Newspaper article The Christian Science Monitor

Free-Market System Turns Malaysia into Thriving Industrial Economy

Newspaper article The Christian Science Monitor

Free-Market System Turns Malaysia into Thriving Industrial Economy

Article excerpt

AFTER studying accounting and finance in England for five years, Pretta returned to Malaysia's capital, Kuala Lumpur, to be greeted by plenty of job offers and a country that had made huge economic progress.

The Malaysian-born Indian had left during the height of the recession, when prices for rubber and palm oil, Malaysia's principal exports had bottomed out. Now the country counts air conditioners and semi-conductors among its main exports.

By 1992 agriculture accounted for only 17 percent of national output and industry had risen to 29.3 percent.

For example, Sime Darby, one of Malaysia's largest companies with roots reaching back to the country's colonial past, has long ceased to be just a rubber plantation owner. It has become a major tire producer and operates a $38-million research center for tire technology together with Japan's Sumitomo Rubber.

With a population of 18 million, Malaysia has become more prosperous. It has recorded constant growth rates above 8 percent and attracted large amounts of foreign investment.

Prime Minister Mahathir Mohamad, who has led the country since 1981, uses a mixture of third-world solidarity and anti-Western rhetoric in his speeches. However, the former medical doctor enthusiastically supports a free-market system, though managing it in a comparatively authoritarian style.

Dr. Mahathir has aggressively started privatizing the nearly 250 state-run enterprises. Key utilities and telecommunications enterprises have been sold off.

The privatizations have fueled a boom in the capital markets. The Kuala Lumpur Stock Exchange has the highest market capitalization in Southeast Asia and stock prices have been performing well.

Rapid industrial expansion has led to a labor shortage, with fast-rising wages adding to inflationary pressures. The 1992 inflation rate of 4. …

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