Malaysia

Name Roll NoDeepak Ramakrishnan 08Shaikh Shoaib 51Sarina Tellis 54Jaideep Parchure 60

Influence of Culture in Malaysia in the field of Trade and Commerce

Malaysia

Country in South east Asia Consisting of 13 states

and 3 federal territories Total landmass: 329,845

sq.km Capital: Kuala Lumpur Commercial and financial

capital is still Kuala Lumpur

Federal Government situated at: Putrajaya

History

Gained Independence on 31st August 1957 from the British

Formed the state of Malaysia in the year 1963

Malaysia consisted of Malaya, Sabah, Sarawak and Singapore

Later in 1965, Singapore withdrew from this alliance.

Total population in 1963 was $10 Mn

Demographics Many ethnic groups Malays – 50.4%, Chinese descent - 23.7%, Indian

descent – 7.1% Majority of Indians are Tamils apart from the Indians

from Punjab, Gujarat and other parts of India. Other Malaysians also include origins from Middle east,

Indonesia, Vietnam, Cambodians and Thailand. Religion breakup is as follows:

Religion % of Population

Islam 60.4

Buddhism 19.2

Christianity 9.1

Hinduism 6.3

Chinese Religion 2.6

Not specified 2.3

Education

Education – Federal government , Ministry of education

Primary education: Two major types, Govt operated and govt assisted schools

Medium of instruction – Chinese and Tamil Secondary education: Majority are govt operated Medium of instruction – Malay International school – Opportunity to study the

curriculum of another country Tertiary education: Public universities, partnership

universities etc

Culture Multi ethnic, multi cultural and multilingual

society Current population : 28 Mn National Language: Malay. English is largely

spoken in major towns/cities across the country. Population breakup:

Background % of Population

Malay (Bumiputeras) 62

Chinese 24

Indian 8

Others - foreigners 6

Post – Independence…

Separation of Singapore from Malaya state. Circa 1970: Malaysia – world’s leading producer of

rubber, tin and palm oil. Significant producer of Iron ore. Surplus to invest in Industrial development and

infrastructure projects 1st and 2nd Malayan plan supported economic growth in

Industry and infrastructure Reduce dependency on export of commodities. Education especially in rural Malaya area needed to be

improved which was one of the agenda in the 2nd Malayan plan.

Modern Malaysia

In 1975, 75% of Malaysian’s were living below poverty line.

Majority were Malays who were rural workers. Poverty was settled by New agricultural policy that

resettled 250,000 Malay workers on newly farmed lands

Emphasis on rural infrastructure – free trade zone – rise to manufacturing set-ups.

National prosperity through oil and gas exploration Shift in rural workers dependent on commodities to

manufacturing set-ups & oil and gas companies

Modern Malaysia

From 1988 to 1997 – experienced a period of diversification which resulted in the economy growing at 9% annually

Foreign and domestic investment Manufacturing grew 13.9% in 1970 to 30% in

1999. Agriculture and mining – 42.7% in 1970 dropped

to 9.3% and 7.3% in 1999. Major products included – electronic components Malaysia is the largest exporter of semiconductor

devices, electrical goods and appliances

Modern Malaysia

Dr Mahathir bin Mohamad – Prime Minister Responsible for the rapid transformation of Malaysia. Education was given the primary importance Created number of schools and universities

throughout the country Medium – Malay rather than English Unofficial barrier to allow Chinese to higher education 60,000 of Malaysians had foreign degrees Malay women were also given opportunities to study

in the universities.

Modern Malaysia

Malayan government created several agencies for intervention in economy

PERNAS, PETRONAS & HICOM Preferentially allocated to Malays

Major projects in Malaysia

Creation of planned city – Putrajaya International Airport – KLIA Hydroelectric dam – Bakum dam Petronas Towers Multimedia super corridor covered cities

like Penang. Major PC companies/IT have

manufacturing base at Malaysia

Asian Financial Crisis Brief disruption of progress of Malaysia during the AFC in

1997. FDI fell at an alarming rate and Ringgit depreciated

substantially KLSE index fell from approx. 1300 points to 400 points

within a matter of few weeks. Malaysian government imposed capital controls and

pegged the Ringgit at 3.80 to a US$ Refused economic aid from IMF and thus the conditions

thereof. Countries affected – Indonesia, Thailand and Philippines. Bank Negara Malaysia launched a complete revamp of the

financial sector after the Asian Financial crisis giving prominence to Islamic banking.

Islamic Banking system - Malaysia Started in September 1963 It was set up as an institution for Muslims to save for their

Hajj (pilgrimage to Mecca) expenses Islamic banking refers to a system of banking or banking

activity that is consistent with the principles of Islamic law (Sharia) and its practical application through the development of Islamic economics.

Sharia prohibits the payment or acceptance of interest fees for the lending and accepting of money respectively, (Riba, usury) for specific terms, as well as investing in businesses that provide goods or services considered contrary to its principles (Haraam, forbidden).

While these principles were used as the basis for a flourishing economy in earlier times, it is only in the late 20th century that a number of Islamic banks were formed to apply these principles to private or semi-private commercial institutions within the Muslim community.

PrinciplesFiqh al-Muamalat (Islamic rules on transactions).

The basic principle of Islamic banking is the sharing of profit and loss and the prohibition of riba

In an Islamic mortgage transaction, instead of loaning the buyer money to purchase the item, a bank might buy the item itself from the seller, and re-sell it to the buyer at a profit, while allowing the buyer to pay the bank in installments.

Islamic banking is restricted to Islamically acceptable transactions, which exclude those involving alcohol, pork, gambling, etc.

Islamic banking is an example of full-reserve banking, with banks achieving a 100% reserve ratio

home loans, called Musharaka al-Mutanaqisa, allows for a floating rate in the form of rental.

Islamic banks lend their money to companies by issuing floating rate interest loans. The floating rate of interest is pegged to the company's individual rate of return. Thus the bank's profit on the loan is equal to a certain percentage of the company's profits.

Malaysian Management style Regardless of the size or nature of the

company, hierarchy is an integral part of hierarchy is an integral part of Malaysian business cultureMalaysian business culture. Malaysian companies generally follow a vertical

hierarchical structure where authority is directed from the top.

In keeping with Malaysian culture, titles and job descriptions play a significant part in many Malaysian companies. They are important for employees in order to emphasise the line of authority within the business.

Working Relationships in Malaysian Malaysians’ respect for authority is evident in

most business dealings. The relationship between subordinates and their superiors for example is distinct and highly official. Malaysians do not address their bosses by their first name, but use titles such as “Mr” and “Madam” followed by their honorific form of address.

Relationships between Malaysian business colleagues are based on mutual respect and, as such, the same procedure used when addressing their superiors is also applied with their Malaysian business colleagues

Business practices in Malaysia When meeting your Malaysian counterparts for

the first time, a firm handshake is the standard form of greeting. However, you should only shake hands with a

Malaysian businesswoman if she initiates the gesture. Otherwise a nod or a single bow is appropriate.

It is advised to find out in advance how you should address the person you are to meet. Generally speaking, a Malay’s first name is

individually given, while the second and third name indicate those of the father and the grandfather. In some cases the words “bin” (son) or “binti” (daughter) can be added after the given name.

Business practices in Malaysia

Gifts are not usually exchanged as they may be perceived as a bribe. However, in the event that you are presented with a gift, it is customary to accept it with both hands and wait until you have left your Malaysian colleagues before opening it.

Business cards Customarily exchanged after an initial introduction

in Malaysia. Printed in both English and Chinese and that details

of your education, professional qualifications, and business title are included.

Should be presented and received with both hands, and time should always be spent examining the information before placing it on the table or in a briefcase.

Malaysian Business Etiquette (Do's and Don'ts)