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Maylasia
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Malaysia - A Political Risk Forecast Publisher: PRS Group, The Page Count:60 This 60-page report forecasts the climate for international business under three most likely regime scenarios in Malaysia over the next 18 months and over the next five years. Data includes Political Risk Forecasts for Turmoil, Financial Transfer, Export Markets and Direct Investment for both forecast periods. A Political Risk Services Country Report helps you evaluate the international business climate. They are the perfect starting point before you invest, alerting you to potential risks in the future. Updated quarterly, these reports follow a standard format that includes both the details and executive summaries. They include political and economic risk forecasts, 10-year time series for 52 economic and social variables, as well as giving you independent risk ratings that help you assess the risks of doing business in a country. Malaysia: Country fact sheet Population 24.4m (mid-2002) Population growth 2.5% (average, 1998-2002) Land area 330,433 sq km Fiscal year Starts January 1st Currency Ringgit (M$) M$3.80:US$1 (2002, average GDP M$334.6bn (2001, nominal) GDP growth 3% (average, 1997-2001) GDP per head US$3,670 (2001, at market Inflation 2.6% (average, 1998-2002) Background The UK took control of the Malay sultanates in the late 19th and early 20th centuries. The United Malays National Organisation (UMNO) led a campaign for independence after the second world war and the Japanese occupation. After suppressing a communist insurgency, the UK granted Malaya independence in 1957, and the Federation of Malaysia was formed in 1963 with the decolonisation of the Borneo states of Sabah and Sarawak, together with Singapore (which left the Federation in 1965). Following a fiercely fought general election in 1969, rioting broke out between Malays and Chinese. In the ensuing political crisis, the Alliance, which had ruled since independence and consisted of UMNO, the Malaysian Chinese Association and the Malaysian Indian Congress, was replaced by a broader coalition, the Barisan Nasional (BN, National Front). With minor changes in composition, the coalition has ruled ever since. Political structure Malaysia’s parliamentary democracy has an appointed Senate (the upper house) and an elected House of Representatives (the lower house). The prime minister, Mahathir Mohamad, heads the BN, of which UMNO is by far the largest member. Each of the 13 states has an assembly and a chief minister. Policy issues Following the Asian economic and financial crisis in mid-1997, the government abandoned its tight monetary and fiscal policies and adopted an expansionary strategy to revive the economy. On September 1st 1998 the government introduced wide-ranging capital controls to gain greater flexibility in lowering interest rates, and pegged the ringgit at M$3.80:US$1. Since February 1999 the government has eased most of these controls. The stimulative fiscal and monetary stance has remained basically unchanged since the 1997-98 crisis. The government remains committed to the fixed exchange rate, and the weakness of the US currency has eased pressure for an adjustment of the peg. Foreign trade Exports totalled US$88bn in 2001 and imports US$69.6bn (fob) yielding a trade surplus of US$18.4bn (down from US$20.8bn in 2000 and contributing to a current-account surplus of US$7.3bn. Major exports (2001) US$ bn Major imports (2001) US$ bn Electronics & electrical machinery 60.6 Intermediate goods 60.7 Petroleum & LNG 6.7 Machinery, excl transport equip. 11.8 Chemicals & chemical products 3.9 Consumption goods 4.6 Textiles, clothing & footwear 2.7 Imports for re-exports 1.7 Palm oil 2.6 Transport equipment 1.6 Leading markets (2001) % of total Leading suppliers (2001) % of total US 20.2 Japan 19.2 Singapore 16.9 US 16.0 EU 13.6 EU 12.9 Japan 13.3 Singapore 12.6 Hong Kong 4.6 Taiwan 5.7 China 4.3 China 5.2 Download the numbers in Excel Taxation Corporate income tax is 28%; capital allowances offset new investments and there are extra inducements for approved new investments. Personal income tax, after the deduction of tax reliefs, is 2% on earnings of M$2,500-5,000 (US$660-1,300) per year, rising progressively to 30% on earnings above M$150,000 (US$39,500) per year. Malaysia: Country risk summary COUNTRY VIEW FROM THE ECONOMIST INTELLIGENCE UNIT Overall Overall Political Economic Economic Liquidity rating score risk policy risk structure risk risk March B 37 C B B B February B 37 C B B B Short-term risk event The US action against Iraq puts the governing coalition in a tricky position: the government could undermine its Malay support base if it is seen to align itself too closely with the US. The government will attempt to continue treading a fine line between opposing the war on Iraq, while supporting the US campaign against terrorism. Political risk Speculation about the date of the next general election continues, despite the declaration of the prime minister, Mahathir Mohamad, that he will not call a general election before his retirement in October. Economic outlook Growth will be buoyed by government spending, reasonable consumption growth and rising investment spending. By 2004 demand for Malaysia’s exports should be rising more strongly. The economy is forecast to expand by 4.6% in 2003 and 5.1% in 2004. Debt outlook The government will continue to accumulate overseas borrowing in order to fund fiscal stimulus without squeezing out domestic borrowers. The external debt stock will rise to US$51.9bn by end-2004, equivalent to 49.3% of GDP.
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Paper Information
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Title: Maylasia
Words: 4301
Rating: None
Pages: 17.2
submitted by: Crystylv609
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