av; %) 0.2 0.2 0.3 0.6 1.1 1.4

Exchange rate ¥:US$ (av) 79.4 82.6 86.7 89.0 92.2 91.4

Exchange rate M$:US$ (av) 3.09 3.05 2.97 2.87 2.84 2.82

Malaysia 5


Economic growthThe economy is expected to remain on a sustainable growth path in 2013-17. Its rate of expansion will slow slightly in2013, to 4.5%, compared with an estimated 5.2% in 2012. Real GDP grew by 5.2% in the third quarter of this year. Thismeans that even if the pace of expansion slows slightly in the fourth quarter, in 2012 as a whole the economy is set togrow at least as fast as it did in 2011.

The forecast slowdown in growth in 2013 will partly reflect a return to trend for gross fixed investment, which surgedin the first half of 2012 as a number of large infrastructure projects commenced. It will also be a consequence of thecontinued drag exerted by the external sector, which is expected to struggle to expand sales significantly next year.However, economic expansion in 2013 will be supported by private consumption, itself underpinned by one-offpayments by the government to various socioeconomic groups and also to Malaysia's 1.3m civil servants, who makeup around 10% of the national workforce.

Domestic demand will continue to grow strongly in 2014-17. Private consumption will be boosted by the strength ofthe local labour market, while the commencement of other large infrastructure projects will help to support growth ininvestment spending. Despite the government's efforts to consolidate its finances, real government consumption(which will be guided by the 10MP) will increase by an average of 7.1% annually in 2014-17. Exports of goods andservices are meanwhile expected to rise by 7.3% a year on average in the period. However, the contribution of netexports to economic expansion will remain negative as growth in imports of goods and services continues to outpaceexport growth.

Economic growth% 2012a 2013b 2014b 2015b 2016b 2017b

GDP 5.2 4.5 5.3 5.2 5.6 5.5

Private consumption 8.3 7.1 6.4 6.9 7.4 7.6

Government consumption 8.3 7.1 6.3 7.4 6.8 7.8

Gross fixed investment 19.8 7.7 7.8 8.6 8.8 8.5

Exports of goods & services 1.2 3.8 5.8 6.9 7.9 8.7

Imports of goods & services 7.4 5.4 7.5 9.3 10.2 11.1

Domestic demand 12.1 6.2 7.0 7.4 7.8 7.9

Agriculture 2.0 2.6 3.0 3.1 2.8 3.0

Industry 3.8 5.0 5.2 5.6 5.6 5.6

Services 6.7 4.4 5.7 5.2 6.0 5.7a Economist Intelligence Unit estimates. b Economist Intelligence Unit forecasts.

InflationThe expected strengthening of the ringgit against the US dollar, together with moderating global fuel and food prices,should help to contain inflationary pressures in Malaysia in 2013. However, the government's moves to rationalise itsextensive subsidy scheme will put upward pressure on prices, with annual inflation averaging 2.2% in 2013, comparedwith an estimated 1.7% in 2012. That said, rises in domestic energy and fuel costs are likely to occur only gradually.From 2014 another source of inflationary impetus will be the GST, which the government will attempt to introducetowards the end of 2013. One factor that will help to keep price rises in check in 2014-17 will be the forecast steadyappreciation of the ringgit against the US dollar. Given that most of Malaysia's imports and exports are denominated inUS dollars, imports will become cheaper in local-currency terms as a consequence of the increase in the localcurrency's value.

Exchange ratesFollowing a volatile performance during much of 2012, the exchange rate is expected to stabilise in 2013, when weforecast that it will strengthen slightly, to an average of M$3.05:US$1. Stronger macroeconomic fundamentals inMalaysia than in the US in the remainder of the forecast period are expected to push up the ringgit's value against theUS dollar to an average of M$2.82:US$1 in 2017. The central bank will maintain its current exchange-rate regime, underwhich the ringgit is subject to a managed float against a trade-weighted basket of currencies. Offshore trading of theringgit is prohibited under a rule imposed in the wake of the 1997-98 Asian financial crisis. However, expected furtherprogress towards regional economic integration makes it likely that BNM will allow the ringgit to be traded offshore infuture, and possibly by 2017.

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External sectorAt just 3.7%, merchandise export growth is forecast to remain sluggish in 2013 as economic activity in the euro zone—

one of Malaysia's main export markets—remains feeble (it is forecast to contract by 0.2% in real terms next year). A

gradual improvement in external conditions from the second half of 2013 is expected to boost overseas sales, as wellas leading to an increase in Malaysian demand for imports of intermediate goods used in manufacturing for export.Merchandise import growth will also be supported by firm domestic demand next year, and the pace of expansion inimports in value terms will be faster than that in exports. Owing to a slight fall in the trade surplus and persistentdeficits on the income and services accounts, the current-account surplus is expected to fall to the equivalent of 6%of GDP in 2013, from an estimated 6.8% in 2012. Subsequently, sustained global trade expansion will result in a rise inthe current-account surplus to an average of 6.2% of GDP in 2014-17.

Forecast summaryForecast summary(% unless otherwise indicated)

2012a 2013b 2014b 2015b 2016b 2017b

Real GDP growth 5.2 4.5 5.3 5.2 5.6 5.5

Industrial production growth 3.5 3.3 4.5 5.1 5.2 5.6

Gross agricultural production growth 2.0 2.6 3.0 3.1 2.8 3.0

Unemployment rate (av) 3.0 2.9 2.8 2.7 2.6 2.5

Consumer price inflation (av) 1.7 2.2 3.0 3.2 3.3 3.2

Consumer price inflation (end-period) 1.4 2.6 3.1 3.3 3.3 3.2

Base lending rate 4.8 4.9 5.4 5.8 6.1 6.1

Central government balance (% of GDP) -4.7 -4.2 -4.2 -4.1 -4.0 -3.8

Exports of goods fob (US$ bn) 226.0 234.4 250.3 271.0 293.8 322.9

Imports of goods fob (US$ bn) -184.4 -192.1 -206.2 -221.1 -240.6 -267.5

Current-account balance (US$ bn) 21.0 20.2 21.9 27.4 29.2 33.1

Current-account balance (% of GDP) 6.8 6.0 5.8 6.5 6.2 6.4

External debt (end-period; US$ bn) 92.9 99.0 107.7 114.4 121.5 131.2

Exchange rate M$:US$ (av) 3.09 3.05 2.97 2.87 2.84 2.82

Exchange rate M$:US$ (end-period) 3.05 3.00 2.92 2.86 2.83 2.81

Exchange rate M$:¥100 (av) 3.89 3.69 3.43 3.23 3.08 3.09

Exchange rate M$:€ (endperiod) 3.93 3.77 3.60 3.58 3.57 3.54a Economist Intelligence Unit estimates. b Economist Intelligence Unit forecasts.

Malaysia 7


Data and charts

Annual data and forecast 2008a 2009a 2010a 2011a 2012b 2013c 2014c

GDP

Nominal GDP (US$ m) 231.0 202.3 246.8 287.9 307.7 338.0 377.0

Nominal GDP (M$ bn) 769.9 712.9 795.0 881.1 950.8 1,031.0 1,119.8

Real GDP growth (%) 4.8 -1.5 7.2 5.1 5.2 4.5 5.3

Expenditure on GDP (% real change)

Private consumption 8.7 0.6 6.6 7.1 8.3 7.1 6.4

Government consumption 6.9 4.9 2.9 16.1 8.3 7.1 6.3

Gross fixed investment 2.4 -2.7 10.4 6.5 19.8 7.7 7.8

Exports of goods & services 1.6 -10.9 11.3 4.2 1.2 3.8 5.8

Imports of goods & services 2.3 -12.7 15.6 6.2 7.4 5.4 7.5

Origin of GDP (% real change)

Agriculture 3.8 0.1 2.4 5.9 2.0 2.6 3.0

Industry 0.2 -6.8 8.0 2.1 3.8 5.0 5.2

Services 8.9 3.0 7.2 7.2 6.7 4.4 5.7

Population and income

Population (m) 27.5 27.9 28.6 29.0b 29.3 29.7 30.1

GDP per head (US$ at PPP) 14,543 14,264 15,113 16,009b 16,910 17,828 18,926

Fiscal indicators (% of GDP)

Public-sector balance -4.6 -6.7 -5.4 -4.8 -4.7 -4.2 -4.2

Public-sector debt interest payments 1.7 2.0 2.0 2.0 2.4 2.3 2.4

Public-sector primary balance -3.0 -4.7 -3.5 -2.8 -2.3 -1.9 -1.8

Net public debt 39.8 50.8 51.2 51.8 52.9 53.3 53.5

Prices and financial indicators

Exchange rate M$:US$ (end-period) 3.46 3.42 3.08 3.18 3.05 3.00 2.92

Consumer prices (end-period; % change) 4.5 1.0 2.1 3.0 1.4 2.6 3.1

Producer prices (av; % change) 10.2 -7.3 5.6 9.0 1.5 3.7 4.5

Stock of money M1 (% change) 8.2 9.9 11.7 15.1 12.9 14.3 14.3

Stock of money M2 (% change) 13.3 9.5 7.1 14.6 14.4 15.2 15.6

Lending interest rate (end-period; %) 5.9 4.8 4.9 4.8 4.8 4.9 5.4

Current account (US$ m)

Trade balance 51,261 40,254 41,672 48,850 41,650 42,287 44,115

Goods: exports fob 199,733 157,655 198,954 227,481 226,040 234,371 250,289

Goods: imports fob -148,472 -117,402 -157,283 -178,631 -184,390 -192,084 -206,174

Services balance 51 1,297 544 -2,728 -5,316 -8,387 -8,377

Income balance -7,137 -4,169 -8,142 -7,201 -8,545 -6,948 -6,750

Current transfers balance -5,262 -5,580 -6,783 -6,896 -6,754 -6,744 -7,108

Current-account balance 38,914 31,801 27,291 32,025 21,035 20,208 21,880

External debt (US$ m)

Debt stock 66,074 66,272 81,497 89,977b 92,937 99,002 107,724

Debt service paid 8,778 12,057 13,284 11,380b 9,756 9,472 9,824

Principal repayments 6,258 9,793 11,349 9,221b 7,428 7,112 7,313

Interest 2,521 2,264 1,935 2,159b 2,328 2,360 2,511

Debt service due 8,778 12,057 13,284 11,380b 9,756 9,472 9,824

International reserves (US$ m)

Total international reserves 91,528 96,713 106,525 133,618 138,746 140,572 148,230a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts.Source: IMF, International Financial Statistics.

Malaysia 8


Quarterly data 2010 2011 2012

4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr

Federal government finance (M$ m)

Revenue 45,818 39,759 49,649 48,347 47,664 47,889 50,747 n/a

Expenditure 64,008 44,974 48,824 61,104 73,026 53,720 58,527 n/a

Current balance -18,190 -5,215 825 -12,757 -25,362 -5,831 -7,780 n/a

Output

GDP at constant 2000 prices (M$ m) 174,805 170,122 174,395 180,776 183,968 178,768 184,182 190,242

GDP at constant 2000 prices (% change, year on year) 4.8 5.0 4.3 5.7 5.2 5.1 5.6 5.2

Industrial production index (2000=100) 108.1 107.6 105.9 109.5 110.6 111.4 111.2 112.1

Industrial production index (% change, year on year) 3.7 2.2 -1.7 2.1 2.3 3.5 4.9 2.4

Prices

Consumer prices (2005=100) 100.9 102.2 102.9 103.6 104.1 104.5 104.7 105.0

Consumer prices (% change, year on year) 2.0 2.8 3.3 3.4 3.2 2.3 1.7 1.4

Producer prices (2000=100) 124.0 129.4 133.0 133.7 133.2 134.2 134.0 n/a

Producer prices (% change, year on year) 4.8 7.4 10.2 10.9 7.5 3.8 0.8 n/a

Financial indicators

Exchange rate M$:US$ (av) 3.11 3.05 3.02 3.02 3.15 3.06 3.11 3.12

Exchange rate M$:US$ (end-period) 3.08 3.03 3.02 3.19 3.18 3.07 3.19 3.07

Deposit rate (av; %) 2.7 2.7 3.0 3.0 3.0 3.0 3.0 3.0

Lending rate (av; %) 4.9 5.0 4.9 4.9 4.8 4.7 4.9 4.8

Money market rate (av; %) 3.0 3.0 3.3 3.3 3.2 3.1 3.1 n/a

M1 (end-period; M$ bn) 224.4 229.4 239.4 241.9 258.2 259.5 263.1 n/a

M1 (% change, year on year) 11.7 14.0 14.5 13.3 15.1 13.2 9.9 n/a

M2 (end-period; M$ bn) 1,060.2 1,088.6 1,132.1 1,162.6 1,214.9 1,254.6 1,285.9 n/a

M2 (% change, year on year) 7.2 8.6 12.4 13.0 14.6 15.2 13.6 n/a

KLSE composite index (end-period; Apr 4th 1986=100) 1,518.9 1,545.1 1,579.1 1,387.1 1,530.7 1,596.3 1,599.2 1,636.7

KLSE composite index (% change, year on year) 32.5 26.6 29.6 -8.3 -2.2 1.9 -4.1 22.8

Sectoral trends

Electronic & electrical products index (2005=100) 128.2 133.3 144.5 147.3 151.3 144.0 152.3 155.7

Electronic & electrical products index (% change, year on year) 31.8 10.5 5.6 7.8 18.0 8.0 5.4 5.7

Mining index (2000=100) 93.1 91.7 81.4 86.1 89.1 91.8 83.2 85.1

Mining index (% change, year on year) -3.0 -5.9 -12.2 -7.1 -4.3 0.1 2.2 -1.1

Foreign trade (M$ m)

Exports fob 164,803 167,236 172,720 176,975 180,931 173,723 177,489 174,290

Imports cif 139,300 134,782 143,723 146,373 148,749 143,940 156,182 157,118

Trade balance 25,503 32,454 28,997 30,602 32,183 29,783 21,307 17,173

Foreign payments

Current-account balance (M$ m) 23,768 24,340 22,961 27,436 22,371 18,076 9,595 9,505

Reserves excl gold (end-period; US$ m) 104,884 112,161 132,568 129,070 131,780 133,749 132,384 135,374Source: IMF, International Financial Statistics.

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Monthly data Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Exchange rate M$:US$ (av)

2010 3.38 3.42 3.33 3.21 3.25 3.26 3.21 3.15 3.11 3.10 3.12 3.13

2011 3.06 3.04 3.04 3.01 3.01 3.03 3.00 2.99 3.09 3.14 3.15 3.16

2012 3.11 3.02 3.04 3.06 3.10 3.18 3.17 3.12 3.08 3.06 3.06 n/a

Exchange rate M$:US$ (end-period)

2010 3.41 3.41 3.27 3.19 3.25 3.26 3.19 3.14 3.09 3.11 3.16 3.08

2011 3.06 3.05 3.03 2.97 3.01 3.02 2.96 2.98 3.19 3.07 3.17 3.18

2012 3.05 3.00 3.07 3.03 3.18 3.19 3.14 3.13 3.07 3.06 3.04 n/a

Real effective exchange rate (2000=100; CPI basis)

2010 80.39 80.12 82.06 85.03 85.16 85.35 85.50 86.12 86.46 84.61 84.28 84.69

2011 85.98 86.09 85.65 85.42 84.93 84.38 84.81 84.71 83.29 82.55 82.52 82.85

2012 83.85 85.47 85.36 84.85 84.42 82.95 82.93 83.69 n/a n/a n/a n/a

Money market rate (av; %)

2010 2.2 2.2 2.5 2.6 2.7 2.8 2.9 3.0 3.0 3.0 3.0 3.0

2011 3.0 3.0 3.0 3.2 3.3 3.4 3.3 3.3 3.3 3.3 3.2 3.2

2012 3.1 3.1 3.1 3.1 3.2 3.2 3.2 n/a n/a n/a n/a n/a

Money supply M1 (end-period; % change, year on year)

2010 10.7 15.3 12.0 8.9 11.2 12.6 10.7 13.9 11.5 11.6 9.9 11.7

2011 17.9 13.2 14.0 16.2 13.1 14.5 14.5 13.7 13.3 16.6 13.8 15.1

2012 9.9 9.8 13.2 13.2 11.0 9.9 14.0 10.6 n/a n/a n/a n/a

Money supply M2 (end-period; % change, year on year)

2010 8.2 8.4 8.8 8.5 9.6 9.2 8.3 8.2 8.3 8.4 8.1 7.2

2011 9.1 8.3 8.6 10.7 11.6 12.4 11.6 10.8 13.0 11.7 12.7 14.6

2012 14.7 16.0 15.2 15.2 13.8 13.6 14.4 14.8 n/a n/a n/a n/a

Industrial production (% change, year on year)

2010 13.1 4.8 14.1 9.6 13.0 9.2 2.9 4.1 5.8 2.6 4.2 4.4

2011 0.5 4.5 2.0 -0.3 -5.2 0.6 -0.2 3.5 2.8 2.7 1.9 2.4

2012 0.4 8.2 2.4 3.2 7.7 3.9 2.5 -0.2 4.8 n/a n/a n/a

KLSE composite index (end-period; Apr 4th 1986=100)

2010 1,259 1,271 1,321 1,346 1,285 1,314 1,361 1,422 1,464 1,506 1,485 1,519

2011 1,520 1,491 1,545 1,535 1,558 1,579 1,549 1,447 1,387 1,492 1,472 1,531

2012 1,521 1,570 1,596 1,571 1,581 1,599 1,632 1,646 1,637 1,673 1,611 n/a

Consumer prices (av; % change, year on year)

2010 1.4 1.2 1.4 1.6 1.7 1.6 1.8 2.0 1.8 1.9 1.9 2.1

2011 2.4 2.9 3.0 3.2 3.3 3.5 3.4 3.3 3.4 3.4 3.3 3.0

2012 2.7 2.2 2.1 1.9 1.7 1.6 1.4 1.4 1.3 1.3 n/a n/a

Producer prices (av; % change, year on year)

2010 4.2 5.9 9.0 7.4 5.9 5.2 5.6 4.8 4.9 4.4 4.6 5.5

2011 6.9 7.2 7.9 9.2 10.6 10.7 10.8 10.8 11.2 9.1 7.1 6.2

2012 4.1 4.3 2.9 2.3 0.9 -0.9 -0.2 -0.5 n/a n/a n/a n/a

Total exports fob (M$ m)

2010 52,527 46,641 59,433 51,896 52,290 52,785 55,330 52,795 50,322 54,904 52,637 57,262

2011 54,683 50,074 62,479 58,315 55,355 59,050 59,657 58,623 58,696 63,347 56,821 60,764

2012 55,070 56,865 61,787 57,737 58,778 60,975 58,118 55,965 60,208 n/a n/a n/a

Total imports cif (M$ m)

2010 39,446 35,105 45,062 42,707 44,094 46,744 48,386 44,523 43,463 48,123 43,700 47,477

2011 44,904 39,233 50,645 46,778 46,604 50,341 49,781 47,549 49,043 48,940 47,358 52,451

2012 46,321 46,286 51,333 50,231 54,175 51,776 54,504 48,877 53,737 n/a n/a n/a

Trade balance fob-cif (M$ m)

2010 13,081 11,536 14,371 9,189 8,196 6,041 6,944 8,272 6,859 6,781 8,937 9,785

2011 9,779 10,841 11,834 11,537 8,750 8,710 9,876 11,074 9,652 14,407 9,463 8,313

2012 8,749 10,579 10,454 7,506 4,603 9,198 3,613 7,089 6,471 n/a n/a n/a

Foreign-exchange reserves excl gold (US$ m)

2010 95,656 95,506 94,003 94,683 94,110 93,336 93,650 93,861 99,205 103,825 104,227 104,884

2011 106,513 108,194 112,161 128,371 131,100 132,568 133,674 134,534 129,070 132,919 132,857 131,780

2012 132,272 132,930 133,749 133,991 133,960 132,384 132,598 133,122 135,374 n/a n/a n/aSources: IMF, International Financial Statistics; Haver Analytics.

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Annual trends charts

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Monthly trends charts

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Comparative economic indicators

Basic data

Total area

330,252 sq km

Population

29.3m (2012 mid-year government estimate)

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Main towns

Population in ’000 (2009):

Kuala Lumpur (capital): 1,655

Subang Jaya: 1,175

Klang: 1,004

Johor Baru: 868

Ampang Jaya: 724

Climate

Tropical

Weather in Kuala Lumpur (altitude 39 metres)

Hottest months, April and May, 2333°C (average daily minimum and maximum); coldest month, December, 2232°C;

driest month, July, 99 mm average rainfall; wettest month, April, 292 mm average rainfall

Languages

Malay (the official language); other main languages: Chinese (Min Nan, Hakka, Mandarin and Min Dong), English,Tamil, Iban (in Sarawak), Banjar (in Sabah). There are 140 languages spoken in Malaysia (peninsular Malaysia 40,Sabah 54, Sarawak 46)

Measures

Malaysia uses the metric system, but some British weights and measures are still in use. Local measures include:

1 pikul = 25 gantang = 100 katis = 60.48 kg

1 koyan = 40 pikul = 2.419 tonnes

Currency

Ringgit or Malaysian dollar (M$ or RM); M$1 = 100 sen (cents). Average exchange rate in 2011: M$3.06:US$1

Time

Peninsular Malaysia: 7 hours ahead of GMT; Sabah and Sarawak: 8 hours ahead of GMT

Public holidays

January 1st (New Year’s Day); 23rd24th (Chinese New Year); February 6th (the Prophet Mohammed’s birthday

observance); May 1st (Labour Day); June 2nd (the king’s birthday); August 20th21st (Hari Raya Puasa); 31st

(National Day); September 17th (Malaysia Day); November 13th (Deepavali); November 6th-7th (Hari Raya Qurban);November 15th (Awal Muharam), December 25th (Christmas Day)

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Political structure

Official name

Federation of Malaysia

Form of state

Federated constitutional monarchy

The executive

The king appoints a prime minister and, on the prime minister’s advice, the cabinet

Head of state

The yang di-pertuan agong (king or supreme sovereign), elected by and from among the nine hereditary rulers ofMalaysia’s states. In practice the post is rotated every five years

National legislature

Bicameral federal parliament. The Senate (Dewan Negara, the upper house) has 70 members—26 elected from the state

legislatures, and 44 appointed by the king. The House of Representatives (Dewan Rakyat, the lower house) has 222directly elected members. Senators serve six-year terms and members of the lower house five-year terms

State governments

There are state governments in each of Malaysia's 13 states, in nine of which the head of state is a hereditary ruler.Each state has its own constitution, a council of state or cabinet with executive authority and a legislature that dealswith matters not reserved to the federal parliament. There are also three federal territories, namely Kuala Lumpur,Labuan and Putrajaya

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National elections

A general election took place in March 2008. The next poll must be held by April 2013

National government

The Barisan Nasional (BN), the governing 13party coalition—the main element of which is the United Malays

National Organisation (UMNO)—holds 135 of the 222 seats in the lower house. The BN has the simple majority that it

needs in order to pass legislation but not the two-thirds majority that would enable it to amend the constitution

Main political organisations

Government—the main parties in the BN are UMNO, the Malaysian Chinese Association (MCA), the Malaysian

Indian Congress (MIC), Parti Gerakan Rakyat Malaysia (Gerakan), Parti Pesaka Bumiputera Bersatu (PPBB) and theSarawak United People’s Party (SUPP). Opposition—the three founding parties in the Pakatan Rakyat (PR) alliance are

Parti Islam se-Malaysia (PAS), the Democratic Action Party (DAP) and Parti Keadilan Rakyat (PKR)

Key ministers

Prime minister & finance minister: Najib Razak

Deputy prime minister & education minister: Muhyiddin Yassin

Agriculture: Noh Omar

Defence: Ahmad Zahid Hamidi

Domestic trade, co-operation & consumer affairs: Ismail Sabri Yaakob

Energy, green technology & water: Peter Chin Fah Kui

Foreign affairs: Anifah Aman

Health: Liow Tiong Lai

Home affairs: Hishammuddin Hussein

Housing & local government: Chor Chee Heung

Information: Rais Yatim

International trade & industry: Mustapa Mohamed

Public works: Shaziman Abu Mansor

Science, technology & innovation: Maximus Ongkili

Second finance minister: Ahmad Husni Hanadzlah

Tourism: Ng Yen Yen

Transport: Kong Cho Ha

Central bank governor

Zeti Akhtar Aziz

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EIU - Malaysia

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Transcript of EIU - Malaysia