Identify and Evaluate the Economic System That Malaysia Is Adopting. Discuss the Rational of the Malaysia’s Economic System in Terms of Government Intervention and Resource Allocations in the Country.

Topics: Economic growth, Economics, Economy Pages: 9 (3100 words) Published: October 19, 2012
Continuous rapid economic growth has raised Malaysia from an agricultural and commodity-based low-income economy to a successful middle-income economy. As a mixed economy, Malaysia has elements of a free market economy nevertheless with intervention government. Malaysia's economic activity consist of a mixture of sectors whereas mixed of capitalism and socialism The strong economic performance has helped improve the quality of life for Malaysians and supported advances in education, health, infrastructure, housing and public amenities and others. The population of Malaysia locate at over 28 million in 2012.Malaysia's population involved many ethnic groups, with the Malays at around 50.4% making up the majority and other aboriginal groups in Sabah and Sarawak at 11% around of the population. By constitutional definition, Malays are Muslims who practice Malay customs and culture. Around 23.7% of the population is of Chinese descent, while Malaysians of Indian descent comprises approximately 7.1% of the population. Indians began migrating to Malaysia in the early 19th century. Other Malaysians also include those whose origin, can be traced to the Middle East, Thailand and Indonesia. Europeans and Eurasians mainly include British who settled in Malaysia since colonial times. The population distribution is highly uneven, with some 20 million residents concentrated on the Malay Peninsula, while East Malaysia is relatively less populated. 2EVALUATION ON MALAYSIA ECONOMIC SYSTEM

After gaining independence, the Malaysian Federation faced a necessity to expand the economy. The country shifted from the policy of export of primary natural resources and agricultural products to establish itself as a rapidly industrializing country with a diversified export base. In the mid-1960s, Malaysia established 5-year planning, targeting certain areas of economic growth and social changes, and allocating public resources for priority sectors of the economy and for infrastructure development. Despite these efforts, the government was reluctant to institute centralized control over the state's economy. The 5-year plans became a basis for official development strategies. Government plays major role in economic growth as well as distribution of wealth. For example, our government collects tax and provides subsidies at the same time for the public. The success of mixed economic system started in Malaysia with the initiative of Central Government with the creation of National Development Plan. In Malaysia, the planning revolves around the Economic Planning Unit and other central agencies while the Malaysia’s experience in monitoring the implementation of national developments programmed and projects have contributed towards the success of this national socioeconomic development using mixed economic system. Three main factors responsible for Malaysia’s success mixed economy are: 1.

a) sound and sustained socio-economic development programmed b) a committed and modernized bureaucracy, responsive to the political leadership and peoples’ needs c) a system of planning, monitoring and evaluation that ensures implementation always remain on track.

The structure of the Malaysian economy has witnessed tremendous change in the last 2 decades. According to the World Bank, the proportion of manufactured production grew from roughly 20 percent of Gross Domestic Product (GDP) in the early 1980s to 31.5 percent of GDP in the late 1990s. Manufactured products accounted for around 85 percent of gross export earnings in 1999, with electronic goods becoming one of the most important products. Annual growth in GDP grow up from 709 billion income in 2011 and grew to an estimated more than 740 billion in year 2012.The main contributions to GDP for year 2012 were from the services sector (54%) and manufacturing sector (25%), followed by mining (8.5%), agriculture (7.6%) and construction (3.1%) .(EPU,2012). Close...
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