Economy Malaysia

Malaysia, a middle-income country, has transformed itself since the 1970s from a producer of raw materials into an emerging multi-sector economy. After coming to office in 2003, former Prime Minister Abdullah tried to move the economy farther up the value-added production chain by attracting investments in high technology industries, medical technology, and pharmaceuticals, an effort that continues under current Prime Minister Najib. The Najib administration also is continuing efforts to boost domestic demand and to wean the economy off of its dependence on exports. Nevertheless, exports - particularly of electronics - remain a significant driver of the economy. As an oil and gas exporter, Malaysia has profited from higher world energy prices, although the rising cost of domestic gasoline and diesel fuel, combined with strained government finances, has forced Kuala Lumpur to reduce government subsidies. The government is also trying to lessen its dependence on state oil producer Petronas, which supplies 40% of government revenue. The central bank maintains healthy foreign exchange reserves and its well-developed regulatory regime has limited Malaysia's exposure to riskier financial instruments and the global financial crisis. Nevertheless, decreasing worldwide demand for consumer goods hurt Malaysia's exports and economic growth in 2009, although both began showing signs of recovery late in the year. In June 2010 Najib will introduce the Tenth Malaysia Plan, outlining new reforms. Najib already has introduced several reforms in the services sector in a bid to attract direct foreign investment, which has stagnated in recent years.