Since the 1970s Malaysia has transformed itself from a producer of raw materials into an emerging multi-sector economy with an economic record that has made it one of the top performers in Asia. Malaysia was formed in 1963 with the joining of the former British colonies of Singapore and the Eastern Malaysian regions of Sabah and Sarawak on the northern coast of Borneo.
The first several years of the country’s history were marked with volatility that included a Communist insurgency, Indonesian confrontation and the Philippine’s claims to Sabah. However, in following years, particularly under the governance of Prime Minister Mahathir bin Mohamad between 1981 and 2003, Malaysia was successful in diversifying its economy to include manufacturing, services and tourism.
High levels of foreign and domestic investment played a significant role in the modernization of the Malaysian economy. The current leadership has focused on promoting high technology, medical technology, and pharmaceuticals for investment. The government of Malaysia also continues to emphasize the importance of developing domestic demand to wean the economy off of its dependence on exports. Malaysia is one of the world’s largest exporters of semiconductor devices, electrical goods, and information and communication technology products. Compared with the rest of the world, Malaysia was relatively unaffected by the global financial crisis. The country’s central bank maintained healthy foreign exchange reserves and a regulatory regime that also limited Malaysia’s exposure to riskier financial instruments.
Malaysia was a founding member of the Association of Southeast Asian Nations (ASEAN) and served as the group’s chair most recently in 2005-2006. It hosted the ASEAN Summit and East Asia Summit in December 2005, as well as the ASEAN Ministerial and the ASEAN Regional Forum in July 2006. Malaysia is an active member of the Asia Pacific Economic Cooperation (APEC) forum and the Organization of the Islamic Conference (OIC). Regional cooperation continues to be a foundation of Malaysia’s foreign policy. Furthermore, Malaysia is a frequent contributor to UN and other peacekeeping and stabilisation missions, including recent deployments to Lebanon, Timor-Leste, Philippines, Indonesia, Pakistan, Sierra Leone, and Kosovo.
A current challenge the nation faces is the issue of involuntary servitude by immigrants working for Malaysian employers. Malaysia is a destination country for men, women, and children who migrate willingly from South and Southeast Asia to work.