Malaysia
Malaysia was created in 1963 through the merging of Malaya (independent in 1957) and the former British Singapore, both of which formed West Malaysia, and Sabah and Sarawak in north Borneo, which composed East Malaysia. The first three years of independence were marred by hostilities with Indonesia. Singapore seceded from the union in 1965.
There are no known direct threats to expatriate visitors to or residents in Malaysia, however spillover violence from the southern Philippines and Indonesia as well as the possible presence of Islamic extremist cells, some possibly linked to the al-Qaida terrorist network, are cause for concern in some areas. Malaysia's police intelligence chief said in July 2004 that remnants of the al-Qaida-linked Jemaah Islamiah (JI) are regrouping and planning more terror attacks in Southeast Asia despite the arrest of their leaders.
Islamic violence in southern Thailand in 2004 prompted Malaysia to deploy 4 battalions comprising 1,600 soldiers to the border area.
Malays comprise just under half of the population, Chinese constitute one-quarter, Indians one-tenth and indigenous tribes make up the rest. Although since 1971 Malays have benefited from positive discrimination in business, education and the civil service, ethnic Chinese continue to hold economic power and are the wealthiest community. The Malays remain the dominant group in politics while the Indians are among the poorest.
King Syed Sirajuddin Syed Putra Jamalullail was installed as Malaysia's 12th king during a glittering ceremony in April 2002. He is the traditional ruler of Malaysia's smallest state, Perlis, a rural province in the far north of the country bordering on Thailand. He is a former student at Sandhurst military academy in Britain. His role is largely ceremonial, although he is nominal head of the armed forces and all laws and the appointment of every cabinet minister require his assent.
Prime Minister Abdullah Ahmad Badawi succeeded Mahathir Mohamad as prime minister in October 2003, when Asia's longest-serving elected leader retired after 22 years in power. Abdullah is a former deputy premier who held defense, foreign affairs and education portfolios under Mahathir. He promised to continue the policies of his predecessor.
On taking office he faced a strong political challenge from opposition Islamic fundamentalists and inherited the task of overseeing one of the region's most vibrant economies. In March 2004 Abdullah was sworn in for a new, five-year term after his coalition government won a landslide victory in parliamentary and regional elections. The victory might give the prime minister the boost he needed to push through his package of reforms, including his promise to stamp out corruption.
In contrast to his predecessor, Abdullah has been described as self-effacing. He has been called the "Nice Guy" of Malaysian politics.
In October 2003 armed kidnappers riding in a speedboat raided a remote resort in Malaysian Borneo, seizing six people before escaping. Three Indonesian and three Filipino migrant workers - all men in their 30s - were taken in the attack on the Borneo Paradise Eco-Farm Resort in eastern Sabah state, Malaysian national police chief Norian Mai said. The kidnappers were believed to be Malaysians - possibly pirates - and authorities did not believe any foreign group was involved. Nevertheless, diplomats said the raid bore some of the hallmarks of two attacks in 2000 on dive resorts in Malaysia by the Abu Sayyaf rebel group, an al-Qaida-linked Islamic extremist group in the southern Philippines. Using speedboats, Abu Sayyaf militants made lightning strikes on resorts on two Malaysian islands. Using speedboats, Abu Sayyaf militants made lightning strikes on resorts on two Malaysian islands, seizing dozens of hostages, including Western tourists, and taking them to the southern Philippines. The hostages were eventually released after large ransoms were reportedly paid.
Meanwhile a court in Malaysia sentenced three leaders of a Muslim sect to death in December 2001 after convicting them of armed rebellion to create an Islamic state in the multi-cultural nation. Life sentences were handed down to 16 other members of the Al-Ma´unah movement, who surrendered along with their comrades after a shootout in the jungle of northern Malaysia in 2000. The gang was tracked down after taking arms and ammunition from two army camps, where they by-passed guards by posing as officers. Malaysian police have also detained a number of Islamic extremists with alleged ties to “other countries” authorities reported.
In March 2001 fighting between Malays and ethnic-Indians left at least six dead in Malaysia’s worst ethnic bloodshed in three decades. Hundreds of riot police armed with batons were deployed in five villages after the clashes.
Neighbors Malaysia and Singapore pledged in July 2004 to step up military cooperation in an effort to protect the world's busiest sea lane, the Malacca Strait, from piracy and terror attacks. The narrow strait between Malaysia and Indonesia, with Singapore at its southern entrance, carries more than a quarter of world trade and almost all oil imports to Japan and China. Piracy has plagued the strait for centuries, but has worsened in recent years and since the September 11 attacks on the United States in 2001, the prospect of terrorist strikes has emerged. Attacks on vessels in the 805-km (500-mile) channel rose 33 percent between January and June 2004 from the same period in 2003, the International Maritime Bureau said.
Malaysia's economy has resumed growth in 2003 and 2004, following a stall in 2001, which was largely due to reduced demand for Malaysian exports. Following growth of only 0.3% decline in real gross domestic product (GDP) in 2001, Malaysia experienced real GDP growth of 4.1% in 2003. Growth is projected to reach 4.4% for 2004. Malaysia's merchandise trade surplus rose sharply in 2003, after having fallen in 2001 and 2002.
Malaysia's banking system has been stabilized, after being undermined by a high proportion of non-performing loans during the Asian financial crisis of 1997-98. The country's banking sector went through a major restructuring in 2000, with many weaker financial institutions being taken over by stronger ones. In order to stimulate the economy, the country's government has increased spending since 2001, incurring a budget deficit of 5.6% of GDP in 2002.
Malaysia has maintained its policy of a fixed exchange rate between the ringgit and the U.S. dollar, which was imposed by Prime Minister Mahathir in September 1998, as part of capital controls designed to stem the outflow of short-term capital in the wake of the Asian financial crisis. Malaysian currency is considered somewhat undervalued at the present exchange rate of 3.8 ringgits to one U.S. dollar. Some of the capital controls imposed in 1998 were relaxed in early 2001, such as the taxes on repatriation of short-term stock market profits by foreign portfolio investors.
