From the late 18th to the early 19th century, Britain gradually gained control of Peninsular Malaysia, and most of northern Borneo fell into private British hands. During the same period, the largely Malay population became diversified, as ethnic Chinese and Indians immigrated to work in Malaysia’s tin and rubber industries. Since independence in 1957, ethnic tensions, especially between Chinese and Malays, have dominated political and economic issues. Despite the tensions, however, Malaysia has experienced rapid economic growth, particularly in the manufacturing sector, and economists include the country among Asia’s newly industrialized economies (NIEs).

Economy :
The economy of Malaysia once relied principally on the production of raw materials for export, most importantly petroleum, natural rubber, tin, palm oil, and timber. After Malaysia gained independence in 1957, however, the development of the manufacturing sector took priority. From the mid-1970s to mid-1990s Malaysia had one of the world’s fastest-growing economies, mainly due to rapid industrialization. In the late 1980s industry replaced agriculture as the largest contributor to the gross domestic product (GDP). The services sector, especially tourism, also drove growth.

In 1991 the Malaysian government launched the ambitious “Vision 2020” program, which envisions Malaysia attaining the status of a developed nation by 2020. Toward this goal, the government has invested heavily in modernizing the infrastructure of the Kuala Lumpur metropolitan area. The modernization is designed to propel Malaysia into the digital age and position it as a hub for high-technology businesses in Southeast Asia. However, the country’s reliance on exports of manufactured goods, such as computer microchips and other electrical components, has made its economy susceptible to regional and global economic downturns. Malaysia was one of many Asian countries that suffered economic decline during a regional economic crisis in 1997 and 1998. This crisis led to the delay of some infrastructure projects and possibly of the Vision 2020 goal.

The nation’s economy expanded an average of 6.5 percent annually in the period 1990–2001. In 1997 Malaysia’s annual budget included revenues of about $23 billion and expenditures of about $20 billion. The country’s GDP was $88 billion in 2001. Industry, including mining and construction, accounted for 49 percent of the GDP; services, 42 percent; and agriculture, forestry, and fishing, 9 percent.

Foreign Trade :
Export trade totaled $88 billion in 2001. Major exports include semiconductors and electrical equipment, palm oil, chemicals, petroleum, machinery appliances and parts, wood and wood products, and textiles. The chief buyers of exports are the United States, Singapore, Japan, China (including Hong Kong), and Thailand. Imports were valued at $73 billion in 2001. Major imports include electrical and electronic products, machinery and transportation equipment, chemicals, manufactures of metal, petroleum, and iron and steel products. The leading suppliers of imported goods are Japan, the United States, Singapore, China, Taiwan, and South Korea.

Malaysia is a founding member of the Association of Southeast Asian Nations (ASEAN) and is a full participant in the ASEAN Free Trade Area (AFTA), established in 1992 with the goal of establishing nearly free trade among member nations. With the formal implementation of AFTA in 2002, member nations were to gradually reduce tariff barriers to 5 percent or less. Malaysia became a member of the World Trade Organization (WTO) in 1995.

Currency and Banking :
The Malaysian unit of currency is the ringgit, consisting of 100 sen (3.80 ringgits equal U.S.$1; 2001 average). Malaysia’s central bank and bank of issue is the Bank Negara Malaysia, in Kuala Lumpur. There is a stock exchange in Kuala Lumpur.

Religion :
Islam is the country’s official religion, although the constitution guarantees freedom of religion. More than half the people of Malaysia are Muslims, including nearly all ethnic Malays. Most Chinese are Buddhists, although Confucianism and Daoism (Taoism) are also important. Most Indians practice Hinduism. In Sabah and Sarawak many of the indigenous peoples are Christians, although traditional beliefs are also widely practiced.

Government :
Malaysia is a federal constitutional monarchy with a two-house legislature. The government is based on the 1957 constitution of the Federation of Malaya, which was an independent nation from 1957 to 1963 that occupied present-day West Malaysia. The Federation of Malaya joined with Singapore, Sarawak, and Sabah to form the Federation of Malaysia in 1963, although Singapore became an independent republic in 1965. All citizens of Malaysia who are at least 21 years old may vote.

Ethic Groups and Language :
Ethnic Malays and other indigenous peoples, sometimes known as Malayan peoples, comprised 65 percent of Malaysia’s population at the 2000 census. In Malaysia they are called bumiputera (sons of the soil). Other groups include ethnic Chinese, who constituted 26 percent of the population, and ethnic Indians, who made up about 8 percent. Small numbers of Indonesians, Thai, Europeans, and Australians also live in Malaysia. In West Malaysia ethnic Malays make up a majority of the population. In East Malaysia, however, numerous Dayak ethnic groups constitute a sizable population, as do Chinese, especially in Sarawak. The national language is Bahasa Malaysia (also known simply as Malay), a Malay language of the Austronesian language family. English, Chinese, and Tamil (a Dravidian language of southern India) are also widely spoken.

Population :
Malaysia’s estimated 2003 population was 23,092,940. The population growth rate was 1.86 percent in 2003. The overall population density is 70 persons per sq km (181 per sq mi), but the population is unevenly distributed; West Malaysia has a population density about twice the national average. Some 58 percent of Malaysia’s population is urban. Like most developing nations, Malaysia has experienced high rural-to-urban migration rates since the 1950s. Urban unemployment is very low in Malaysia, and this contributes to the growth. The labor shortage for low-skill jobs attracts many immigrants, particularly from Indonesia, the Philippines, Pakistan, and Bangladesh. Skilled workers are recruited primarily from India, Japan, and China.

In addition to Malaysia’s largest city, Kuala Lumpur, large cities in the country include Ipoh, Johor Baharu, Petaling Jaya, Kelang, Kuala Terengganu, and George Town (formerly Pinang). Kuala Lumpur, Petaling Jaya, and Kelang are part of the Kelang Valley conurbation, which is Malaysia’s largest urban region. Most of the conurbation is located in the state of Selangor, which surrounds the Kuala Lumpur federal territory. Selangor is Malaysia’s most populated state, followed by Johor and Sabah. From 1991 to 2000, Selangor had an annual population growth rate of about 6 percent—the highest of any Malaysian state. The growth was largely due to employment opportunities in the Kelang Valley conurbation and to the sprawl of the Kuala Lumpur greater metropolitan area beyond the borders of the federal territory. Growth of the metropolitan area has been spurred since the late 1990s by the construction of a new administrative center of the federal government, Putrajaya, about 40 km (about 25 mi) south of Kuala Lumpur, and the Kuala Lumpur International Airport, located south of Putrajaya.

Energy :
Malaysia is self-sufficient in energy. In 2001 annual production was 68 billion kilowatt-hours. Some 90 percent of the country’s production came from thermal plants burning fossil fuels (petroleum and natural gas), and 10 percent was from hydroelectric sources.

Transportation and Communications :
The framework of West Malaysia’s system of roads and railroads was laid down during the British colonial period. A main highway in western Peninsular Malaysia extends over 800 km (500 mi) from Singapore to the Thai border in the north. The road system in Sabah and Sarawak is much less developed; a main road runs along Borneo’s northern coast but there are few good interior roads. The state-owned railroad system consists of 1,622 km (1,008 mi) of track, most of which is in West Malaysia and with a short stretch in Sabah. Malaysia Airlines, founded in 1971, offers both domestic and international flights. Other domestic carriers also offer local flights. Malaysia has a number of international airports, including the Kuala Lumpur International Airport, located south of the city at Sepang. Major seaports in West Malaysia are Port Kelang, George Town, and Melaka. Kuching and Labuan are the major seaports serving Sarawak and Sabah, respectively.

The government of Malaysia tightly controls and monitors most public communications. Government censorship, and the expectation of it, imposes restrictions on the news media. Malaysia has 42 daily newspapers publishing in four languages. A government agency, Radio Television Malaysia, controls and monitors radio and television broadcasting. The state-run Radio Malaysia operates six radio networks, and Television Malaysia operates two television networks; two private television networks also exist. The government has made it a policy to not censor the Internet, which as a consequence has become an important alternative source of information for the Malaysian public.