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- GDP (PPP):
- $447.3 billion
- 5.1% growth
- 4.3% 5-year compound annual growth
- $15,568 per capita
- Inflation (CPI):
- FDI Inflow:
Malaysia’s economic freedom score is 66.1, making its economy the 56th freest in the 2013 Index. Its score is 0.3 point lower than last year, with an improvement in property rights outweighed by a significant decline in labor freedom. Malaysia is ranked 9th out of 41 countries in the Asia–Pacific region, and its overall score is above the world and regional averages.
Despite the challenging global economic environment, the Malaysian economy has recorded growth rates averaging about 4.5 percent per year over the past five years. Pressing ahead with its Economic Transformation Program, the government has undertaken structural reforms to enhance the entrepreneurial environment and legal transparency. Management of public finance has been relatively prudent, with gradual reductions in various government subsidies in recent years.
Despite ongoing reform efforts, Malaysia’s overall economic freedom continues to be constrained by institutional shortcomings that damage prospects for more vibrant long-term economic expansion. The country’s perceived level of corruption has increased, and there is no sign of effective anti-corruption measures, The judicial system remains vulnerable to political interference.
Malaysia, an ethnically and religiously diverse constitutional monarchy, became independent in 1957 and has been ruled continuously by the United Malays National Organization. Huge electoral inroads made in March 2008 by the opposition coalition, led by the People’s Justice Party, were largely the result of popular dissatisfaction with pro-Malay affirmative action programs and corruption. In 2011 and 2012, the government cracked down heavily on peaceful protests by civil society groups calling for electoral reform. Malaysia has slowly liberalized its economy, but government ownership remains prevalent in such key sectors as banking, media, automobiles, and airlines. Malaysia is a leading exporter of electronics and information technology products, and its industries range from agricultural goods to automobiles.
Private property is protected, but the judiciary is subject to political influence. Corporate lawsuits face lengthy delays. In late 2011, the parliament amended the Copyright Act to strengthen intellectual property protection. Malaysia intends to accede to the World Intellectual Property Organization Copyright Treaty and Performances and Phonograms Treaty. Corruption is a continuing concern.
The top individual income tax rate is 26 percent, and the top corporate tax rate is 25 percent. Other taxes include a capital gains tax. The overall tax burden is equal to 13.8 percent of total domestic income. Government spending is equivalent to 29.7 percent of GDP. Large government spending projects have contributed to a budget deficit, and public debt amounts to about 53 percent of GDP.
Steps to introduce greater regulatory efficiency have been implemented in recent years, and licensing requirements have become considerably less time-consuming and bureaucratic. With no minimum capital required, it takes only three procedures and six days on average to start a business. Labor market rigidity persists, hampering dynamic job growth. Monetary stability has been relatively well maintained.
The trade-weighted average tariff rate is 4 percent, and non-tariff barriers add to the cost of trade. Despite efforts to attract foreign investment, government interference and a lack of transparency deter dynamic growth in investment flows. The financial sector remains stable. Measures to open the banking sector to greater competition have been made, but progress has been slow.