The world has consisted with both developed and developing countries. Based on some basic economic indicators like gross domestic product, per capita income, standard of living and industrialization, this classification has been done. The country, which has low infrastructural facilities along with low Human Development Index (HDI) compare to other countries like the U.S.A, is referred as developing country (Jamali & Carroll, 2017). Malaysia is also considered as developing country, which has ranked 59 in Human Development Index (Tan, Chuah & Luu, 2018). Thus, this report has intended to analyze the economic condition of this country. For this, it is essential to take an overview of this country based its various factors that can influence its stage of development along with the historical economic trend and future growth forecasts. The supply of natural resources, capital accumulation, and growth of population along with technological progress can be described under stage of development. Moreover, some macroeconomical factors like GDP growth, interest rates, value of currency and balance of trade, are required to analyse. This analysis can help to understand the role of government within Malaysia. Furthermore, this report is going to provide some recommendations based on infrastructure development and economical incentives along with education and training, which can help to improve the tourism sector of this country further. In this context, market has also played significant role to attract people all over the world. In addition to this, local impacts on business and various strategies to develop tourism and hospitality sector has also described. For this, the report has discussed about the potential customers who can help to promote the concerned business sectors.
Malaysia, situated in Southeast Asia, is consisted with thirteen states along with three federal territories. The South China Sea has separated this country in two segments, which are, east Malaysia and Peninsular Malaysia. The country has ranked 44 as the most populous country, all over the world (Yong, 2017). The economic condition of this country is better compare to other developing countries through developing its tourism sector by offering brilliant scenery and excellent beaches. Hence, it is beneficial to analyse those factors that can indicate the stage of development of this country.
Supply of natural resources: Malaysia has possessed with huge amount of natural resources in the field of agriculture, minerals and forestry. Consequently, the country has exported various natural and agricultural products among which the most valuable product is petroleum (Zakaria, Ibrahim & Othman, 2017). In addition to this, Malaysia has also exported other natural products like palm oil and natural rubber along with cocoa, pineapple, pepper and tobacco.
Figure 1: Crude oil production in Malaysia
Source: (Tradingeconomics.com, 2018)
Malaysia has also possessed sufficient reserved of oil barrels to export to other countries. From figure 1, it can be seen that the oil production in this concerned country has increased significantly after 2014 (Tradingeconomics.com, 2018). Hence, the rank of this country based on oil reserve is forth worldwide after China, India, and Vietnam. In addition to this, the gas reserved of this country is also high, for instance, in 2014; Malaysia has contained proven natural resource of 83 trillion cubic feet (Zakaria, Ibrahim & Othman, 2017).
Capital Accumulation: Through its primary sector along with industrial and tertiary sectors, Malaysia has earned sufficient amount of capital, which can be invested further for producing more output (Latif, Yusoff & Tan, 2017). Hence, this in turn has influenced Malaysia to develop its economic condition, significantly.
Figure 2: Capital accumulation of Malaysia
Source: (Tradingeconomics.com, 2018)
Figure 2 has represented the capital accumulation o Malaysia since 2008. According to this figure, it can be stated that the trend of investment is this country has increased significantly, which is turn has helped the Malaysia to accumulate huge amount of capital.
Population growth: Population is another important factor that indicates the stages of development of Malaysia (Samad & Mansor, 2017). The per capita income is chiefly depended on this economical factor. Hence, at a stable level of national income, increasing number o population can lead the country’s per capita income to decrease further. This in turn has forced the country to lower its economic condition. On the other side, decreasing trend of population is good for an economy.
Figure 3: Population growth trend of Malaysia
Source: (Tradingeconomics.com, 2018)
According to figure 3, it can be stated that the population growth of this country has decreased significantly since 2012. Hence, from this consequence, it can be stated that the country is developing its economic condition gradually.
Technological progress: The last but not the least factor is technological progress. Through technological innovation, a country can increase its total production by large amount along with good quality. However, for technological progress, capital accumulation is required. Through its technological progress, Malaysia has developed its information technology (IT) sector (Jin, Duan & Tang, 2018). At present, this country is become one of the biggest IT Hub. Moreover, with technological progress, the infrastructural facility of Malaysia has also been developed. With strong telecommunication networks and international ports, Malaysia has represented a significant technological progress.
Hence, all factors have positively indicated that Malaysia has improved its economical condition strongly for the last ten years. Through analysing the historical trend of each factor, it can be said that the country can develop its future condition as well (Tradingeconomics.com, 2018). Hence, future growth forecast is also required to understand this situation. From the trend of GDP, it can be estimated that the GDP growth rate of Malaysia is going to increase in future but at a slower rate. However, the unemployment rate along with inflation and GDP of the government can also increase further and this is not good for the country.
To develop the economic condition of a country, the government has played significant role. By adjusting its natural resource with affective fiscal and monetary policies, the government of Malaysia can influence the GDP, interest rates, currency values and balance of trade in a positive way. Moreover, environmental policies and good standard of living has also indicated the economical development of Malaysia.
The Gross Domestic Product (GDP) of Malaysia:
Figure 4: GDP growth trend of Malaysia
Source: (Tradingeconomics.com, 2018)
In figure 4, the GDP growth rate of Malaysia has been shown. From this figure, it can be said that the economical condition of this country has remained at a stable position. Due to financial crisis, this rate has declined significantly between 2008 and 2010 (Tradingeconomics.com, 2018). However, during the post crisis era, the country has successfully maintained a stable position.
Interest Rates:
Figure 5: Interest rate of Malaysia
Source: (Tradingeconomics.com, 2018)
Based on figure 5, it can be said that the Central Bank of Malaysia has kept its interest rate almost unchanged since 2012 (Tradingeconomics.com, 2018). This in turn has helped domestic economy of this country to maintain a steady growth rate along with lower inflation.
Value of the Ringgit:
Figure 6: Value of Ringgit in terms of 1 U.S.D
Source: (Fred.stlouisfed.org, 2018)
Figure 6 has represented changing values of Ringgit (MYR), the Malaysian currency, in terms of the U.S dollar. According to this trend, it can be said that the value of MYR has decreased after 2014 (Fred.stlouisfed.org, 2018). The chief cause behind this currency depreciation is the decrease in price of crude oil in global market. This depreciation in turn has negatively influenced the country import any foreign products as it has become costly while export has become comparatively cheaper than before. On the contrary, the demand for domestic market has increased significantly, as these have become cheaper compare to foreign products.
Foreign debt:
Figure 7: Gross external debt of Malaysia
Source: (Tradingeconomics.com, 2018)
The amount of gross external debt of Malaysia has increased drastically since 2009 (Tradingeconomics.com, 2018). This phenomenon is not desirable for any country as it creates huge pressure on the domestic economic system. The chief reason behind this increasing trend of public debt is balance deficit within the country’s balance of trade.
Malaysia has experienced enormous numbers of environmental issues due to pollution and deforestation. The government of Malaysia has taken various steps to recover its environmental condition. For instance, the government has maintained the Air Pollution Index (API) to measure the air quality of the country. In addition to this, the country has signed various multilateral environment agreements related to biodiversity, for instance, the Convention on Biological Diversity (Grigg et al., 2017). Malaysia has become the member of other agreements that deal with important wetlands protection, climate change, biosafety and haze and lows of the sea.
Personal well-being of citizens:
Figure 8: Happiness Index of Malaysia
Source: (countryeconomy.com, 2018)
The above figure has represented the happiness index of Malaysia. Based on this figure, it can be said that the wellbeing of citizens are improving in this country. The world happiness-ranking of this country has also increased over the last five years. In 2017, the country has ranked 42 while, in 2016, it has ranked 47 worldwide (countryeconomy.com, 2018). For constructing this index, some parameters are considered, viz., health, income, life satisfaction, work-life balance and safety and so on and those in turn have represented the well-being of citizens.
Thus, from the above discussion, it can be said that the government of Malaysia has great contribution on the country’s economical development. Hence, the economical condition of this country has remained at a higher and stable position compare to other developing countries, all over the world.
The tourism sector of Malaysia has contributed significant amount to the country’s gross national income (GDI) (Mosbah, & Al Khuja, 2014). However, the government of this country can develop various sectors, which can influence the tourism and hospitality industry of this country positively.
Infrastructural development: The country has possessed one of the most developed infrastructures all over the Asia. With its strong telecommunications network along with transport one, the country has developed its infrastructural facilities to a large extend. Transport network of Malaysia has constructed through road, rail, air and sea (Zhao & Li, 2018). Hence, the country has already contracted its infrastructural facilities that can support its tourism and hospitality industry.
Economics incentives: The government of Malaysia has generated some positive economic environments from which economic incentives can be generated. For instance, the government has abolished income tax on some companies, which are expanding their business in less developed parts of this country. This tax exemption in turn has facilitated domestic and international investors to invest their money in the business sectors (Hee, Kamaludin & Ping, 2016). In addition to this, the government can reduce taxes on tickets along with transportations that connect various tourism sectors of Malaysia. This further can generate economic incentives for tourists.
Education and Training: Education and training is important factors that lead the tourism and hospitality sectors of a country to develop further. Proper educations help an individual to communicate with people of other countries efficiently. Most of the tourists have come across the world, for which, Malaysia has experienced cross-cultural communications. Proper education can support the citizens of Malaysia to adopt this mixed cultural activity quickly (Zhao & Li, 2018). In addition to this, proper training related to hospitality and tourism sector is also requires to make skilled employees. Malaysia has founded various colleges, which provide courses related to this sector.
Figure 9: literacy rate in Malaysia (aged between 15 and 24)
Source: (Uis.unesco.org., 2018)
According to figure 9, it can be said that the literacy of Malaysia has increased steadily since 1975 (Uis.unesco.org., 2018). Consequently, this increasing trend has helped the country to expand its tourism and hospitality sector properly.
Marketing: Malaysia has possessed large scale of biodiversity containing around 20% animal species all over the world (Wilson et al., 014). Different kinds of species can be seen in different parts of the country. In addition to this, geographical diversity can also be seen within this country. Those, in turn helped the country to attract tourists worldwide.
Figure 10: Number of international tourists arrived in Malaysia
Source: (Data.worldbank.org, 2018)
The above figure has represented a trend of international tourists, arrived in Malaysia, since 2008. From this figure, it can be stated that the number of tourists has increased significantly throughout the year. This number has decreased by small amount between 2014 and 2016 (Data.worldbank.org, 2018). However, later it has increased again. Thus, it can be stated that the country has positive market conditions for its tourism and hospitality sectors. Large numbers of tourists have helped the hotel companies to boost up their business. In this context, the government can also play significant role to promote this sector further. For instance, by providing financial supports, the government can help various small-scale hotel companies to expand their business by large extend and also to advertise their hotels in international market. Through utilizing that financial assistance, those concerned companies may successfully compete with other large-scale companies in the market.
Hence, the government may solely help the country to expand the tourism and hospitality sector of Malaysia noticeably. The government can also create a positive environment to develop this concerned sector through other methods. For instance, it can organize a global campaign featuring the diversity of Malaysia, and this in turn can attract people of other countries to visit over there. In addition to this, educational sector has also played a significant role to promote the economical condition of this tourism sector as large number of international students may come into this country for pursuing higher education. This in turn has helped Malaysia’s tourism and hospitality sector to develop further.
East Malaysia is also referred as Sarawak, Sabah and Labuan. This part of the country is situated on island, where the number of population along with their economical condition is very low compare to the Penang or Kuala Lumpur. The physical nature of this part has consisted with mountain rain forest and lowland rain forest. Moreover, 5 highest mountains of Malaysia along with the highest one, that is, Mount Kinabalu can be seen over here. In addition to this, East Malaysia has Banggi island, Mulu Caves and the Gunung Mulu National Park, where each of them has huge geographical importance (Hanifah et al., 2018). Hence, the tourism and hospitality sector can earn huge advantage for conducting their business in this part of the Malaysia.
As the east Malaysia has possessed large scale of natural diversity, it can help tourism and hotel sectors to expand their business in those parts. Being underdeveloped, the infrastructural facilities along with education, training and marketing have remained underdeveloped as well (The, Teh & Jolis, 2018). Hence, to develop those parts, financial supports are required. However, governmental aid can play the chief role to promote this sector significantly. By providing proper financial support and infrastructural facilities, the government can attract international tourists and this in turn may help this sector to earn more revenue.
Economical condition of East Malaysia is not developed. Due to underdevelopment and low level of education along with absence of other facilities, this part has remained unable to expand their business significantly (Zhao & Li, 2018). However, by providing economics incentives, the government can attract local persons to invest their money for earning higher amount of profit.
Legislation and planning issues:
The government may provide financial assistance and tax exemptions to those producers, who are willing to start their business in any part of the East Malaysia (Hanifah et al., 2018). To promote those tourists sectors, the government can promote advertisement in a proper way. Hence, proper planning and legislation are required for developing business of tourism and hospitality sector.
Staffing, skills of local residents:
Due to lack of education, most of the local residents have remained uneducated. Moreover, absence of training courses related to tourism and hospitality sector have made impossible for companies to hire skilled staffs from any part of the East Malaysia (Mosbah & Al Khuja, 2014). For this, this portion of the country requires proper educational facilities along with some vocational courses to get a job form this concerned sector.
Economic flow:
After the development of tourism and hospitality industry, this part of the country can enjoy large scale of economies. This is because, by constructing the concerned sector, the government or a company can help to develop economic condition of this segment of Malaysia (Zhao & Li, 2018). Moreover, this sector can increase the opportunity of employment generation and infrastructural facilities. Hence, local community can receive positive flow of economics.
Conclusion:
Thus, the report has discussed about the economical condition of Malaysia by considering some factors that can indicate the stages of development of this country, for instance supply of natural resources, capital accumulation and the number of population by considering their historical trends and tendency to grow in future. Moreover, the country’s GDP growth rate, interest rate and value of the currency in terms of the U.S dollar have also been considered to understand the role of government on this sector. At the end, East Malaysia has been considered to analyze the future prospective of this region regarding the tourism and hospitability sector.
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