An Economic Research Project On ASEAN Nations: Malaysia

UNIVERSITYOF SAN CARLOS
P.del Rosario St., Cebu City
An Economic Research Project on ASEAN Nations:
MALAYSIA
____________________________________
A Research Project
Presented to the
Faculty of the Department of Accountancy
School of Business and Economics
University of San Carlos
Cebu City, Philippines

____________________________________
In Partial Fulfillment
of the Requirements for the course
Economic Development (AC 2203)

____________________________________
By
GROUP 3 TTh 9:00-10:30 AM
Doriquez, Angelie
Falcon, Vienna Rose Marie
Rivera, Jireh Mae
Ruiz, Andreanne Marie
May 4, 2020
i
ACKNOWLEDGEMENT
First of all, we would like to give thanks to the University of San Carlos for giving us
this opportunity to showcase our skills and enhance our creative capabilities for the good of
the society.
Secondly, to our blockmates, thank you for your undying friendship and support in
everything we do. We may have struggles but we faced and conquered it all together.
Especially to our groupmates for being so patient and useful in making this research work
possible.
To our parents, for being so considerate of our current situation in school. For being
so understanding everytime we work home late on our research.
We would also like to give our regards and thanks to our teacher, Miss Jovelyn Q. Yu,
for guiding us in every single step in our research, for correcting our errors and affirming our
achievements. And every time we miss our deadlines, we would like to thank her for being so
patient and understanding of the current situation we are in.
Lastly and especially, we would love to give our highest gratitude to the Almighty
God for giving us this life to live, this research to pass and this semester to experience with
our friends, teachers, classmates and everyone around us.
PRECIS / ABSTRACT
ii
This research aimed to study Malaysia by seeing through its demographics, economic
profile, and determine the pressing problems and economic imbalances. The researchers
found out that the country faces issues related to poverty and income inequality, gender
groups, the rising cost of living, urbanization, and declining human capital investment.
From the findings, the following solutions were recommended to address these
economic problems and issues. (1) To eradicate poverty, the government should lift income
levels, increase employment opportunities, consider legislative reforms such as loan
forgiveness funds, and expand eligibility or benefits to the poor. (2) To reduce racial issues,
schools must create inclusive education for underrated women, corporations shall practice
diverse hiring, and government must enact laws authorizing women as part of the boards in
large corporations. (3) To counter rising cost of living and to improve quality of life, the
government shall consider negotiating with private entities and the use of stockpiling
mechanism, as well advocating the importance of saving and responsible buying.
(4) To solve cases on urbanization, the government shall work on spreading

opportunities in both urban and rural areas. (5) With the declining human capital, the
Malaysian federation should provide more schools, healthcare, social services, and teach poor
children basic corporate practices for their future. Lastly, (6) to protect the environment, there
should be policies on sustainable selling and threatened penalty for those businesses that use
extensive biofuels, biomass, or carbon.
TABLE OF CONTENT
iii
S
Cover Page i
Acknowledgement ii
Precis / Abstract iii
List of Tables vi
List of Figures vii
CHAPTER I
I INTRODUCTION / COUNTRY DEMOGRAPHICS 1
Location 1
Land Area 2
Land Division 2
Populatin and Gender Profile 4
National Capital 6
Currency 8
Political / Government System 9
Sector Distribution 12
II ECONOMIC PROFILE 13
Gross Domestic Product and Gross National Income 13
Gross National Disposable Income 18
Inflation 19
Unemployment 21
Monetary Authority 25
Fiscal Spending 28
Exports and Imports of Goods and Services 30
Current Account Balance 34
III ECONOMIC PROBLEMS AND ISSUES 36
Poverty and Income Inequality 43
Gender Inequality 50
Population Growth and Quality of Life 54
Urbanization 58
iv
Human Capital: Education and Health 67
Environment and Climate Change 73
IV SUMMARY, CONCLUSION, AND RECOMMENDATIONS 79
Summary 79
Conclusion 84
Recommendations 84
BIBLIOGRAPHY 89
v
LIST OF TABLES
Table Page
3.1 Malaysia’s HDI trends based on consistent time

series data and new goalposts 39
3.2 Country Classifications by Income Level 42
3.3 The Global and Regional Gender Gap Index Rankings

of Southeast Asian Countries, 2020 50
3.4 Data Required for Measuring Gender Inequality through

the MGGI 52
3.5 Policy Thrusts for Women and Development in the 9th

Malaysian Plan, 2006-2010 53
3.6 Cost of Living Index of Selected Southeast Asian

Countries in the year 2018 55
3.7 Safety Index of Selected Southeast Asian Countries

in the year 2018 56
3.8 Environmental Performance Index (EPI) and sub-indices

of Southeast Asian Countries, 2018 58
3.9 Traffic Index of Selected Southeast Asian Countries

in 2018 63
3.10 The Number of Squatters in Malaysia by State, 2015 66
3.11 Labor Force by Educational Attainment, Malaysia (2014) 69
vi
LIST OF FIGURES
Figure Page
1.1 Map of the Malaysian Peninsula 1
1.2 States and Federal Territories of Malaysia 3
1.3 Population of Malaysia by Gender in 2018 4
1.4 Total Population and Annual Population Growth Rate of

Malaysia (1960-2018) 5
1.5 Percentage of Population according to Age Group of

Malaysia (1960-2018) 6
1.6 The Districts of Kuala Lumpur 7
1.7 60-Day Exchange Rate History of Malaysian Ringgit VS

US Dollar 9
1.8 Malaysia’s Sector Distribution based on GDP from 2008-2018 12
2.1 GDP (in current US$) of Southeast Asian Countries in 2018 13
2.2 Top 40 Countries with the highest GDP (in current US$)
in the World (2018) 14
2.3 GDP per capita (in current US$) of Malaysia and the World
(1960-2018) 15
2.4 GDP per capita (in current US$) of Southeast Asian

Countries in 2018 16
2.5 GDP (in current US$) of Malaysia and its Annual Growth
Rate from 1960-2018 17
2.6 GDP per capita (in current US$) of Malaysia and its
Annual Growth Rate from 1960-2018 17
2.7 GNI (in current US$) of Malaysia from 1960-2018 18
2.8 Gross National Disposable Income (in MY Ringgit) of

of Malaysia from 2015-2018 19
vii
2.9 Annual Consumer Price Inflation Rate (in percent) of
Malaysia from 1960-2018 20
2.10 Annual Consumer Price Inflation Rate (in percent) of

Southeast Asian Countries in 2018 21
2.11 Total Unemploymenr Rate (in percent of total labor force)

based on national estimate of Malaysia from 1982-2018 22
2.12 Comparison of Unemployment Rates for different

educational levels in Malaysia (data available: 2009, 2010,
2015, and 2016) 23
2.13 Total Unemployment Rates (percent of total labor force)

based on modeled International Labor Organization (ILO)
estimate for Southeast Asian Countries in 2018 24
2.14 Actual Inflation and the 24-month-ahead forecast in

Malaysia (1996-2012) 26
2.15 Malaysia’s Statutory Reserve Requirement Ration

(1989-2020) 27
2.16 General Government Total Expenditure of Malaysia

(in billions of MY Ringgit) from 1990-2018 28
2.17 Malaysia’s 2018 Budget – Spending Allocation 29
2.18 Malaysia’s 2020 Budget – Spending Allocation 30
2.19 Net Exports of and Imports of Good and Services

(Balance of Payments, current US$) of Malaysia from
1974-2018 31
2.20 Net Trade in Goods and Services (Balance of Payments,

current US$) of Malaysia from 1974-2018 31
2.21 Percentage of Exports by Category in Malaysia

as of 2017 32
2.22 Percentage of Imports by Category in Malaysia

as of 2017 33
2.23 Current Account Balance (Balance of Payments,

current US$) of Malaysia from 1976-2018 34
viii
2.24 Current Account Balance (Balance of Payments,
current US$) of Selected Southeast Asian Countries
from 1976-2018 35
3.1 Key Dimensions of Human Development Index 36
3.2 Human Development Index of Selected Asian

Countries in 2018 37
3.3 Human Development Index Trend of Malaysia

from 1990-2018 38
3.4 The 17 Sustainable Development Goals of the

UNDP 39
3.5 National SDG and 11th Malaysian Plan Roadmap 41
3.6 2017 Malaysia’s Voluntary Review Report 42
3.7 Malaysia’s Poverty Headcount Ratio at National

Poverty Libe from 2002-2015 45
3.8 Incidence of Poverty and Number of Households

earning less than 60% Median Household Income
from 1995-2016 46
3.9 Income Gap between Malaysia’s T20, M40 and B40 48
3.10 Gini Coeffient of Malaysia from 1976-2016 49
3.11 Malaysia’s Scores and Global Ranking by Indicator

(2006 and 2020) 51
3.12 Urban Population of Malaysia as a Percentage of Total

Population form 2008-2018 59
3.13 Destinations of Internal Migrants in Malaysia (2018) 59
3.14 Crime Index of Selected Southeast Asian Countries

in 2018 61
3.15 Crime Statistics of Malaysia in 2018 61
3.16 Average Crime Rate Index per 100,000 of the

population, by State from 2010-2017 62
ix
3.17 Road Traffic Death rate per 100,000 of the
population of Southeast Asian Countries in 2016 65
3.18 Percentage of High-skilled and Low-skilled Labor

in Malaysia, 2007 67
3.19 Total Government Expenditure on Education

(% of GDP) of Selected Southeast Asian Countries
in 2018 68
3.20 Median Income (in MY Ringgit) by Educational

Attainment in Malaysia (2017 and 2018) 70
3.21 Malaysia’s Healthcare Spending per capita (in current

US$) and its Percentage of GDP from 2000-2016 72
3.22 CO2 emission per capita (in metric tons) vis-à-vis GDP
per capita (in current US$) of Malaysia from 1970-2018 74
3.23 CO2 emission per capita (in metric tons) of Southeast

Asian Countries in 2018 75
3.24 Tree Cover Loss in Malaysia from 2001-2018 77
3.25 Annual Tree Cover Loss by Dominant Driver in

Malaysia from 2001-2018 78
x
CHAPTER 1
COUNTRY DEMOGRAPHICS
Location
Malaysia is a country in Southeast Asia that lies just north of the Equator. It is
composed of 2 noncontiguous regions: Peninsular Malaysia, also called West Malaysia
(Malaysia Barat), which is on the Malay Peninsula, and East Malaysia (Malaysia Timur),
which is on the island of Borneo, as seen in Figure 1.1. The Malaysian capital, Kuala
Lumpur, lies in the Western part, about 25 miles (40 km) from the coast; the administrative
center Putrajaya, is located about 16 miles (25 km) South of the capital.
Figure 1.1. Map of the Malaysian Peninsula
1
Land Area
Malaysia is bordered by Thailand in the West, and Indonesia and Brunei in the East.
It is composed of 2 districts, Peninsular and East Malaysia, which are separated by the South
China Sea. Both Peninsular and East Malaysia feature coastal plains rising to hills and
mountains. The whole Malaysian Peninsula has a total land area of 329,613 square
kilometers. East Malaysia covers 198,847 square kilometers or 60% of the country’s land
area, while Peninsular Malaysia makes up 132,090 square kilometers or 40% of the country’s
land area.
Land Division
The federation of Malaysia is comprised of 13 states and 3 federal territories. These
are divided between 2 regions, with 11 states and 2 federal territories on Peninsular Malaysia
and the other 2 states and 1 federal territory in East Malaysia.
2
States and Federal Territories
Malaysia has 13 states, as seen in Figure 1.2. These are Johor (Johor Bahru), the
southernmost state, Kedah (AlorSetar), Kelantan (Kota Bharu), a state that is well-known for
traditional Malay handiwork, silverwork, brocade, batik etc., Malacca (Malacca City), Negeri
Sembilan (Seremban), an inland state with only 48km of coastline, Pahang (Kuantan), a state
that is rich in agricultural and natural resources, Penang (George Town), a state that occupies
an island and a part of the mainland, Perak (Ipoh), the 2nd largest state,. Perlis (Kangar), the
smallest state in the country, Sabah (Kota Kinabalu), Sarawak (Kuching), the largest
Malaysian state, Selangor (Shah Alam), a state that surrounds the Federal Territory of Kuala
Lumpur and Putrajaya, and Terengganu (Kuala Terengganu), the state with most Malays.
Meanwhile, the 3 free federal territories are the Federal Territory of Kuala Lumpur, Federal
Territory of Labuan, and Federal Territory of Putrajaya.1
Figure 1.2. States and Federal Territories of Malaysia
1
Federal Territories and State Governments, The Malaysia Government's Official Portal, 2014, https://web
.archive.org/web/20140222231636 /http:/ /mygov.malaysia.gov.my/EN/Main/MsianGov/State
GovAndFederalTerritories/Pages/StateGovAndFederalTerritories.aspx (accessed 20 March, 2020)
3
Population and Gender Profile
As of 2018, the total population of Malaysia is 31,528,525. This is an increase of
423,497 people compared to the population of 31,105,028, as is the year before. Figure 1.3
shows that there is a population of 16,212,465 for the male and 15,316,120 for the female.
The sex ratio of the total population is 1.059 (1,059 males per 1,000 females) which is lower
than global sex ratio of 1,106 males to 1,000 females.2
Figure 1.3. Population of Malaysia by Gender in 2018
Source: The World Bank
Figure 1.4 shows that Malaysia’s population has been increasing from the year 1960
up to the year 2018. However, the graph also shows that the population growth rate of
Malaysia has been decreasing since the year 1990, and remained constant at 1.51% from 2016
to 2018.
2
Malaysia Population, worldmeter, 2020, www.worldmeters.info/world-population/malaysia-population/
(accessed 20 March, 2020).
4
Figure 1.4. Total Population and Annual Population Growth Rate of Malaysia (1960-
2018)
As shown in Figure 1.5, the population can be further distributed according to age
groups, as follows: 0-14 years (children), 15-64 years (working age), 65 years and over
(elderly). The proportion of the population of Malaysia below the age of 15 years old
decreased to 23.9951% in 2018 compared to 33.3562% in 2000. In contrast, the proportion of
the working age population increased to 69.3331% from 62.7287%. For the population aged
65 years old and over, there is an increase to 6.6718% as compared to 3.9150% in 2000.
5
Figure 1.5. Percentage of Population according to Age Group of Malaysia (1960-2018)
National Capital
The Federal Territory of Kuala Lumpur is the capital and the largest city of Malaysia.
It is located West-Central Peninsular Malaysia, midway along the West Coast and rubber belt,
and about 25 miles (40 km) east of its ocean port, Port Kelang, on the Strait of Malacca.
Kuala Lumpur literally means “Muddy Influence’. It was named such because the city is
located near the intersection of Gombak and Klang River. In 1972, Kuala Lumpur was
designated as a municipality, and in 1974 this entity and the adjacent portions surrounding
Selangor became a federal territory. Figure 1.6 shows the 11 districts of Kuala Lumpur.
6
Figure 1.6. The Districts of Kuala Lumpur
Kuala Lumpur is considered as the cultural, financial and economic center of
Malaysia. The city is known for its colorful culture and rich reserves. It is also recognized as
one of the fastest growing metropolitan regions in Southeast Asia, in both population and
economic development. The city serves as the home of the Parliament of Malaysia and it is
also where the Istana Negara (official residence of the Malaysian King) is located. Kuala
Lumpur once held the headquarters of the Executive and Judicial Branches of the federal
government, but these were relocated to Putrajaya in early 1999. At present, some sections of
the political bodies still remain in Kuala Lumpur.
Currency
7
Ringgit, also known as Malaysian Dollar, is the monetary unit of Malaysia. Bank
Negara Malaysia (Central Bank of Malaysia) is authorized as the sole issuer of Ringgit
banknotes and coins in the country. The coins of Malaysia’s currency in circulation have
denominations of 1, 5, 20, and 50 sen (cents). Meanwhile, the 6 different banknotes have
values ranging from 1 to 100 Ringgit. The obverse of these banknotes contain a portrait of
Tuanku Abdul Rahman, Malaysia’s 1st Prime Minister, and a small image of the country’s
national flower which is the hibiscus rosa-sinensis. The back portion of the bills features
Malaysia’s natural wonders, culture, flora and fauna, and technological and economic
achievements. The rhinoceros hornbill, national bird, can be found on the 5-Ringgit bill; the
Rafflesia, largest flower in the world, is the subject of the 10-Ringgit note; the 20-Ringgit
note exhibits the hawksbill and leatherback turtles; the 50-Ringgit note displays palm trees
which are Malaysia’s major source of palm oil; and Mount Kinabalu as well as the limestone
formations of Mount Api are illustrated on the 100-Ringgit note. The Ringgit was declared as
the official monetary unit of Malaysia in 1946, replacing the Straits Settlement Dollar which
was the colonial currency created in the mid-19th century.3
As of March 20, 2020, the current exchange rate is 1 US Dollar = 4.4002 MY Ringgit
or 1 MY Ringgit = 0.22726 US Dollar. It was reported by the New Strait Times that,
recently, the Ringgit has continued to slide against the US Dollar, as oil prices continue to
decline and COVID-19 pandemic continues to grapple global markets.4 The 60-day exchange
rate of MY Ringgit to US Dollar is shown in Figure 1.7.
3
Ringgit, Encyclopedia Britannica, 2020, https://www.britannica.com/topic/ringgit (accessed 21 March 2020).
4
MYR/USD Conversion History Table, Exchange Rates UK, https://www.exchangerates.org.uk/MYR
-USD-20_03_2020-exchange-rate-history.html (accessed 21 March 2020).
8
Figure 1.7. 60-Day Exchange Rate History of Malaysian Ringgit VS US Dollar
Source: Exchange Rates UK
Political / Government System
Malaysia’s politics is a Federal Constitutional Monarchy in which the King serves as
the head of the state and the Prime Minister as the head of the government. The country is
composed of 13 states operating within a constitutional monarchy and parliamentary
democracy of state and federal levels. The government has 3 major institutions namely:
Executive, Legislature, and Judiciary. The Federal Government and the 13 State
Governments exercise its executive power, while the Federal Parliament and the 13 State
Assemblies make use of their federal legislative power. 5 The State Governments in Malaysia
also have their respective executive and legislative bodies. The Judicial Branch in Malaysia is
a federalism body operating uniformly throughout the country.
King of Malaysia
5
Malaysia politics and Malaysian political system, Wonderful Malaysia,
http://www.wonderfulmalaysia.com/malaysia-politics-and-political-system.htm (accessed 27 April 2020)
9
The Malaysian kings ‘Yang di-Pertuan Agong’ are the head of the state and the
highest governor, chosen for a 5-year term among the 9 sultans of the states of the Malaysian
Peninsula. In 2019, the present king, Al-Sultan Abdullah Al-Haj, was crowned as the 16 th
king of Malaysia. He is the successor of the Sultan Muhammad V who reigned as King of
Malaysia between 2016 and 2019.
Federal Government
The Federal or Central Government is the ultimate authority in Malaysia and is located
in Putrajaya. It is headed by a Prime Minister, a leader of the party that wins most seats in the
lower house of the Parliament and is approved by the King. Executive power is vested to the
Prime Minister which includes implementation of the law and running daily affairs of the
country.6 In 2018, the current Prime Minister, Mahathir bin Mohammad, was appointed by
the King of Malaysia.
Legislature
The 2 houses of the Congress are the Senate 'Dewan Negara' and the House of the
Commons 'Dewan Rakyat'. The House of the Common elects a premier as stated by the
Malaysian Constitution, thereon, the King picks a new Prime Minister to rule. The
government is composed of members from both the House of the Congress and their
administrators in which 69 members of the Senate are given a 6-year term on authority; 36 are
elected from 13 state meetings while 42 are arranged by the King. The House of
Representatives is elected by ways of general voting through districts, wherein the 193
members are given 5 years maximum term of office. The King can dissolve the Parliament if
he wishes, but usually only does so upon the advice of the Prime Minister.
Executive
The political framework of Malaysia, Nordea, https://www.nordeatrade.com/no/explore-new-

6
market/malaysia/political-context (accessed 27 April 2020)

10
The Executive Branch is led by the Prime Minister who is appointed by the Yang di-
Pertuan Agong. The Prime Minister, in turn, leads the government (Cabinet) and also the
party that holds majority of the Parliament. As the Constitution delegates the executive power
to the Yang di-Pertuan, this means that all government matters are carried out in the name of
His Highness. However, the Constitution also states that in carrying out executive duties, His
Highness is required to act based on the advice of the Cabinet of Ministers.7
Judiciary
The Judicial Authority of Malaysia is provided for in Article 121 (1) of the Federal
Constitution.8 To implement judicial duties in the country, the system court was created.
Religious Courts have the authority to rule on matters regarding Islamic law and custom.
Meanwhile, the Federal Court, the highest court in Malaysia, reviews constitutional matters
and issues arising between states or between the federal government and states. It is made up
of 2 chief judges from the High Courts and 7 other judges. Most civil and criminal cases are
fair and open, and are handled by the High Courts. The Sessions Courts have jurisdiction
over landlord-tenant disputes and car accidents. Matters involving criminal cases in which the
maximum sentence does not exceed 12 months are heard by the Magistrates' Courts. The
Court of Appeals has jurisdiction over High Court and Sessions Court decisions.9
Sector Distribution
7
Governmant, Nexus Commonwealth Network Malaysia, http://www.commonwealthofnations.org/sectors-
malaysia/government/ (accessed 30 April 2020)
8
Federal Constitution, Attorney General’s Chamber,
http://www.agc.gov.my/agcportal/uploads/files/Publications/FC/Federal%20Consti%20(BI%20text).pdf
(accessed 30 April 2020)
9
Malaysia Judicial System, Nations Encyclopedia, https://www.nationsencyclopedia.com/Asia-and-
Oceania/Malaysia-JUDICIAL-SYSTEM.html (accessed 30 April 2020)
11
In Figure 1.8, it can be observed that as of 2018, the Sector Distribution of Malaysia is
concentrated on the Service and Industry Sectors. The Service Sector of Malaysia takes up
52.96% of the country’s Gross Domestic Product (GDP), followed by the Industry Sector that
claims 38.30% of the country’s GDP. Lastly, only 7.40% of the country’s GDP comes from
the Agriculture Sector. Moreover, the trend beginning 2008 to 2018 reflects the Structuralist
Approach Theory, wherein an economy is developing and progressing when there is a shift to
the Industry and Service Sectors, and a corresponding decline in the Agriculture Sector.
Figure 1.8. Malaysia’s Sector Distribution based on GDP from 2008-2018
CHAPTER 2
12
ECONOMIC PROFILE
Gross Domestic Product (GDP) and Gross National Income (GNI)
Since 1970, Malaysia's economy has evolved from one that is dependent on the export
of raw materials such as elastic and tin to one that is among the most grounded, generally
expanded, and fastest-growing in Southeast Asia.10 The country ranks 4th in the region and
36th in the world during the year 2018 with a total GDP of 358.6 Billion US Dollars. This is
shown in Figure 2.1 and Figure 2.2.
1200000000000
1000000000000
800000000000
600000000000
400000000000
200000000000
0
Malaysia
Brunei Darussalam
Indonesia
Singapore
Vietnam
Cambodia
Timor-Leste
Thailand
Myanmar
Lao PDR
Philippines
Figure 2.1. GDP (in current US$) of Southeast Asian Countries (2018)
10
Economy, Britannica Encyclopedia, https://www.britannica.com/place/Malaysia/Economy (accessed 26 March
2020)
13
25000000000000
20000000000000
15000000000000
10000000000000
5000000000000
0
United Kingdom
Australia
Singapore
Malaysia
Colombia
India
Brazil
Belgium
Japan
Russia Federation
Iran, Islamic Rep.

Mexico
Turkey
Poland
Thailand
Ireland
Pakistan
United States
Netherlands
United Arab Emirates

Figure 2.2. Top 40 Countries with the highest GDP (in current US$) in the World (2018)
GDP is often analyzed alongside GDP per capita. Economic analysts utilize this
measurement for knowledge on both the domestic profitability and productivity of a country
contrasted with different nations. The GDP per capita is the result of dividing a country’s
inflation-adjusted GDP by the entire population. Figure 2.3 shows that the GDP per capita of
Malaysia is last recorded at 11,373.233 US Dollars in 2018. This is equivalent to 100.54% of
the world's which is 11,312.44 US Dollars.
14
12000
10000
8000
6000
4000
2000
0
96
0 66 72 78 84 90 96 02 08 14
1 19 19 19 19 19 19 20 20 20
World Malaysia
Figure 2.3. GDP per capita (in current US$) of Malaysia and the World (1960-2018)
Before the Asian Financial Crisis (mid-80s to 90s), Malaysia experienced high growth
rates that went beyond 8%. However, Malaysia’s extraordinary performance ended in July
1997 due to its involvement in a major regional economic crisis. 11 Such a crisis caused a
decline in its GDP per capita from 4,637.865 US Dollars to 3,263.334 US Dollars.
Nevertheless, Malaysia was able to rise in the succeeding years, not until the Global Financial
Crisis in 2009 which resulted in another downturn of the economy. 12 As shown in Figure 2.4,
Malaysia is promising as it ranks 3rd among Southeast Asian countries in 2018, only behind
Singapore and Brunei Darussalam.
11
The Asian Financial Crisis 1997 Explained, Financial Literacy for Youths, https://www.flymalaysia.org/asian-
financial-crisis-1997-explained/ (accessed 26 March 2020)
12
Malaysia emerges from recession, Financial Times, https://www.ft.com/content/3d3d8420-9246-11de-b63b-
00144feabdc0 (accessed 26 March 2020)
15
35000
30000
25000
20000
15000
10000
5000
0 Brunei Darussalam
Vietnam
Myanmar
Philippines
Indonesia
Timor-Leste
Lao PDR
Malaysia
Cambodia
Thailand
Figure 2.4. GDP per capita (in current US$) of Southeast Asian Countries in 2018
Figures 2.5 and 2.6 reflect the GDP and GDP per capita of Malaysia including its
corresponding growth rates from 1960 to 2018. Malaysia’s economy has been performing
well after the Asian and Global Financial Crisis. The lowest GDP growth since the Global
Financial Crisis was experienced in the year 2016. This was driven by subdued investment
activities in most economies and weak commodity prices amid heightened political and policy
uncertainties in major economies.13
Recently, the Maybank Investment Bank Research has predicted an economic growth
of 4.4% in 2020. However, the Central Bank pointed out that nothing is certain as of now
because of the COVID-19 pandemic that has been hitting economies worldwide, including
Malaysia. This would cause lower foreign tourists and spending. The production disruptions
in China, one of Malaysia’s biggest trading partners, are also expected to affect the country’s
exports in the manufacturing and commodities export segment.14
13
The International Economic Environment, Economic Developments in 2016,
https://www.bnm.gov.my/files/publication/ar/en/2016/cp01.pdf(accessed 26 March 2020)
14
Malaysia GDP growth slows to 4.3%, lowest in 10 years, Nikkei Asian Review,
https://asia.nikkei.com/Economy/Malaysia-GDP-growth-slows-to-4.3-lowest-in-10-years (accessed 26 March
2020)
16
Figure 2.5. GDP (in current US$) of Malaysia and its Annual Growth Rate from 1960-
2018
Figure 2.6. GDP per capita (in current US$) of Malaysia and its Annual Growth Rate
from 1960-2018
17
GNI measures all the income of a country earned by its residents and businesses both
from sources within and abroad. Figure 2.7 shows that Malaysia’s GNI moves in the same
manner as its GDP. In 2018, the country records a GNP of 345.8 Billion US Dollars which is
lower than its GDP by 12.8 Billion US Dollars.
Figure 2.7. GNI (in current US$) of Malaysia from 1960-2018
Gross National Disposable Income (GNDI)
Gross National Disposal Income (GNDI) accounts for the income that is available to
the nation for final consumption and gross saving. 15 In contrast to GNI, this measurement is
broader as it includes unilateral transfers and remittances which are considered as growing
sources of income for developing countries. GNDI is equal to GNI less current transfers
(other than taxes, less subsidies, on production and imports) payable to non-resident units,
plus the corresponding transfers receivable by resident units from the rest of the world.16
15
Gross National Disposable Income, Central Statistics Office,
https://www.cso.ie/en/releasesandpublications/ep/p-nie/nie2017/gndi/ (accessed 20 April 2020)
16
Definition: Gross national disposable income, European Customs Portal,
https://www.tariffnumber.com/info/abbreviations/1563 (accessed 20 April 2020)
18
Malaysia's GNDI is reported at 1,376,045 MY Ringgit in 2018, higher than the
previous record of 1,315,690 MY Ringgit for 2017. This indicator is updated yearly,
averaging 1,256,083.50 MY Ringgit from 2015 to 2018. The data reached an all-time high of
1,376,045 MY Ringgit in 2018 and a record low of 1,123,504.00 MY Ringgit in 2015.
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
2015 2016 2017 2018
Figure 2.8. Gross National Disposable Income (in MY Ringgit) of Malaysia
from 2015-2018
Source: Department of Statistics Malaysia
Inflation
Figure 2.9 shows the annual inflation rate of Malaysia from 1960 to 2018. The
inflation recorded its lowest in 1964 with -0.40% and an all-time high of 17.33% in 1974.
Since 1980, the inflation rate for consumer prices in Malaysia moved within 0.3% to 9.7%. In
2018, the rate is 0.88%, the lowest in 9 years. This is also relatively lower than the 2.5%-
3.5% expectation.17
Malaysia's central bank taps the brakes, raises key rate, Reuters, https://www.reuters.com/article/us-malaysia-
17
economy-rates/malaysias-central-bank-taps-the-brakes-raises-key-rate-idUSKBN1FE0SL (accessed 26 March

2020)
19
20
15
10
0
96
0 66 72 78 84 90 96 02 08 14
1 19 19 19 19 19 19 20 20 20
-5
Figure 2.9. Annual Consumer Price Inflation Rate (in percent) of Malaysia from
1960-2018
Figure 2.10 shows the annual consumer price inflation rate of Southeast Asian
countries in 2018. Ranking from highest to lowest, Malaysia is 2 nd to the last with 0.88%.
Bank Negara Malaysia projected a lower inflation rate in 2018, on expectations of a smaller
effect from global cost factors.18 Singapore has the lowest inflation rate in the region with
0.44% while Myanmar has the highest with 6.87%.
Monetary Policy Statement, Bank Nigeria Malaysia, https://www.bnm.gov.my/index.php?

18
ch=en_press&pg=en_press&ac=4608&lang=en (accessed 26 March 2020)

20
8
7
6
5
4
3
2
1
0
Vietnam
Indonesia
Cambodia
Brunei Darussalam
Singapore
Timor-Leste
Malaysia
Myanmar
Lao PDR
Thailand
Philippines
Figure 2.10. Annual Consumer Price Inflation Rate (in percent) of Southeast Asian
Countries in 2018
Unemployment
Unemployment, according to the World Bank is the share of the labor force that is
without work but available for and seeking employment. Figure 2.11 shows the
unemployment rates in Malaysia from 1982 to 2018. In 2018, the unemployment rate is at
approximately 3.28%. Malaysia’s unemployment is low and stable which implies that the
populace is close to full employment. Generally, an unemployment pace of 3% or less would
be viewed as full employment. A certain level of unemployment, say, up to 3%, is
unavoidable due to the presence of frictional and technological unemployment. However,
there is no accord among economists on this point. The International Labor Organization
(ILO) acknowledges that definitions of full employment should take into account changes in
employment patterns, such as higher labor turnover and shorter working hours.19
19
Full employment, Economics Online, https://www.economicsonline.co.uk/Definitions/Full_employment.html
(accessed 28 March 2020)
21
Malaysia’s unemployment rate peaked in 1986 at 8.29% due to a commodity shock.
The economic drop-off in developed countries prompted by the US high-interest rate policy
(the ‘Volker shock’) in the early 1980s brought a massive breakdown in the world commodity
trade. Between 1984 and 1986, Malaysia’s overall export price index declined by 30%,
reflecting a decrease in tin and palm oil prices. 20 In the following years, an economic boom
was experienced in the country, causing the unemployment rate to shrink and, in 1997, it
recorded 2.6%. From 1998 onwards, the unemployment rate in Malaysia remained at a
moderate level.
Figure 2.11. Total Unemployment Rate (percent of total labor force) based on the
national estimate of Malaysia from 1982-2018
Malaysia's unemployment rate,

20
https://crawford.anu.edu.au/acde/publications/publish/papers/wp2010/wp_econ_2010_12.pdf (accessed 28
March 2020)
22
Referring to Figure 2.12, unemployment rates were noticeably high among the labor
forces with basic and intermediate education in 2009. It was during this time when the Global
Financial Crisis triggered sharp decline in the output of most industrialized economies,
including Malaysia, causing an unprecedented increase in the numbers of unemployed.21 The
labor force with intermediate education has the highest contribution to the total
unemployment rate in all of the years indicated. On the other hand, the movement of
unemployment rates for those with advanced education presents a different trend as the rates
were higher in the years 2015 and 2016.
Figure 2.12. Comparison of Unemployment Rates for different educational levels in
Malaysia22 (data available: 2009, 2010, 2015, and 2016)
21
The Great Recession and the jobs crisis, https://www.un.org/esa/socdev/rwss/docs/2011/chapter2.pdf (accessed
28 March 2020)
22
The World Bank, http://www.worldbank.org (accessed 4 April 2020) defines the following:
1. Basic education comprises primary education or lower secondary education according to the
International Standard Classification of Education 2011 (ISCED 2011).
2. Intermediate education comprises upper secondary or post-secondary non-tertiary education according
to the International Standard Classification of Education 2011 (ISCED 2011).
3. Advanced education comprises short-cycle tertiary education, a bachelor’s degree or equivalent
educational level, a master’s degree or equivalent educational level, or doctoral degree or equivalent
educational level according to International Standard Classification of Education 2011 (ISCED 2011).
23
Although Malaysia’s unemployment rate of 0.88% in 2018 can be considered low and
stable, it is relatively high when compared to its neighboring countries in the Southeast Asian
region. Ranking from highest to lowest, Brunei Darussalam is 1 st place with 9.22% and Lao
PDR is the last in rank with only 0.609% unemployment rate. This is shown in Figure 2.13.
Figure 2.13. Total Unemployment Rates (percent of total labor force) based on modeled
International Labor Organization (ILO) estimate for Southeast Asian countries in 2018
24
Monetary Authority
Bank Negara Malaysia (BNM), Central Bank of Malaysia, 23 is the monetary authority
that oversees Malaysia’s financial system and economy. Established on January 26, 1959,
BNM’s goals are the following: advance monetary stability and sound financial structure, go
about as a banker and financial consultant to the government, supply currency and keep
international reserves, and influence the credit situation to the benefit of the country. BNM’s
monetary policy is to maintain price stability while remaining supportive of growth. In the
BNM’s Outlook and Policy, inflation is expected to average between 0.7% – 1.7% in 2019
(2018: 0.88%).24
During the 40th Harvard Business School Alumni Club Malaysia anniversary dinner in
2018, Governor Tan Sri Muhammad Ibrahim stated that Malaysia has departed from the
normal central banking practice as it opted to use the "Inflation Anchoring" framework
instead of "Inflation Targeting”. The policy outcome is similar, stable inflation. The
Governor emphasized that too much focus on achieving a single target could lead to potential
blind spots.25 Inflation Anchoring is measured as the response of inflation expectations to
inflation shocks. Keeping inflation anchored is said to decrease the variability that firms and
households face, permitting them to plan and exercise longer-term investments to stimulate
growth.26 Inflation expectations differ over time. If actual inflation is higher than long-run
expectation, but long-run expectation changes only a little, then inflation expectations are well
anchored. If, on the other hand, the long-run expectation is marked up in response to higher-
than-expected inflation, then expectations are poorly anchored.27
23
About the Bank, Bank Negara Malaysia, https://www.bnm.gov.my/index.php?
ch=en_about&pg=en_intro&ac=641&lang=en (accessed 4 April 2020)
24
Outlook and Policy 2019, Bank Negara Malaysia,
https://www.bnm.gov.my/files/publication/ar/en/2018/cp04.pdf (accessed 4 April 2020)
25
The remarkable paradox of public policy, Bank Negara Malaysia, https://www.bnm.gov.my/index.php?
ch=en_speech&pg=en_speech&ac=790&lang=b (accessed 4 April 2020)
26
Inflation anchoring,
https://www.imf.org/~/media/Files/Publications/WP/2018/wp1836.ashx+&cd=7&hl=en&ct=clnk&gl=ph
27
Are your inflation expectations well-anchored?, Econbrowser,
https://econbrowser.com/archives/2007/07/are_your_inflat (accessed 4 April 2020)
25
In Figure 2.14, it is shown that Malaysia’s inflation expectations did not change
significantly relative to the actual inflation. On average, inflation expectations are broadly
anchored at a stable rate of 1-4%, close to actual inflation long-run average of 3%.28
Figure 2.14. Actual Inflation and the 24-month-ahead forecasts in Malaysia (1996-2012)
Source: Consensus Economics
28
Malaysia's inflation expectation, https://www.bnm.gov.my/files/publication/ar/.en/2018/cp04_001_box.pdf
26
Statutory Reserve Requirement
The Statutory Reserve Requirement (SRR) is a regulation mandated by the BNM for
liquidity management and credit creation purposes. It is used to pull back or infuse liquidity
when the excess or deficiency of liquidity in the banking system is perceived by BNM to be
large and long-term in nature.29 BNM lowered its SRR ratio by 100 basis points (bps) to 2%
from 3% effective March 20, 2020, bringing the SRR to its lowest rate since April 2011.
According to BNM, a decrease in SRR will inject liquidity into the monetary system, which is
expected to be loaned by the banks to back more economic activities. An analyst said that the
lowering of 100 bps in the SRR was more than expected, suggesting that economic growth
remained a concern amid the COVID-19 outbreak.30 Figure 2.15 shows the SRR in Malaysia
from 1989 to 2020 as mandated by BNM. Malaysia experienced large capital inflows
between 1992 and 1994. During this period, the Central Bank adopted a tight monetary
policy and increased the statutory requirement to mop up excess liquidity in the system.
Malaysia’s SRR reached its record-high in June 1996 when it was raised to 13.5%.31
Figure 2.15. Malaysia’s Statutory Reserve Requirement Ratio (1989-2020)
29
Statutory Reserve Requirement (SRR), http://br.my/definitions/srr.htm?
fbclid=IwAR0PBHAcYK7RQ4VEwWELz-CZ4PtnzQaEMSypizbWuap1vMgAdIkwWXTa6JY (accessed 7
April 2020)
30
Bank Negara cuts SRR to 2% to shore up liquidity, TheStar, https://www.thestar.com.my/business/business-
news/2020/03/20/bank-negara-cuts-srr-to-2-to-shore-up-liquidity (accessed 7 April 2020)
31
An Insight into Macroeconomic Policy Management and Developments in Malaysia,
https://aric.adb.org/pdf/aem/external/financial_market/Malaysia/mal_mac.pdf (accessed 7 April 2020)
27
Source: Bank Negara Malaysia
Fiscal Spending
Figure 2.16 shows that the fiscal spending of Malaysia has been increasing since 1990
except for a drop in the years 2010 and 2016. In 2018, it recorded a total of 328 Billion MY
Ringgit. This is 47.7 Billion MY Ringgit higher than the budget which is 280.3 Billion MY
Ringgit. The General Government's Total Expenditure increased from 81 Billion MY Ringgit
in 1999 to 328 Billion MY Ringgit in 2018, growing at an average annual rate of 7.90%. 32
Figure 2.17 presents the spending allocation of the 2018 budget.
Figure 2.16. General Government Total Expenditure of Malaysia (in Billions of MY
Ringgit) from 1990-2018
Source: Knoema
32
Malaysia - General government total expenditure in current LCU, Knoema,
https://knoema.com/atlas/Malaysia/topics/Economy/Financial-Sector-General-Government-finance/General-
government-total-expenditure (accessed 7 April 2020)
28
Figure 2.17. Malaysia’s 2018 Budget – Spending Allocation
Source: MoF Economic Report 2017/2018
Last October 11, 2019, the Malaysian government projected a budget of 297 Billion
MY Ringgit for the year 2020. However, the actual fiscal spending is expected to exceed the
said amount, following the COVID-19 outbreak. In February 2020, an emergency stimulus
package worth 4.8 Billion US Dollars was issued by the government to counter the economic
impact of the outbreak. The package includes strategies such as: inducing economic growth,
promoting investments, and encouraging the adoption of automation and digitalization among
businesses. Some 453 Million US Dollars will go towards the tourism industry, one of the
most affected industries.33 The figure below shows the breakdown of the 2020 budget.
33
Malaysia Issues Stimulus Package to Combat COVID-19 Impact, AseanBriefing,
https://www.aseanbriefing.com/news/malaysia-issues-stimulus-package-combat-covid-19-impact/ (accessed 7
April 2020)
29
Figure 2.18. Malaysia’s 2020 Budget – Spending Allocation
Source: MoF Fiscal Outlook
Exports and Imports of Goods and Services
In Figure 2.19, it can be observed that both exports and imports of goods and services
of Malaysia show the same movement from the year 1974 to 2018. As of 2018, the value of
exports is 246.5 Billion US Dollars and 221.3 Billion US Dollars for imports. This leads to a
trade balance of 25.1 Billion US Dollars, shown in Figure 2.20. Since 1996, total exports
have been outgrowing the total imports, resulting in positive trade balances. This is an
application of the openness factor in the Asian Growth Miracle – a shift into the promotion of
external markets. According to the World Integrated Trade Solution of the World Bank,
Malaysia’s exports and imports of goods and services as a percentage of GDP are 68.76% and
61.75%, respectively.34
34
Malaysia trade statistics: Exports, Imports, Products, Tariffs, GDP and related Development Indicator, World
Integrated Trade Solution (WITS), https://wits.worldbank.org/CountryProfile/en/MYS (accessed 7 April 2020)
30
Figure 2.19. Net Exports and Imports of Goods and Services (Balance of
Payments, current US$) of Malaysia from 1974-2018
Source: International Monetary Fund, Balance of Payments Statistics Yearbook
Figure 2.20. Net Trade in Goods and Services (Balance of Payments, current US$) of
Malaysia from 1974-2018
Source: International Monetary Fund, Balance of Payments Statistics Yearbook
31
In 2017, the Observatory of Economic Complexity (OEC) stated that Malaysia is the
17th largest exporter in the world with a total export of 263 Billion US Dollars. After gaining
independence in 1957, Malaysia has successfully broadened its economy from one that was
initially agriculture and commodity-based, to one that now plays a huge role in the
manufacturing and service sectors, propelling the country to become a leading exporter of
electrical appliances, electronic parts and components. Malaysia’s receptiveness to trade and
investment has been instrumental in employment creation and income growth, with about
40% of jobs in Malaysia connected to export activities.35
As shown in Figure 2.21, the Machine category leads Malaysia's exports with a value
of 130 Billion US Dollars. Mineral Products with an export value of 42.5 Billion US Dollars,
placed 2nd. This is then followed by Animal and Vegetable Bi-Products - 15.6 Billion US
Dollars, and Plastics and Rubbers - 15.1 Billion US Dollars. On a per-product basis,
Integrated Circuits are the most exported and these comprise 21.1% of the total exports. This
is followed by Petroleum with 6.8% and Office Machine Parts which accounts for 4.2%.
Figure 2.21. Percentage of Exports by Category in Malaysia as of 2017
Source: OEC Data
35
The World Bank in Malaysia, The World Bank, https://www.worldbank.org/en/country/malaysia/overview
32
On the other hand, the OEC also reported that Malaysia is the top 29 importer around
the world. The same with the country’s exports, Machine Category, valued at 81.2 Billion US
Dollars leads the country’s imports. This is followed by Mineral Products and Metals with
import values of 27.7 Billion US Dollars 16.5 Billion US Dollars, respectively. Considering
it on a per-product basis, Integrated Circuits take up 19%, Refined Petroleum – 7.9%, and
both the Broadcasting Equipment and Office Machine Parts are at 1.8%. This is reflected in
Figure 2.22.
Figure 2.22. Percentage of Imports by Category in Malaysia as of 2017
Source: OEC Data36
36
Malaysia, OEC, https://oec.world/en/profile/country/mys/ (accessed 7 April 2020)
33
Until the 1997 Asian Financial Crisis, Malaysia, for the most part, experienced a
deficit in its current account balance (see Figure 2.23). This was primarily because of its
substantial reliance on foreign savings for its high domestic investment. In 1997, the current
account balance was 5.9 Billion US Dollars which rose to 9.5 Billion US Dollars in 1998.
However, after the Asian Financial Crisis, Malaysia has been recording a constant surplus in
its current account. This exquisite shift was brought about by the significant depreciation of
Ringgit, which resulted in decreasing imports and increasing exports. As of 2018, Malaysia
recorded a current account balance of 7.6 Billion US Dollars.37
Figure 2.23. Current Account Balance (Balance of Payments, current US$) of Malaysia
from 1976-2018
37
Is Malaysia's Current Account Balance Sustainable? Evidence From Inter-Temporal Solvency Model,
http://www.ijbs.unimas.my/repository/pdf/Vol14No2paper3.pdf (accessed 7 April 2020)
34
Figure 2.24 presents the current account balances of the 10 countries of Southeast Asia
during 2018. Being an export-oriented country, Singapore leads the region with a surplus of
65.1 Billion US Dollars. This is followed by Thailand and Malaysia with current account
surpluses of 32.4 Billion US Dollars and 7.6 Billion US Dollars, respectively. Meanwhile,
Indonesia and the Philippines experienced the highest deficits.
Figure 2.24. Current Account Balance (Balance of Payments, current US$) of Selected
Southeast Asian Countries in 2018
35
CHAPTER 3
ECONOMIC PROBLEMS & ISSUES
According to the Societe Generale, Malaysia is the 4 th largest economy in Southeast
Asia and it continues to grow strongly.38 In assessing a country’s development, the basis
should not be economic growth alone, greater emphasis must be placed on people and their
capabilities. With this, the United Nations Development Programme (UNDP) has created
criteria for measuring the average achievement in key dimensions of human development: a
long and healthy life, being knowledgeable and have a decent standard of living. These
criteria are summed up into what is called the Human Development Index (HDI). It is used as
a geometric mean to aggregate each of the 3 dimensions into composite index, as shown in
Figure 3.1.39
Figure 3.1. Key Dimensions of Human Development Index
Source: UNDP
38
Malaysia: Country Risk, Societe Generale, https://import-
export.societegenerale.fr/en/country/malaysia/economy-country-risk (accessed 8 April 2020)
39
Human Development Index, UNDP, http://hdr.undp.org/en/content/human-development-index-hdi (accessed 8
April 2020)
36
As of 2018, Malaysia’s HDI reached the Very High Human Development category
together with Singapore and Brunei. It scored 0.804, higher than the world HDI which is
0.731.40 The country is positioned at 61st in the world and 7th across Asia (refer to Figure 3.2).
Between 1990 and 2018, Malaysia has shown stability and consistent headway in its HDI
from 0.644 to 0.804, as shown in Figure 3.3. It reflects an average increase of 0.80% per
year.
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Philippines
Fiji
Singapore
Korea, Republic
Sri Lanka
Indonesia
Samoa
Malaysia
China
Tonga
Hong Kong
Brunei Darussalam
Palau
Thailand
Japan
Figure 3.2. Human Development Index of Selected Asian Countries in 2018
Source: UNDP
Malaysia enters Very High Human Development category of nations, UN,

40
https://www.nst.com.my/news/nation/2019/12/546426/un-malaysia-enters-very-high-human-development-
category-nations (accessed 8 April 2020)
37
0.79
Index Value
0.74
0.69
0.64
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Figure 3.3. Human Development Index Trend of Malaysia from 1990-2018
Source: UNDP
Table 3.1 shows the component of Malaysia’s Human Development Index from 1990
to 2018. Based on the 2019 HDR, Malaysia’s life expectancy at birth increased by 5.1 years,
expected years of schooling increased by 3.7 years, mean years of schooling increased by 3.6
years, while Malaysia’s Gross National Income (GNI) per capita increased by about 167.6
percent. In 2018, Malaysia’s HDI value increased mainly because of the life expectancy
average of 76.0, compared to 75.8 in 2017, and GNI per capita at Purchasing Power Parity
(PPP) of 27,227 US Dollars of 2018.41
Inequalities in Human Development in the 21st Century, UNDP,

41
http://hdr.undp.org/sites/all/themes/hdr_theme/country-notes/MYS.pdf (accessed 8 April 2020)

38
Table 3.1. Malaysia’s HDI trends based on consistent time series data and new goalposts
Life expectency Expected years Mean years of GNI per capita

at birth of schooling schooling (2011 PPP$) HDI value
1990 70.9 9.7 6.5 10,175 0.644
1995 71.8 10.2 7.6 13,997 0.683
2000 72.6 11.9 8.6 15,071 0.724
2005 73.6 12.7 7.6 17,757 0.732
2010 74.5 13.0 9.8 20,347 0.773
2015 75.5 13.5 10.2 24,703 0.797
2016 75.6 13.7 10.2 25,394 0.801
2017 75.8 13.5 10.2 26,555 0.802
2018 76.0 13.5 10.2 27,227 0.804
Source: 2019 Human Development Report
Additionally, in September 2015, the General Assembly of the United Nations (UN)
adopted the 2030 Agenda for Sustainable Development. It includes the 17 Sustainable
Development Goals (SDGs) designed to bring the several life changing ‘zeros’ and pledge to
Leave No One Behind among 169 targets of different countries and territories, 42 as shown in
Figure 3.4. These goals are integrated to end poverty, protect the planet and to ensure a better
planet for future generations.
Figure 3.4. The 17 Sustainable Development Goals of the UNDP
Source: UNDP
42
Sustainable Deevelopment Goals, UNDP, https://www.undp.org/content/undp/en/home/sustainable-
development-goals.html (accessed 8 April 2020)
39
In 1970, Malaysia began its commitment to pursue sustainable development. The
New Economic Policy (NEP) was introduced with the goal of eliminating poverty and societal
inequality. In 2009, the country formulated the New Economic Model (NEM) based on 3
pillars: high income, inclusivity and sustainability, which reflect the 3 elements of SDG,
namely economy, social and environment. The NEM provides the basis of the subsequent 5-
year Malaysian development plan, with the purpose of achieving them all by 2020. 43 The
country’s implementing mechanism for the SDGs aligned in its next 5-year development plan,
the 11th Malaysian Plan, will be in place through priorities and plan of action by the National
SDG Roadmap, as shown in Figure 3.5.44 Therefore, it can be deduced that Malaysia has been
crafting plans since then and is continuously venturing its pathways towards sustainable
development at present. Figure 3.6 shows some of the country’s achievements as of 2017.
43
Sustainable Development Goals, UN, https://sustainabledevelopment.un.org/memberstates/malaysia (accessed
8 April 2020)
44
Integrating the 2030 Agenda : SDG Roadmap Malaysia, UNDP,
https://www.undp.org/content/dam/rbap/docs/meetTheSDGs/Session%20IA%20National%20-%20Malaysia
%20Integrating%20the%202030%20Agenda.pdf (accessed 8 April 2020)
40
Figure 3.5. National SDG and 11th Malaysian Plan Roadmap
Source: UNDP
41
Figure 3.6. 2017 Malaysia’s Voluntary National Review Report
Source: United Nations
According to the 2019 Human Development Report (HDR), there has been a global
rise in human development in the Asia-Pacific region. However, the region also continues to
struggle with the key elements of human development: increasing income gap and obstinate
inequalities.45
Being part of the Asia-Pacific, Malaysia is experiencing the abovementioned case.
Although it is undergoing rapid economic growth and is a top-tier country in terms of HDI, it
has not achieved the ‘Developed Country’ status yet. At present, Malaysia has been facing
issues and inequalities in various aspects. Subsequent discussions include the following: (1)
Poverty and Income Inequality (2) Gender Inequality (3) Population Growth and Quality of
Life (4) Urbanization (5) Human Capital: Education and Health (6) Environment and Climate
Change .
Poverty and Income Inequality
45
2019 Human Development Report, UN, https://www.malaymail.com/news/malaysia/2019/12/10/malaysia-
ranked-61st-on-uns-human-development-index-for-2018/1817677 (accessed 8 April 2020)
42
Poverty and income inequality remain as great challenges of Malaysia at present.
Although the government has taken great retaliation such as the launching of the New
Economic Policy (NEP), these problems continue to exist and hamper the country’s pursuit
towards development.
The World Bank defines poverty as having an income level that fall below some
minimum level necessary to meet basic needs. Essentially, poverty occurs when people do
not have sufficient resources to provide for their basic needs such as food, clean water, shelter
and clothing.
Poverty can be classified into 2 types: absolute poverty and relative poverty. There is
absolute poverty when people are unable to meet their basic needs. Aside from that, they lack
access to healthcare, education and other social services. On the other hand, relative poverty
occurs when people’s total income is less than 50% of the country’s median income. It also
refers to inequality or poverty relative to the standard of living household in a society. 46
However, in Malaysia, the measurement for relative poverty is raised to 60% median.47
Every country has its own measure of poverty but the World Bank serves as a
recognized authority providing a metric called the International Poverty Line. In 2015, it
defined extreme poverty as those people who live on less than 1.90 US Dollars per day. On
the other hand, the World Bank assigns the world's economies into 4 income groups. Table
3.2 shows the threshold for each classification in current US Dollars.
Table 3.2. Country Classifications by Income level

46
What is poverty? Its not as simple as you think, World Vision, https://www.worldvision.ca/stories/child-
sponsorship/what-is-poverty (accessed 9 April 2020)
47
Statistical Data For Appropriate Poverty Measurements
And Policy For Eradication: A Malaysian Case, MyStats,
https://www.bnm.gov.my/documents/2012/paper/mystats2012/Paper6.pdf (accessed 16 April 2020)
43
THRESHOLD GNI/CAPITA (CURRENT US$)
Low-income <996
Lower-middle income 996-3,895
Upper-middle income 3,896-12,055
High-income >12,055
Source: World Bank48
The World Bank classifies Malaysia under the upper-middle income category. 49
Malaysia has remarkably reduced poverty from 49.3% living in extreme poverty in 1970 to
less than 1%. As of 2017, absolute poverty in Malaysia can be considered to be very low with
only 0.6% living below the International Poverty Line. 50 The country is expected to continue
improving as the government has been giving high importance in addressing the well-being of
the bottom 40 of the population.51
Malaysia’s performance towards the goal of curtailing poverty can also be assessed
using the Poverty Headcount Ratio at National Poverty Line. Since 2002, poverty rate has
been lowered from 5.1% to 0.4% in 2015.52 Based on Figure 3.7, there is a declining trend in
48
New Country Classifications by Income Level: 2018-2019, World Bank,
https://sustainabledevelopment.un.org/memberstates/malaysia (accessed 16 April 2020)
49
The World Bank in Malaysia,World Bank, https://www.worldbank.org/en/country/malaysia/overview#3
50
Voluntary National Review 2017, United Nations.
https://sustainabledevelopment.un.org/memberstates/malaysia (accessed 0 April 2020)
51
An idea who’s time has come: increasing Malaysia’s poverty line, World Bank,
https://blogs.worldbank.org/eastasiapacific/idea-whose-time-has-come-increasing-malaysias-poverty-line
52
Malaysia - Poverty headcount ratio at national poverty line, Knoema,
https://knoema.com/atlas/Malaysia/Poverty-rate-at-national-poverty-line (accessed 9 April 2020)
44
the poverty rates from 2008. The National Poverty Line is 980 MY Ringgit per household per
month.53
0
2002 2004 2006 2008 2011 2013 2015
Figure 3.7. Malaysia’s Poverty Headcount Ratio at National Poverty Line from 2002-
2015
Source: Knoema
Despite the effort of eliminating absolute poverty, relative poverty continues to
confront Malaysia. Although the national statistical data reveals that the number of
households living below 60% median income is lowered down to 22.2% in 2016 from 26.2%
in 1995, the relative poverty in 2016 is slightly higher compared to 2014. This is shown in
Figure 3.8.
53
Malaysia Vastly Undercounting Poverty, Inter Press Service,
https://www.thestar.com.my/news/nation/2019/08/23/malaysia-dismisses-un-rep039s-claim-of-high-poverty-rate
45
Figure 3.8. Incidence of Poverty and Number of Households earning less than 60%
Median Household Income from 1995-2016
Source: DOSM, EPU
Moreover, earnings gap between Malaysia's Top 20% (T20) and their other
countrymen remains alarming.54 In fact, in 2018, it was reported by Khazanah Research
Institute (KRI) that the gap or relative difference in the country has widened in 2 decades. 55
The KRI also added that income levels of the T20 continued to grow in 2016, but its growth
54
Malaysia's income gap doubled in two decades: Study, The Straits Times,
https://www.straitstimes.com/asia/se-asia/malaysias-income-gap-doubled-in-two-decades-study (accessed 16
April 2020)
55
Malaysia’s widening income gap between rich and poor, TheStar,
https://www.thestar.com.my/business/business-news/2018/10/16/malaysias-widening-income-gap/ (accessed 16
April 2020)
46
was slower compared to the growth in 2010. However, because they (the T20) started at a
higher base, the gap between the T20 and Middle 40 (M40)/Bottom 40 (B40) continued to
heighten, and that can be observed after the Global Financial Crisis (GFC). Interestingly, the
gap contracted in the years following the 1987 Crisis (Black Monday Stock Market Crash)
and the 1997 Asian Financial Crisis. To further put the 2016 household income into context,
T20 possess 46.2% of the national income share, M40 have 37.4% of the national income
share while the B40 get 16.4% of the national income share. Figure 3.9 shows the gap
between income groups in Malaysia from 1970 to 2016.
Figure 3.9. Income Gap between Malaysia’s T20, M40 and B40 (1970-2016)56
The Khazanah Research Institute, http://www.krinstitute.org/assets/contentMS/img/template/editor/Views_The

56
%20Absolute%20VS%20Poverty%20Conundrum.pdf (accessed 16 April 2020) defines the following:

1. T20 > RM 9,619
2. M40 RM >4,360-RM 9,619
47
Source: The Khazanah Research Institute
Although the gap between income groups in Malaysia continues to expand, the Gini
coefficient which measures income inequality declines from 0.513 in 1970 to 0.399 in 2016.
The household income with lower starting base exhibits a greater growth rate compared to a
household which starts from a higher base. In 2015, the high-income household earned 10
times the low income-household while in 2016, the high-income household earned only 6.7
times the low-income household. Because of this, the relative inequality between the 2
households declined.57
Figure 3.10. Gini Coefficient of Malaysia from 1970-2016
Source: CompareHero Malaysia and The Edge Markets
3. B40 <RM 4,360

Widening household income disparity, The Edge Markets, https://www.theedgemarkets.com/article/widening-
57
household-income-disparity (accessed 16 April 2020)

48
Gender Inequality
According to the World Economic Forum’s (WEF) latest report, Malaysia placed 9 th
as the country with biggest gender gaps in Southeast Asia. However, gender equality in the
country is still higher than in other Asian countries such as South Korea, China, and Japan. 58
In Table 3.3, Malaysia placed 104th in the world with a score of 0.677 indicating their progress
towards gender inequality based on economic participation and opportunity, educational
attainment, health and survival, and political empowerment. The country achieved gender
parity in educational attainment in both secondary and tertiary education enrolment, but
because of declining literacy rate equality of 96.3% for men and 91.1% for women, country's
ranking went down to 86th. Malaysia came off 97th in terms of economic participation and
opportunities, 84th in health and survival, and 117th (low) when it comes to political
empowerment. Hence, the life expectancy of men and women has an average of 65.3 years
and 68.1 years, respectively, as shown in Figure 3.13.
Malaysia has one of the biggest gender gaps in South-east Asia, and places in the bottom half of WEF's Global
58
Gender Index, Business Insider Malaysia, https://www.businessinsider.my/malaysia-has-one-of-the-biggest-

gender-gaps-in-south-east-asia-and-places-in-the-bottom-half-of-wefs-global-gender-index(accessed 15 April
2020)
49
Table 3.3. The Global and Regional Gender Gap Index Rankings of Southeast Asian
Countries, 202059
RANK
COUNTRY SCORE
REGIONAL GLOBAL
Indonesia 5 85 0.700
Vietnam 6 87 0.700
Thailand 4 75 0.708
Singapore 3 54 0.724
Malaysia 9 104 0.677
Philippines 1 16 0.781
Lao PDR 2 43 0.731
Cambodia 7 89 0.694
Myanmar 10 114 0.665
Brunei-Darussalam 8 95 0.686
Timor-Leste 11 117 0.662
Source: 2020 World Economic Forum (WEF)
Figure 3.11. Malaysia’s Scores and Global Ranking by Indicator (2006 and 2020)
Source: WEF Global Gender Gap Report 2020
Investment in women’s health and education contributes higher on national development.
However, eliminating only gender disparities in education and health is not sufficient for
eliminating other gender inequalities such as the empowerment of women and changes in the
economic activity of the Malaysian economy. In 2004, the UNDP designed Malaysia's Gender
Global Gender Gap Report 2020, World Economic Forum,
59
http://www3.weforum.org/docs/WEF_GGGR_2020.pdf (accessed 23 April 2020)

50
Gap Index (MGGI) to measure and monitor the extent of gender inequality in Malaysia. The
MGGI comprises 4 sub-dimensions and related statistical data, covering the areas of health,
education, economic activity, and the empowerment of women, shown in Table 3.4. The
indicators were based on the Malaysian situation, availability of data, and international best
practice.60
Table 3.4. Data Required for Measuring Gender Inequality through the MGGI
INDICATORS REQUIRED BY SEX

1. Health Dimension
a. Life Expectancy at Birth
b. Under-5 Mortality Rate (U5MR)
2. Education Dimension
a. Adult Literacy Rate
b. Combined Gross Enrolment Ratio (Primary, Secondary, and Tertiary Levels)
3. Economic Activity Dimension
a. Labour Force Participation Rate (LFPR)
b. Proportion of Persons Engaged in Non-Agricultural Employment
4. Empowerment of Women Dimension
a. Political Representation
I. Percentage Share of Elected Parliamentarians
II. Percentage Share of Appointed Senators
b. Percentage Share of Legislators, Senior Officials, Managers, Professionals,
Technicians and Associate Professionals
Source: UNDP
Against the attainment of economic growth and national development, policymakers set a
great emphasis on gender issues. Specified programs have been established into the development
process to guarantee women as conventional, as well as, enhancing the national mechanism for
women, assessing laws for women, and increasing their access to education, training, and health
Measuring Gender Inequality Through the MGGI, UNDP,

60
https://www.undp.org/content/dam/malaysia/docs/WomenE/MGGI_report.pdf (accessed 15 April 2020)

51
care. Over the past few years, there was a substantial progress in Malaysia's gender gap among
areas of development, as shown in the Table 3.5.
Table 3.5. Policy Thrust for Women and Development in the 9 th Malaysian Plan, 2006-
2010
During the 8th Malaysia Plan (2000–2005) period, significant progress was made in
contributions towards the social and economic development of the nation. Women attained
higher levels of education, increased their participation in the labour force, and were involved
in various business activities. In the Ninth Malaysia Plan (2006–2010) period, the
Government will undertake the following efforts to ensure women's full participation in the
country's development.
Participation in the labour force. Family-friendly workplace practices and the provision of
appropriate training programmes will be introduced to ensure a greater involvement of
women in the labour force. Measures will also be undertaken to ensure women in the informal
sector have better access to social protection.
Business and entrepreneurial activities. Financial programmes will be created to enable
women to obtain loans to enhance their participation in businesses. Women entrepreneurs will
be encouraged to network with organizations both locally and abroad.
National machinery and institutional capacity. Efforts will be undertaken to meet the 30
per cent quota for women in decision-making positions in the public sector.
Laws and regulations. Existing laws will be reviewed to prohibit all forms of sexual
harassment and to ensure women are not discriminated against.
Education and training. More education and training opportunities will be provided to work
towards a knowledge-based economy. More females will be encouraged to enter into the
science and engineering sectors. Programmes in computer literacy and applications will also
be conducted.
Health status and well-being. Efforts to promote the health of women and their families will
be
continued. As women's HIV infection rates are on the increase, awareness and education
programmes will be further promoted.
Violence against women. Awareness and training programmes relating to gender roles will
be
52
implemented to prevent violence and abuse.
Poverty and quality of life. Programmes will be established to ensure poverty amongst
women, in both rural and urban areas, is reduced. Special emphasis will be given to single
mothers
Issues pertaining to women at the international level. The Government, the private sector,
and
NGOs will continue to participate in international forums to ensure women's advancement.
Source: UNDP
Population Growth and Quality of Life
Quality of Life refers to the general well-being of people and society, the degree of
satisfaction and a standard of living. The generally accepted measure of the standard of living
is GDP per capita.61 In the previous chapter, it was shown that the population in Malaysia has
been growing constantly through the years. Along with the increasing population, it was also
shown that GDP per capita manifested the same trend. However, to measure quality of life, it
must not only consider the GDP but also other factors such as the cost of living, safety, and
environmental performance.62
Cost of Living
Cost of living is defined as the amount of money needed in order for people to afford
basic needs including expenses on taxes and healthcare.63 Table 3.6, shows that Malaysia
recorded 44.73 in its cost of living index in 2018, a relatively lower score compared to
61
Standard of Living, The Balance, https://www.thebalance.com/standard-of-living-3305758 (accessed 15 April
2020)
62
The Quality of Life and Environment, SciVerse Science Direct, https://core.ac.uk/download/pdf/82258479.pdf
63
Cost of Living Definition, Investopedia, https://www.investopedia.com/terms/c/cost-of-living.asp (accessed 15
April 2020)
53
Singapore, Thailand and Cambodia. However, cost of living remains a key concern in
Malaysia as it is beyond what most of the people can afford. In addition to that, economists
pointed out that income growth is not able to keep up with the rising prices. Property prices,
particularly in the cities, have skyrocketed. The average price of a terraced house in Malaysia
escalated to 360,262 MY Ringgit in 2017 from 191,055 MY Ringgit in 2010. This reflects an
increase of 88% according to the Malaysian House Price Index. Moreover, food prices take
up 29.5% of the CPI, making it the largest contribution to inflation and thus, the cost of
living. In fact, the food import bill soared immensely from 4.6 Billion MY Ringgit in 1990 to
45.39 Billion MY Ringgit in 2015.64
Table 3.6. Cost of Living Index of Selected Southeast Asian Countries in the year 2018
RANK COUNTRY COST OF LIVING INDEX
1 Singapore 91.40
2 Thailand 48.91
3 Cambodia 45.92
4 Malaysia 44.73
5 Indonesia 39.74
6 Vietnam 39.44
7 Philippines 35.99
Source: Numbeo65
Safety
One of the drawbacks of Malaysia is its popularity in terms of high crime rates. This
is a fact confirmed in the study conducted by Numbeo in which the country recorded an index
of 63.05 – the highest in Southeast Asia. In fact, when breaking it down to cities, 4 of the Top
10 are in Malaysia namely Selangor, Kuala Lumpur, Johor Bahru and Kota Kinabalu. As a
result, Malaysia is named the least safe country in the region with a Safety Index of only
64
Cover Story: Cost of Living Conundrum, The Edge Markets, https://www.theedgemarkets.com/article/cover-
story-cost-living-conundrum (accessed 15 April 2020)
65
Cost of Living Rankings by Country 2018, Numbeo, https://www.numbeo.com/cost-of-
living/rankings_by_country.jsp?title=2018 (accessed 26 April 2020)
54
36.95.66 This index is relatively low compared to its neighbor country, Singapore, which
recorded 83.77. Supporting data is shown in Table 3.7.
Table 3.7. Safety Index of Selected Southeast Asian Countries in the year 2018
RANK SAFETY INDEX

COUNTRY
1 Singapore 83.77
2 Philippines 59.87
3 Indonesia 55.28
4 Thailand 52.75
5 Vietnam 47.78
6 Cambodia 45.62
7 Malaysia 36.95
Source: Numbeo67
Moreover, in a report made by The Edge Markets, Malaysia scrolled a Women’s
Danger Index (WDI) of 527.64 and ranked as the 11th most dangerous country for solo female
travelers in the world. WDI is created using 8 factors, giving more weight to street safety and
international homicide over the other six categories.68
66
Malaysia #1 in Southeast Asia for Crime, theAsianparent Malaysia, https://my.theasianparent.com/malaysia-
crime-rate (accessed 26 April 2020)
67
Crime Index by Country 2018, Numbeo, https://www.numbeo.com/crime/rankings_by_country.jsp?title=2018
1. Only countries in Southeast Asia with available data are included in Table 3.7
68
Malaysia third worst Asian country for solo female travel: Travel blog, The Edge Markets,
https://www.theedgemarkets.com/article/malaysia-third-worst-asian-country-solo-female-travel-travel-blog
55
Environmental Performance
In terms of Environmental Performance Index (EPI) 69, Malaysia ranks 75th out of 180
countries in the world. In Southeast Asia, Singapore ranks 1st with an EPI of 64.23, followed
by Brunei Darussalam with an EPI of 63.57 and Malaysia with an EPI of 59.22. 70 The EPI
can be divided into 2 sub-indices: Environmental Health (HLT) and Ecosystem Vitality
(ECO). The HLT score is based on the quality of the country’s air and water, while the ECO
score primarily indicates the condition of a country’s ecosystem and the animal species that
live within these ecosystems. As shown in Table 3.8, Malaysia’s HLT is 66.63 while ECO is
54.28. Considering the Southeast Asian region only, Malaysia’s score can be considered
high. However, when comparing it to the top performing countries in the world such as
Switzerland and France, it is quite low. This means that Malaysia still has areas to improve
69
The Most Sustainable Countries on Earth According to Environmental Performance Index, Natran Green Pest
Control, https://natran.com/the-most-sustainable-countries-on-earth-according-to-the-environmental-
performance-index/ (accessed 26 April 2020)
1. Environmental Performance Index is a ranking system used to compare the world’s countries based on
their efforts to preserve and protect the earth’s environment.
70
2018 EPI Report, EPI Envirocenter, https://epi.envirocenter.yale.edu/2018/report/category/hlt (accessed 26
April 2020)
56
particularly its air quality. Experts are saying that the air quality in Malaysia has worsened
due to urbanization wherein the high number of motor vehicles increases air pollutants.71
Table 3.8. Environmental Performance Index (EPI) and sub-indices of Southeast Asian
Countries, 2018
Source: Yale University, Center for Environmental Law & Policy and Columbia
University, Center for International Earth Science Information Network
Urbanization
71
Air quality in M’sia getting worse,The Star, https://www.thestar.com.my/news/nation/2020/01/12/air-quality-
in-msia-getting-worse (accessed 26 April 2020)
57
As of late, Malaysia has been encountering advancement and urbanization. The rapid
urbanization which started in 1957 has driven a gigantic relocation of people from rural towns
to urban villages and recently developed areas. At present, the country is the 2 nd most highly
urbanized nation in Southeast Asia and one of the most rapidly urbanized around the world.
Over the last 10 years, the urban populace in Malaysia has expanded from 66.93% in 2008 to
76.04% in 2018. This growth is expected to proceed as individuals move to urban areas due
to the shifting of the economy and employment from agriculture to industry and services.72
Figure 3.14 shows the urban population of Malaysia as a percentage of the total population
from 2008 to 2018.
Figure 3.12. Urban Population of Malaysia as a Percentage of the Total Population
from 2008-2018
Source: Statista
Figure 3.15 shows that in 2018, urban states are the top destination Malaysia’s internal
migrants with 86.7% moving to such areas. Of the 86.7%, 66.9% are urban-urban migrants
and 19.8% are from rural-urban migrants. It is also indicated that Selangor, one of the major
states in Malaysia, is named the highest receiving state of the country.
72
Malaysia: Urbanization from 2008 to 2018, Statista, https://www.statista.com/statistics/455880/urbanization-
in-malaysia/ (accessed 21 April 2020)
58
Figure 3.13. Destinations of Internal Migrants in Malaysia (2018)
Source: Migration Survey (DOSM)
Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi mentioned that rapid
urbanization in Malaysia is an unavoidable process as the country advances towards
development. In fact, the government has set a target of accomplishing a GNI of 15,000 US
Dollars by 2020, high enough to be considered a developed country. Of specific note in this
respect is that the national development policy incorporates the development of a master plan
for improving the competitiveness of the major states. This plan is arranged based on the
acknowledgement that these states play an important role in national growth, with
progressively strong competition between them for investment and talent. 73 While urban
development is progressing in Malaysia, the harmful effects associated with urbanization are
also experienced in the country particularly by its competitive cities. Some of the most
important challenges perceived by urban communities are crime, traffic congestion and large
number of squatters.74
Crime
73
Urbanization in Malaysia and Potential of Social Innovation Business, Hitachi,
https://www.hitachi.com/rev/archive/2018/r2018_04/gir/index.html (accessed 21 April 2020)
74
Urbanization and Urban Poverty in Malaysia: Consequences and Vulnerability, Science Alert,
https://scialert.net/fulltext/?doi=jas.2016.154.160 (accessed 26 April 2020)
59
As mentioned previously, Malaysia is named the least safe country in Southeast Asia.
In the 2018 Crime Index by Numbeo (refer to Figure 3.16), numbers have shown
that Malaysia is ranked as the top 15 in world. With a crime index of 63.05, Malaysia takes
the top spot in the Southeast Asian region, ahead of countries such as Cambodia, Vietnam and
Indonesia which have significantly lower indices at 54.38, 52.22 and 44.72, respectively.
Unsurprisingly, neighbor country, Singapore, takes last spot with a meager index of 16.23 in
the region, while perching at the 3rd last in the world rankings.75
Figure 3.14. Crime Index of Selected Southeast Asian Countries in 2018
Source: Numbeo
Based on the 2018 Crime Statistics released by DOSM, shown in Figure 3.17, 71,760
of the crimes committed in Malaysia are attributable to Property Crime. Under this category,
Vehicle Theft contributes 50.1% of the total which is equivalent to 35,953. Other Property
Crimes that are common in Malaysia are House Break-in and Theft and Snatch Theft.
Meanwhile, only 16,902 cases are attributable to Violent Crimes. Approximately, 60.8% of
Violent Crimes were Robbery.
75
Crime Index by Country 2018, Numbeo, https://www.numbeo.com/crime/rankings_by_country.jsp?title=2018
60
Figure 3.15. Crime Statistics of Malaysia in 2018
Source: Royal Malaysia Police, DOSM
In the Annual Crime and Safety Report published by the Overseas Security Advisory
Council (OSAC), it is mentioned that Malaysia experiences escalating levels of crime in
densely-populated areas around-the-clock. Figure 3.18 shows that most crimes occur in the
urbanized states of Malaysia. The states with the highest Average Crime Rate Index per
100,000 of the population between 2010 and 2017 are Kuala Lumpur and Selangor. The
index crime rates of these states are higher compared to Singapore which had an index crime
rate of 431.3 per 100,000 of the population in 2016. The OSAC also qualifies Kuala Lumpur
as a ‘high-threat' location for crime.76
Malaysia 2018 Crime &Safety Report, OSAC, https://www.osac.gov/Content/Report/ef56bd47-cd6c-4a03-

76
a0a0-15f4ae5cd8cf (accessed 21 April 2020)

61
Figure 3.16. Average Crime Rate Index per 100,000 of the Population, by State from
2010-2017
Source: MOHA and DOSM
Traffic Congestion
The rapid urbanization in Malaysia has driven an increasing level of traffic congestion.
As income increases, the desire and ability to own a car also increase. In fact, Malaysia is
hailed as the 3rd country with the highest level of car ownership (93%) and the highest
incidence of multiple car ownership, globally, according to the Nielsen Global Survey of
Automotive Demand.77 In a report released by Numbeo, Malaysia ranks 4 th in Southeast Asia
terms of Traffic Index in 2018. This is shown in Table 3.9.
Table 3.9. Traffic Index78 of Selected Southeast Asian Countries in 2018
RANK COUNTRY TRAFFIC INDEX
1 Philippines 194.41
2 Indonesia 188.05
3 Thailand 177.35
4 Malaysia 166.47
5 Singapore 177.62
6 Vietnam 111.38
77
Rising Middle Class Will Drive Global Automotive Demand In The Coming Two Years, Nielson,
https://www.nielsen.com/my/en/press-releases/2014/rising-middle-class-will-drive-global-automotive-demand/
78
The Numbeo, https://www.numbeo.com/traffic/indices_explained.jsp (accessed 23 April 2020) defines:
1. Traffic Index as a composite index of time consumed in traffic due to job commute, estimation of time
consumption dissatisfaction, CO2 consumption estimation in traffic and overall inefficiencies in
the traffic system.
62
Source: Numbeo
According to a report from The World Bank, Malaysia Economic Monitor, June 2015
- Transforming Urban Transport, working class Malaysians are estimated to waste about 1
Million hours annually in traffic congestions. Wasting 1 Million hours collectively translates
to a total 10–20 Billion MYR annually. This number is calculated based on a few factors. The
most notable factor is based on the amount of fuel wasted. This considers the unnecessary
idling of engines that translates into extra petrol used in stop-go traffic. The World Bank
determines approximately 1-2 Billion MYR worth of petrol used nationwide because of
congestion.79
Moreover, DOSM reported Transport Accidents as the 4th most common cause of
death in Malaysia in 2016. Referring to Figure 3.19, the country has the 3rd highest fatality
rate from road traffic accidents in Southeast Asia, behind Thailand and Vietnam. The Global
Status Report on Road Safety published by the World Health Organization (WHO) and the
World Bank stated that Malaysia had 7,152 deaths in 2016, of which 87% were males and
13% females.80
79
Malaysians waste RM 10–20 billion annually on traffic congestion, WapCar,
https://www.wapcar.my/news/Malaysians-waste-RM-10%E2%80%9320-billion-annually-on-traffic-congestion-
1244 (accessed 23 April 2020)
80
We have the third highest death rate from road accidents, TheStar,
https://www.thestar.com.my/lifestyle/health/2019/05/14/we-have-the-third-highest-death-rate-from-road-
accidents (accessed 23 April 2020)
63
35 32.7
30
26.4
25 23.6
NOT AVAILABLE
19.9
20 17.8 16.6
15 12.2 12.3
9 10
10 7 8
5 6
5 3 4 2.8
2
01
0
Brunei-Darussalam
Cambodia
Indonesia
Singapore
Vietnam
Malaysia
Myanmar
Thailand
Philippines
Laos
2016
Figure 3.17. Road Traffic Death Rate per 100,000 of the Population of Southeast Asian
Countries in 2016
Source: World Health Organization
Squatters
As mentioned above, the rate of urban population in Malaysia has increased rapidly
around 66.93% in 2008 to 76.04% in 2018. One of the main aspects that require critical
attention from rapid urbanization process in the country is the increase of internal migrants
from rural areas to urban ones, resulting in an increased number of migrants in the low-
income group, who compete for jobs, and more importantly, for a place to live. Statistics
have shown a decline in the incidence of urban poverty but the number of squatters remains
significantly high. 81
81
Ninety Years of Urbanization in Malaysia: A Geographical Investigation of Its Trends and Characteristics,
Ritsumeikan University, http://www.ritsumei.ac.jp/acd/re/k-rsc/hss/book/pdf/vol04_05.pdf (accessed 01 May
2020)
64
Despite the ‘Zero Squatter in 2005’ goal which was indicated in the 5 th Malaysian
Plan, the number of squatters in Malaysia remained high. In Table 3.10, it is shown that in
2015, number squatter families in the country totaled 68,861. This was an increase of 4,732
families from 64,129 in 2013. Among the states, Sabah had the highest number of squatters
with a total of 28,087 families. It is to be noted that Kota Kinabalu, one of the most urbanized
areas in Malaysia, is located in Sabah. In Peninsular Malaysia, Johor topped the statistics
with a total of 11,151 squatter families.82
Table 3.10. The Number of Squatters in Malaysia by State, 2015
Source: Ministry of Urban Wellbeing Housing and Local Government, 2015
82
Combating Squatters in Malaysia, PLANNING MALAYSIA: Journal of the Malaysian Institute of Planners
2017,
https://www.rese318765883_combating_squatters_in_malaysia_do_we_have_dequate_policies_as_instrumentar
chgate.net/publication//download
65
Human Capital: Education and Health
Human capital is the knowledge and personal abilities possessed by a person which
enable him to perform and get economic value. In the case of Malaysia, proper strategy is
needed to achieve development by 2020 and to earn economic growth of the country.
Improvement in human capital investment must be taken to achieve the desired state.83 In
2007, employment across industries of high skilled workers was less than 50%. Herewith,
employers were unwilling to obtain services from highly skilled workers; rather they rely on
low-paid unskilled workers. Between 1990 and 2005, low-skilled workers contributed to the
increase in labor supply, making Malaysia the lowest in rank among other countries like
Singapore, Taiwan, and Korea which had a higher proportion of high skilled workers (refer to
Figure 3.20).84
100%
25%
90% 33% 35%
80% 49%
70%
60%
50%
75%
40% 67% 65%
30% 51%
20%
10%
0%
Malaysia Singapore Taiwan Korea
Low skilled Highly skilled
Figure 3.18. Percentage High-skilled and Low-skilled Labor in Malaysia, 2007
Source: EPU, World Bank
83
Education and Human Capital Effect on Malaysian Economic Growth, International Journal of Economics and
Financial Issues, http://www.econjournals.com/index.php/ijefi/article/viewFile/2727/pdf (accessed 23 April
2020)
84
Quality Of Human Capital And Labor Productivity: A Case Of Malaysia,
https://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/289/185 (accessed 24 April 2020)
66
Education, health, and social protection all play vital roles in human capital
development. Having a knowledge-based economy would lead to attain international
competitiveness towards rapid growth. Hence, investing in education provides a better
productivity and working environment for the workers, in which a lifelong learning system
should be introduced for them to require knowledge and to enhance their skills in attaining
trends of technology change and work on processes.
Accordingly, the significance of education is normally measured through the
percentage of Gross National Product (GNP) and the percentage of total government
expenditure allocated for education. Figure 3.21 shows that in 2018, the Federal Government
of Malaysia allotted an educational expenditure that is equivalent to of 4.5348% of GDP. The
country began its educational expansion as the New Economic Policy (NEP) launched in
1970. The policy comprises education priority towards accomplishing the NEP objectives.
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Vietnam
Timor-Leste
Cambodia
Malaysia
Myanmar
Figure 3.19. Total Government Expenditure on Education (% of GDP) for
Selected Southeast Asian Countries in 2018
67
Currently, there are 20 public universities offering various programs in the country.
Although Malaysia allocates a higher amount on education compared to other countries, the
allocation to public universities has actually decreased since 2007. In 2017, the allocation
totaled 6.12 Billion MY Ringgit, a drop of 19.23% from the 7.57 Billion MY Ringgit in 2016.
Such cut was condemned by the academic community, asking for a reconsideration on such
action because it limits the resources that can be utilized in delivering quality education to the
students. 85
Educational Inequality
Table 3.11 shows that there is a huge gap in productivity among workers having
educational attainment as a college graduate, apart from those who stopped schooling mid-
way. The DOSM specified the edge of those workers who have finished Tertiary and
Secondary education from those few who ended on Primary education or having no formal
education at all. Their limited access to learning hindered them from attaining an optimum
level of output. They also tend to be less competitive in the labor market, in which, at times,
causes human capital exploitation of the country.
Table 3.11. Labor Force by Educational Attainment, Malaysia (2014)
Source: DOSM
85
Public Universities and Budget Cuts in Malaysia, Research Gate,
https://www.researchgate.net/publication/319462694_Public_Universities_and_Budget_Cuts_in_Malaysia
68
Additionally, educational status was highly related to income levels mainly in all
industries. Figure 3.22 shows those with tertiary education earned the highest pay, a median
monthly salary of 3,648 MY Ringgit (an increase of 7% from 2017), and a mean monthly
salary of 4,553 MY Ringgit (an increase of 5.3% from 2017). Conversely, workers with no
formal education earned 1,166 MY Ringgit of median monthly salary (an increase of 5.8%
from 2017), and 1,481 MY Ringgit of a mean monthly salary (an increase of 4.9% from
2017).
Figure 3.20. Median Income (in MY Ringgit) by Educational Attainment
in Malaysia (2017 and 2018)
Source: DOSM
Inequality of Access to Healthcare

69
In line with the Sustainable Goal ‘no one left behind’, Malaysia is on the process of
accessing wealth and development of the nation. The country anticipated of becoming a
developed nation by the year 2020 and its ambitions to reduce poverty and inequalities have
fostered. However, there are still proportions of the population struggling on socioeconomic
and health inequalities particularly those that belong in the B40. Among them, health threats
such as Non-communicable Diseases (NCD) are common particularly to the adults and
children.86 Moreover, the BMC Public Health also reported that visual impairment is
becoming a concern among poor children.87 These people are also identified to be vulnerable
towards mental health problems because of unhealthy lifestyle practices and their
psychological distress in the workplace which includes the workers bullying because of their
status. This scenario goes to show that greater access to healthcare is of much important to
these people. Even so, because healthcare is often connected to income and wealth, the
financial condition of these people becomes a barrier to their access on basic amenities
including healthcare. The B40 primarily seek care from public clinics and hospitals while
most of the M40 and T20 visit private facilities, making healthcare provision concentrated to
those with higher socioeconomic status. It is estimated that 70% of specialists are now in the
more costly private system, typically located in wealthier areas. This skewed distribution
resulted into shortages of medical professionals in the public healthcare system. This in turn
contributed to additional challenges such as overcrowding, long waiting times, delayed
consultation and late admission for emergency cases there.88
The country, as a whole, also experiences scarcity of health care facilities and
healthcare professionals. This caused the quality of human resources to health to decrease.
86
Health, access and nutritional issues among low-income population in Malaysia: introductory note, BMC
Public Health, https://bmcpublichealth.biomedcentral.com/articles/10.1186/s12889-019-6852-8 (accessed 26
April 2020)
87
Status of visual impairment among school children in Malaysia, BMC Public Health,
https://bmcpublichealth.biomedcentral.com/articles/10.1186/s12889-019-6865-3 (accessed 26 April 2020)
88
Statement by Professor Philip Alston, United Nations Special Rapporteur on extreme poverty and human
rights, on his visit to Malaysia, United Nations Human Rights,
https://www.ohchr.org/en/NewsEvents/Pages/DisplayNews.aspx?NewsID=24912&LangID=E#_ftn49, (accessed
26 April 2020)
70
Figure 3.23 shows the expenditures on health per capita of Malaysia (in current US Dollars),
including healthcare goods and services consumed from 2000 to 2016. The healthcare
spending for 2016 was 362 US Dollars (a decrease of 3.87% from 2015) and for 2015 was
376 US Dollars (a decrease of 10.88% from 2011).
450 4.50%
400 4.00%
350 3.50%
300 3.00%
250 2.50%
200 2.00%
150 1.50%
100 1.00%
50 0.50%
0 0.00%
2000 2002 2004 2006 2008 2010 2012 2014 2016
Healthcare Spending per capita (US$) % of GDP
Figure 3.21. Malaysia’s Healthcare Spending per capita (in current US$) and its
Percentage of GDP from 2000-2016
Source: World Bank
Environment and Climate Change
As defined by the United Nations, sustainable development is the development that
meets the needs of the present generation without compromising the ability of future
71
generations to meet their own needs.89 It is not limited to economic development alone but
also to social and environmental development. Climate change and environmental damage
are 2 of the major problems confronting the world today. These are some of the repercussions
of unsustainable development which happen when humans overexploit natural resources.90
During the OECD Global Forum on Environment and Economic Growth 2016, links
between the environment and economic growth were tackled. The links identified are the
following: (1) the environment acts as the natural resource of the economy, and it serves as a
sink for emissions and waste (2) natural resources are essential inputs for production in many
sectors, while production and consumption also lead to pollution and other pressures on the
environment (3) poor environmental quality can impair economic growth and well-being by
curtailing the quantity and quality of resources, striking the health of people, etc.91
CO2 Emission
89
The Sustainable Development Agenda, United Nations,
https://www.un.org/sustainabledevelopment/development-agenda/ (accessed 29 April 2020)
90
Anthropogenic CO2 emissions from fossil fuels: Trends and drivers in the Mediterranean region, Emerald
Insight, https://www.emerald.com/insight/content/doi/10.1108/17568691111107925/full/html (accessed 22 April
2020)
91
Global Forum on Environment and Economic Growth, OECD, http://www.oecd.org/economy/greeneco/global-
forum-on-environment-2016.htm (accessed 23 April 2020)
72
According to the Committee on Climate Change, evidence that CO2 emissions are the
cause of global warming is very huge.92 CO2 emission is defined as the release of greenhouse
gases into the atmosphere that are often formed through the burning of fossil fuels such as
natural gas, crude oil and coal.93 As shown in Figure 3.24, the CO2 emissions per capita of
Malaysia moves in the same way with its GDP per capita. In 2018, CO2 emission per capita
for Malaysia was 8.05 metric tons. This is an increase of 6.73 metric tons from 1.32 metric
tons in 1970. According to Knoema, the CO2 emission per capita of Malaysia is growing at
an average annual rate of 2.20%.
12000 9
8
10000
7
8000 6
5
6000
4
4000 3
2
2000
1
0 0
GDP per capita (in current US$)

CO2 emissions per capita (in metric tons)
Figure 3.22. CO2 emission per capita (in metric tons) vis-à-vis GDP per capita (in
current US$) of Malaysia from 1970-2018
Source: The World Bank and Knoema
In Figure 3.25, it is shown that Malaysia ranks 3 rd in Southeast Asia in terms of
CO2 emission per capita, behind Brunei Darussalam and Singapore. Malaysia’s CO2 emission
per capita is almost double that of the world average. As mentioned above, one major reason
92
What is causing climate change?, Committee on Climate Change, https://www.theccc.org.uk/tackling-climate-
change/the-science-of-climate-change/climate-variations-natural-and-human-factors/ (accessed 23 April 2020)
93
Carbon Dioxide or CO2, eurostat,
https://ec.europa.eu/eurostat/statisticsexplained/index.php/Glossary:Carbon_dioxide_emissions (accessed 23
April 2020)
73
of this case is the rapid urbanization currently experienced in the country. Rapid urbanization
entails higher economic activity. Higher economic activity is associated with increasing
number of well off residents with greater demands of energy-intensive products that can
increase CO2 emissions.94 This is a clear indication that Malaysia’s commitment to reduce
emissions is essential for the sustainable future of the country.
18
16
14
12
10
8
6
4
2
0
East Timor
Brunei-Darussalam
Myanmar
Vietnam
Philippines
Singapore
Indonesia
Cambodia
Malaysia
Thailand
Figure 3.23. CO2 emission per capita (in metric tons) of Southeast Asian Countries in
2018
Source: Knoema95
In the Government of Malaysia’s Intended Nationally Determined Contribution
(INDC) to the United Nations Framework Convention on Climate Change (UNFCC) in 2015,
Malaysia pledged for a 35% reduction in its emission intensity by 2030 (2005 baseline).
94
Urbanization and economic growth: the arguments and evidence for Africa and Asia,
https://journals.sagepub.com/doi/full/10.1177/0956247813490908 (acessed 22 April 2020)
95
CO2 emission per capita, Knoema, https://knoema.com/atlas/ranks/CO2-emissions-per-capita (accessed 22
April 2020)
74
Further, it committed another 10% reduction upon receipt of climate finance, technology
transfer, and capacity building from developed countries.96
Deforestation
The natural vegetation in Malaysia is the tropical rainforest. In 2010, Malaysia had
20.3 million hectares (mha) of natural forest, extending over 87% of its land area. However,
in the past ten years, deforestation became a pressing issue in the country. Actually, when
trees are cut down, the carbon stored in it will be released and will be added to the CO 2
emissions in the atmosphere.97 As shown in Figure 3.26, Malaysia experienced a tree cover
loss of 438 thousand hectares (kha) in 2018. Although this is lower compared to the 2
previous years (2017 and 2016), the 2018 statistics entails a lost 7.73 ma of tree cover,
equivalent to a 26% decrease in tree cover since 2000. Moreover, a total of 3.38
gigatonnes of CO₂ was released into the atmosphere as a result of tree cover loss in Malaysia
from 2001 to 2018.98
96
Winds of Change in Malaysia: The Government and the Climate, Heinrich Boll Stiftung-Southeast Asia,
https://th.boell.org/en/2019/02/27/winds-change-malaysia-government-and-climate#_ftn1(accessed 23 April
2020)
97
Deforestation and Climate Change, Climate and Weather, https://www.climateandweather.net/global-
warming/deforestation.html (accessed 1 May 2020)
98
Historical Emissions in Malaysia, Global Forest Watch 2018,
https://www.globalforestwatch.org/dashboards/country/MYS?category=climate&emissions (accessed 1 May
2020)
75
Figure 3.24. Tree Cover Loss in Malaysia from 2001-2018
Source: Global Forest Watch
Moreover, 93% of the tree cover loss in Malaysia from 2001-2018 occurred in areas
where the dominant drivers resulted in deforestation. According to NASA, different factors
that lead to deforestation can occur at once. One factor may stem from another, exacerbating
the problem. In Malaysia, forest fires are among the drivers of deforestation, but these fires
are often products of human activities such as the clearing of land for commercial purposes
and other slash-and-burn agriculture. 99 Figure 2.7 shows that majority of the deforestations
in Malaysia are commodity-driven. The 438 kha loss in 2018 can be broken down into the
following: Shifting Agriculture – 5.23 kha, Forestry – 38.2 kha, Urbanization – 1.08 kha
and Commodity-driven Deforestation – 393 kha.
Figure 3.25. Annual Tree Cover Loss by Dominant Driver in Malaysia from 2001-2018
Source: Global Forest Watch100
Major Reasons for Deforestation in Malaysia, SFGate, https://homeguides.sfgate.com/major-reasons-

99
deforestation-malaysia-78510.html (accessed 20 April 2020)

76
CHAPTER IV
SUMMARY, CONCLUSION, AND RECOMMENDATIONS
This chapter finalizes the whole report. A summary of each section in the research is
presented along with conclusions drawn from the gathered data and information. In addition
to that, several recommendations proposed by the researchers are pointed out. These ideas
can be considered by Malaysia in laying out future plans for its pursuit towards economic
development.
Each of the previous section in this research study demonstrates the different aspects
of Malaysia. Chapter 1 focuses on the demographic background of the country; Chapter 2
examines the country’s economic profile; Chapter 3 deliberates the current economic
condition of the country as well as the issues and problems confronting it.
Global Forest Watch Dashboard – Malaysia 2018, Global Forest watch,

100
https://www.globalforestwatch.org/dashboards/country/MYS? (accessed 22 April 2020)

77
Summary
Country Demographics
Malaysia is a Southeast Asian country composed of 2 regions separated by South
China Sea and is bordered by Brunei, Indonesia, and Thailand. It has a total land area of
329,613 square kilometers in which the East Malaysia takes up the 60% while the Peninsular
Malaysia takes up 40%. Moreover, Malaysia is made up of 13 states and 3 federal territories.
Its capital city, Kuala Lumpur, is among the fastest growing metropolitan regions in Southeast
Asia and it serves as the home of the King. Meanwhile, Putrajaya is the seat of the federal
government.
Malaysia’s total population has been showing a consistent increase since 1960 but its
growth rates reflect otherwise. As of 2018, the total population stands at approximately
31,528,525 with a sex ratio of 1.059 (1,059 males per 1,000 females). In terms of age group,
majority of the population belongs to the working age. Both the working age and the elderly
populations have been increasing from the year 2000 to 2018, in contrast to the trend
manifested by the population of the children.
In 1964, the Malaysian government declared Ringgit as the official monetary unit.
Since the beginning of 2020, the exchange rates of Ringgit have been sliding against the US
Dollar due to the decline in oil prices and the COVID-19 pandemic. With regards to the
political/government system, the Federal Constitutional Monarchy is adopted by the country.
Under this, the King serves as the head of state and the Prime Minister as the head of
government. Like most systems, Malaysia also applies the separation of powers wherein the
tasks are divided among the 3 major branches namely: Executive, Legislature and Judiciary.
78
Lastly, the economy of Malaysia has shifted to the Industry and Service Sectors at present, as
reflected in its Sector Distribution.
Economic Profile
Malaysia has been performing well after the Asian and Global Financial Crisis. In
fact, it is dubbed as one of the fastest growing economies with a GDP of 358.6 Billion US
Dollars in 2018, the 36th largest in the world and 4th in Southeast Asia. The country is also
promising in terms of GDP per capita as it surpassed that of the World by 60.79 US Dollars.
However, due to the COVID-19 pandemic, the economic growth of Malaysia in 2020 is
expected to slow down particularly in the 1st quarter. In addition to that, the country reached a
GNI of 345.8 Billion US Dollars in 2018. The country also recorded a GDNI of 1,376,045
MY Ringgit in the same year.
Both the inflation and unemployment rates of Malaysia in 2018 can be considered low
as it recorded 0.88% and 3.28%, respectively. The financial system of the country is
monitored by Bank Negara Malaysia (Central Bank of Malaysia). Going back to the inflation
rate, BNM adopts the ‘Inflation Anchoring’ framework instead of the ‘Inflation Targeting’
framework which is used by most countries. However, the goal remains the same and that is
to maintain a stable inflation while remaining supportive of growth. The BNM also set the
SRR which is currently at 3%.
As the economy of Malaysia grows, its fiscal spending also grows. The government
projected a budget of 297 Billion MYR for the year 2020. However, the actual spending is
expected to exceed the budget after an emergency stimulus package was issued to back the
country’s economy against the impact of the on-going pandemic. In terms of trade, Malaysia
is more of an exporter than an importer. As of 2017, it generated a total export of 246.5
Billion US Dollars and a total import of 221.3 Billion US Dollars. For its current account
79
balance, Malaysia was able to curtail the deficit after the Asian Financial Crisis. However,
the balances have shown declining amounts starting year 2011.
Economic Problems and Issues
In 2018, the country’s HDI reached the ‘Very High Development’ category with a
score of 0.804. Although it is a top-tier in terms of human development, Malaysia continues
to grapple against issues connected to Poverty and Inequality, Gender Inequality, Population
Growth and Quality of Life, Urbanization, Education and Health, and Environment and
Climate Change. These issues hinder the country from being classified as a developed nation.
Despite the government’s effort in reducing absolute poverty to 0.6%, relative poverty
continues to strike Malaysia. The households living below 60% median income has increased
to 26.2% in 2016. Moreover, the issue on the earnings gap between income groups is
becoming serious that it widened in 2 decades. However, amidst the increasing earnings gap,
income inequality measured by the Gini coefficient has shown a declining trend.
Meanwhile, the Gender Inequality Index of Malaysia has increased from 0.651 in
2006 to 0.677 in 2018. Notwithstanding the increase, the said score is still relatively lower
compared other Asian countries such as South Korea, China, and Japan. Based on the
breakdown of the index by indicator, Malaysia has to improve the gender gap primarily in the
educational attainment, and health and survival aspects.
In 2018, Malaysia recorded 44.73 in its cost of living index, lower than the scores of
some neighbor countries. However, the situation within the country reflects a different scene
as prices keep on increasing, making it a primary concern. Along with that, issues related to
safety and the environment have also affected the quality of life in the country. Malaysia
80
perched at the top spot in Southeast Malaysia Asia in 2018 with a crime index of 63.05. Also,
air quality in Malaysia is reported to have worsened.
Recently, Malaysia is experiencing rapid urbanization with 76.04% of the population
living in urban centers. This process is inevitable especially to a country that is moving
towards development. However, there are drawbacks to this phenomenon. Aside from
Malaysia’s high crime rates, the level of traffic congestion has been increasing in the country
as well. Further, the number of squatters also expanded from 64,129 families in 2013 to
68,861 in 2015.
Another objective of the New Economic Policy in its establishment was to improve
the country’s human capital. The Malaysian government has exerted an effort which resulted
to the establishment of 20 public college universities. However, the budget allocation for
public universities was reduced. This, according to the academic community, affects the
quality of education.
When it comes to healthcare, certain issues of inequalities are still present particularly
among the low income groups. Aside from these groups’ limited access, the country, as a
whole, is also experiencing scarcity of healthcare facilities and professionals. The gathered
information revealed that Malaysia’s healthcare spending decreased by 3.87% in 2016.
To repeat, one of the issues affecting the quality of life in Malaysia is the worsening of
its air quality. This is proven in the statistics released by Knoema wherein the country
recorded a CO2 emission per capita of 8.05 metric tons, an increase of 6.73 metric tons since
1970. In fact, these figures are among the highest in Southeast Asia. Aside from the
emissions coming from the increasing number of factories and motor vehicles, deforestation is
81
also considered as a contributor to this issue. The tree cover loss of Malaysia from 2001-2018
equates to 3.38 gigatonnes of CO2 released.
Conclusion
Malaysia is a multiracial country with a rich cultural heritage, which has a diversity of
races, religions, cultures, a stable and peaceful environment, places of interest, and many
international achievements which are the pride of the nation. Despite the pressing problems
of racial and economic imbalances of the country, Malaysia has experienced strong economic
growth over the past decades. As a middle-income country, it has transformed itself from a
manufacturer of resources into an emerging multi-sector economy. Though of a success, the
Malaysian economy is not devoid of serious problems that the government implicates policy
measures to analyze and account for the pattern of economic development of the country.
Recommendations
In line with the economic problems and issues existing in Malaysia, the researchers
would like to recommend the following to settle the affairs:
82
Poverty and Income Inequality
The government of Malaysia should take great retaliation on poverty by providing
opportunities to hardcore and overall poor household to generate income and reduce their
dependency on government aids. Government initiative on raising income level and
increasing employment opportunities are means of dealing with poverty in which household
members can sufficiently purchase certain minimum necessities in life. Furthermore,
legislative reforms such as loan forgiveness funds and expanding eligibility or benefits must
be taken into consideration among the vulnerable population. Hence, the government shall
educate these people about a plan to achieve self-support programs to reduce their dependence
on public benefits and enhance economic stability.
Gender Inequality
On the issue of gender disparity, the researchers recommend the creation of inclusive
education in Malaysia for those women under-represented in emerging roles such as
engineering and data. The administration shall ensure that women are better equipped in
terms of improving their skills, unlocking their potential, and to have an equal role in building
the future. Moreover, in terms of business and profession, corporations shall practice diverse
hiring to promote gender balance among workers, particularly to women by giving them
opportunities for career building and to pursue the highest levels of an organization. There
should be government authorization in which women can comprise at least a percentage of the
boards in large corporations. Diversity can lead to a healthy challenge among their male
colleagues, and that, not only is beneficial to them but it is also good for the business and the
economy.
83
Population Growth and Quality of Life
One of the pressing issues in Malaysia is the rising cost of living, affecting the quality
of life. Increasing prices and crime index emanate different households or income groups’
difficulties in meeting their needs. Thus, the researchers recommend that the government
shall intervene in the supply chain through the regulation of price increases. As for the issue
on increasing property prices, the authorities can negotiate with private entities to build
affordable houses. Food prices usually expand due to supply and demand, and sometimes,
because of trade policies, energy prices and inefficiencies. To address this, the government
can use the stockpiling mechanism. During a price increase, the food stocks can be released
to the market at lower prices. It must be noted that this strategy also demands proper
warehouse handling and distribution, in order to become effective. The government can also
provide stronger efficiency education and rebate program for people to step above their
poverty line and improve the quality of life. Most importantly, saving and responsible buying
must be advocated especially to the children and the youth because price increase can
84
continue to the future. Recommendations on crime risk and the deterioration of air quality
shall be discussed in the succeeding portions.
Urbanization and Urban Migration
The government shall provide wide coverage of basic programs, services, and
amenities to rural areas, to ensure that the benefits of urbanization are widely shared among
others. Programs such as structural incorporation of cultural work, housing, and transport
which help folks better their sense of belonging and security. Further, the administration
should strengthen urban service delivery like urban highways, roads, and public
transportation. Continuing use of public transport improves pollution management, and
utilizing renewable energy and water recycling will ensure environmental sustainability in an
urban locale. Lastly, to lessen crime risk, the government can take actions by imposing
regulations and compliance policies such as a community watch because not all times law
enforcement officers can be on every street corner. Therefore, citizen involvement is
necessary to combat those crimes.
Human Capital: Education and Health
85
Malaysian federation should provide more, healthcare, and other social services which
among the millions of people living in the country are in hardship. Moreover, they should lift
their level of education among the poor children in school, and teach them basic corporate
practices that can help them gain a higher wage job and possibly run a business of their own
in the future. Government programs are opportunities provided to those remnant groups, to
better themselves and for the benefit of the expanding economy.
Environment and Climate Change
Despite the Malaysian government’s commitment to doing certain activities and
having several mitigation practices and policy frameworks to address the issues related to
climate change, they should also foster in dealing with sustainable selling in which people
make informed choices by buying less stuff, reduce consumption of single-use products and
eating durable food to protect the forest. On top of that, the effective ways to curb global
warming is to start with the power of the marketplace. Companies should maximize the use of
recycled materials in their products or nonrecycled materials that has credible assurance,
which does not fuel deforestation and would only create a minimal impact on climate change.
There will be a threatened penalty for those businesses using extensive biofuels, biomass, or
carbon that releases more green gas emissions. Regarding the issue on deforestation, the
Malaysian government shall make strict impositions on their present policies especially to
those who chop off trees illegally. Illegal loggers should be fined with a higher amount or
longer time of imprisonment. Also, replanting a tree after cutting off one should be required.
86
BIBLIOGRAPHY
(n.d.). Retrieved from https://import-export.societegenerale.fr/en/country/malaysia/economy-

country-risk
(n.d.). Retrieved from

https://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/289/185
Amadeo, K. (2020, February 15). Where's the Best Standard of Living? Depends Who You
Ask. Retrieved from https://www.thebalance.com/standard-of-living-3305758
Bank Negara Malaysia: Central Bank of Malaysia. (n.d.). Retrieved from

https://www.bnm.gov.my/index.php?ch=en_about&pg=en_intro&ac=641&lang=en
Ben, S. (n.d.). Malaysia. Retrieved from https://oec.world/en/profile/country/mys/
Bernama. (2019, December 10). UN: Malaysia enters Very High Human Development category
of nations: New Straits Times. Retrieved from
https://www.nst.com.my/news/nation/2019/12/546426/un-malaysia-enters-very-high-human-
development-category-nations
Bernama. (2020, March 13). Ringgit falls against US dollar amid Covid-19 fears: New Straits
Times. Retrieved from https://www.nst.com.my/business/2020/03/574404/ringgit-falls-
against-us-dollar-amid-covid-19-fears
87
Carpenter, J. W. (2020, January 29). Budgeting Tips: Living in Malaysia on $1,000 a Month.
Retrieved from https://www.investopedia.com/articles/personal-finance/011216/budgeting-
tips-living-malaysia-1000-month.asp
CO2 emissions per capita by country, 2019. (n.d.). Retrieved from

https://knoema.com/atlas/ranks/CO2-emissions-per-capita
Coleman, A. (2019, June 24). The Most Sustainable Countries On Earth According To The
Environmental Performance Index. Retrieved from https://natran.com/the-most-sustainable-
countries-on-earth-according-to-the-environmental-performance-index/
Cost of Living. (n.d.). Retrieved from https://www.numbeo.com/cost-of-

living/rankings_by_country.jsp?title=2018
Countrymeters.info. (n.d.). Malaysia Population. Retrieved from

https://countrymeters.info/en/Malaysia
Crime. (n.d.). Retrieved from https://www.numbeo.com/crime/rankings_by_country.jsp?
title=2018
Ethnic inequality and poverty in Malaysia since May 1969. (n.d.). Retrieved from
https://voxeu.org/article/ethnic-inequality-and-poverty-malaysia-may-1969
Full_employment. (2020, January 28). Retrieved from

https://www.economicsonline.co.uk/Definitions/Full_employment.html)
Global Forum on Environment and Economic Growth. (n.d.). Retrieved from

http://www.oecd.org/economy/greeneco/global-forum-on-environment-2016.htm
Hitachi, Ltd. (n.d.). Urbanization in Malaysia and Potential of Social Innovation Business.
Retrieved from https://www.hitachi.com/rev/archive/2018/r2018_04/gir/index.html
Human Development Reports. (n.d.). Retrieved from http://hdr.undp.org/en/content/human-

development-index-hdi
Institute, W. R. (n.d.). Malaysia: Dashboards: Global Forest Watch. Retrieved from

https://www.globalforestwatch.org/dashboards/country/MYS
Lee, H. (2017, January 13). Malaysia #1 In Southeast Asia For Crime. Retrieved from
https://my.theasianparent.com/malaysia-crime-rate
88
Leinbach, T. R., Ahmad, Z. B., Lockard, C. A., & Bee, O. J. (2020, April 23). Malaysia.
Retrieved from https://www.britannica.com/place/Malaysia
Malay Mail. (2019, December 10). Malaysia ranked 61st on UN's Human Development Index
for 2018: Malay Mail. Retrieved from
https://www.malaymail.com/news/malaysia/2019/12/10/malaysia-ranked-61st-on-uns-human-
development-index-for-2018/1817677
Malaysia .:. Sustainable Development Knowledge Platform. (n.d.). Retrieved from

https://sustainabledevelopment.un.org/memberstates/malaysia
Malaysia 2018 Crime & Safety Report. (n.d.). Retrieved from

https://www.osac.gov/Content/Report/ef56bd47-cd6c-4a03-a0a0-15f4ae5cd8cf
Malaysia GDP1960-2019 Data: 2020-2022 Forecast: Historical: Chart: News. (n.d.). Retrieved
from https://tradingeconomics.com/malaysia/gdp
Malaysia General government total expenditure, 1980-2018. (n.d.). Retrieved from

https://knoema.com/atlas/Malaysia/topics/Economy/Financial-Sector-General-Government-
finance/General-government-total-expenditure
Malaysia Gross National Income2005-2019 Data: 2020-2022 Forecast: Historical. (n.d.).
Retrieved from https://tradingeconomics.com/malaysia/gross-national-product
Malaysia Issues Stimulus Package to Combat COVID-19 Impact. (2020, April 3). Retrieved
from https://www.aseanbriefing.com/news/malaysia-issues-stimulus-package-combat-covid-
19
Malaysia Population. (n.d.). Retrieved from https://www.worldometers.info/world-

population/malaysia-population/
Malaysia Poverty rate at national poverty line, 1960-2018. (n.d.). Retrieved from
https://knoema.com/atlas/Malaysia/Poverty-rate-at-national-poverty-line
Malaysia trade statistics. (n.d.). Retrieved from

https://wits.worldbank.org/CountryProfile/en/MYS
Malaysia. (2016, February 25). Retrieved from https://2009-2017.state.gov/r/pa/ei/bgn/2777.htm
Malaysia: GDP: Gross National Disposable Income: Economic Indicators: CEIC. (1970, January
1). Retrieved from https://www.ceicdata.com/en/malaysia/2015-base-gdp-by-expenditure-
current-price-annual/gdp-gross-national-disposable-income
89
Malaysian Ringgit (MYR) to US Dollar (USD) Historical Exchange Rates on 20th March 2020
(20/03/2020). (n.d.). Retrieved from https://www.exchangerates.org.uk/MYR-USD-
20_03_2020-exchange-rate-history.html
Malaysians waste RM 10–20 billion annually on traffic congestion. (n.d.). Retrieved from
https://www.wapcar.my/news/Malaysians-waste-RM-10–20-billion-annually-on-traffic-
congestion-1244
Martin, M. J. (2017, November 21). Major Reasons for Deforestation in Malaysia. Retrieved
from https://homeguides.sfgate.com/major-reasons-deforestation-malaysia-78510.html
Nair, S., Sagaran, S., Alam, Siwar, C., Wahid, Talib, …Sna. (1970, January 1). Health, access
and nutritional issues among low-income population in Malaysia: introductory note.
Retrieved from https://bmcpublichealth.biomedcentral.com/articles/10.1186/s12889-019-
6852-8
Overview. (n.d.). Retrieved from https://www.worldbank.org/en/country/malaysia/overview
Plecher, H. (2020, January 29). Malaysia - urbanization 2008-2018. Retrieved from

https://www.statista.com/statistics/455880/urbanization-in-malaysia/
Pollution in Malaysia. (n.d.). Retrieved from
https://www.numbeo.com/pollution/country_result.jsp?country=Malaysia
Quality of Life in Malaysia: About Malaysia. (2020, February 24). Retrieved from
https://www.paulhypepage.my/quality-of-life-in-malaysia/
Results. (n.d.). Retrieved from https://epi.envirocenter.yale.edu/2018/report/category/hlt
Rising Middle Class Will Drive Global Automotive Demand. (2014, April 16). Retrieved from
https://www.nielsen.com/my/en/press-releases/2014/rising-middle-class-will-drive-global-
automotive-demand/
Sipalan, J. (2018, January 25). Malaysia's central bank taps the brakes, raises key rate. Retrieved
from https://www.reuters.com/article/us-malaysia-economy-rates/malaysias-central-bank-
taps-the-brakes-raises-key-rate-idUSKBN1FE0SL
Smith, L. M. (2019, December 18). Malaysia has one of the biggest gender gaps in South-east
Asia, and places in the bottom half of WEF's Global Gender Index. Retrieved from
https://www.businessinsider.my/malaysia-has-one-of-the-biggest-gender-gaps-in-south-east-
asia-and-places-in-the-bottom-half-of-wefs-global-gender-index
90
Surendran, S. (2018, October 16). Widening household income disparity. Retrieved from
https://www.theedgemarkets.com/article/widening-household-income-disparity
Sustainable Development Goals. (n.d.). Retrieved from

https://www.undp.org/content/undp/en/home/sustainable-development-goals.html
Teng, C. C. H. (2020, January 11). Air quality in M'sia getting worse. Retrieved from
https://www.thestar.com.my/news/nation/2020/01/12/air-quality-in-msia-getting-worse
Teoh, S. (2018, October 15). Malaysia's income gap doubled in two decades: Study. Retrieved
from https://www.straitstimes.com/asia/se-asia/malaysias-income-gap-doubled-in-two-
decades-study
The Editors of Encyclopaedia Britannica. (2019, October 23). Kuala Lumpur. Retrieved from
https://www.britannica.com/place/Kuala-Lumpur
The Star Online. (1969, December 31). Malaysia's widening income gap between rich and poor.
Retrieved from https://www.thestar.com.my/business/business-news/2018/10/16/malaysias-
widening-income-gap/
The Sustainable Development Agenda - United Nations Sustainable Development. (n.d.).

Retrieved from https://www.un.org/sustainabledevelopment/development-agenda/
Traffic. (n.d.). Retrieved from https://www.numbeo.com/traffic/indices_explained.jsp
Urbanization and Urban Poverty in Malaysia: Consequences and Vulnerability. (n.d.). Retrieved
from https://scialert.net/fulltext/?doi=jas.2016.154.160
Varkkey, H., Jong, H. N., & Mock, A. (2019, February 27). Winds of Change in Malaysia: The
Government and the Climate: Heinrich Böll Foundation: Southeast Asia Regional Office.
Retrieved from https://th.boell.org/en/2019/02/27/winds-change-malaysia-government-and-
climate#
What is poverty? It's not as simple as you think. (n.d.). Retrieved from
https://www.worldvision.ca/stories/child-sponsorship/what-is-poverty
Writer, S. (2020, February 12). Malaysia GDP growth slows to 4.3%, lowest in 10 years.
Retrieved from https://asia.nikkei.com/Economy/Malaysia-GDP-growth-slows-to-4.3-lowest-
in-10-years
91
92

An Economic Research Project On ASEAN Nations: Malaysia

Uploaded by

Copyright:

Available Formats

An Economic Research Project On ASEAN Nations: Malaysia

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

An Economic Research Project On ASEAN Nations: Malaysia

Uploaded by

Copyright:

Available Formats

UNIVERSITYOF SAN CARLOS

P.del Rosario St., Cebu City

An Economic Research Project on ASEAN Nations:

Faculty of the Department of Accountancy

School of Business and Economics

University of San Carlos

Cebu City, Philippines

of the Requirements for the course

Economic Development (AC 2203)

GROUP 3 TTh 9:00-10:30 AM

so understanding everytime we work home late on our research.

patient and understanding of the current situation we are in.

our friends, teachers, classmates and everyone around us.

(4) To solve cases on urbanization, the government shall work on spreading

III ECONOMIC PROBLEMS AND ISSUES 36

Poverty and Income Inequality 43

Population Growth and Quality of Life 54

Environment and Climate Change 73

IV SUMMARY, CONCLUSION, AND RECOMMENDATIONS 79

3.1 Malaysia’s HDI trends based on consistent time

3.2 Country Classifications by Income Level 42

3.3 The Global and Regional Gender Gap Index Rankings

3.4 Data Required for Measuring Gender Inequality through

3.5 Policy Thrusts for Women and Development in the 9th

3.6 Cost of Living Index of Selected Southeast Asian

3.7 Safety Index of Selected Southeast Asian Countries

3.8 Environmental Performance Index (EPI) and sub-indices

3.9 Traffic Index of Selected Southeast Asian Countries

3.10 The Number of Squatters in Malaysia by State, 2015 66

3.11 Labor Force by Educational Attainment, Malaysia (2014) 69

1.1 Map of the Malaysian Peninsula 1

1.2 States and Federal Territories of Malaysia 3

1.3 Population of Malaysia by Gender in 2018 4

1.4 Total Population and Annual Population Growth Rate of

1.5 Percentage of Population according to Age Group of

1.6 The Districts of Kuala Lumpur 7

1.7 60-Day Exchange Rate History of Malaysian Ringgit VS

1.8 Malaysia’s Sector Distribution based on GDP from 2008-2018 12

2.1 GDP (in current US$) of Southeast Asian Countries in 2018 13

2.4 GDP per capita (in current US$) of Southeast Asian

2.7 GNI (in current US$) of Malaysia from 1960-2018 18

2.8 Gross National Disposable Income (in MY Ringgit) of

2.10 Annual Consumer Price Inflation Rate (in percent) of

2.11 Total Unemploymenr Rate (in percent of total labor force)

2.12 Comparison of Unemployment Rates for different

2.13 Total Unemployment Rates (percent of total labor force)

2.14 Actual Inflation and the 24-month-ahead forecast in

2.15 Malaysia’s Statutory Reserve Requirement Ration

2.16 General Government Total Expenditure of Malaysia

2.17 Malaysia’s 2018 Budget – Spending Allocation 29

2.18 Malaysia’s 2020 Budget – Spending Allocation 30

2.19 Net Exports of and Imports of Good and Services

2.20 Net Trade in Goods and Services (Balance of Payments,

2.21 Percentage of Exports by Category in Malaysia

2.22 Percentage of Imports by Category in Malaysia

2.23 Current Account Balance (Balance of Payments,

3.1 Key Dimensions of Human Development Index 36

3.2 Human Development Index of Selected Asian

3.3 Human Development Index Trend of Malaysia