Malaysia vs. Indonesia

The adoption of Islam in the 14th century saw the rise of a number of powerful sultanates on the Malay Peninsula and island of Borneo. The Portuguese in the 16^th century and the Dutch in the 17^th century were the first European colonial powers to establish themselves on the Malay Peninsula and Southeast Asia. However, it was the British who ultimately secured their hegemony across the territory and during the late 18th and 19th centuries established colonies and protectorates in the area that is now Malaysia. These holdings were occupied by Japan from 1942 to 1945. In 1948, the British-ruled territories on the Malay Peninsula except Singapore formed the Federation of Malaya, which became independent in 1957. Malaysia was formed in 1963 when the former British colonies of Singapore, as well as Sabah and Sarawak on the northern coast of Borneo, joined the Federation. The first several years of the country's independence were marred by a communist insurgency, Indonesian confrontation with Malaysia, Philippine claims to Sabah, and Singapore's withdrawal in 1965. During the 22-year term of Prime Minister MAHATHIR Mohamad (1981-2003), Malaysia was successful in diversifying its economy from dependence on exports of raw materials to the development of manufacturing, services, and tourism. Prime Minister MAHATHIR and a newly-formed coalition of opposition parties defeated Prime Minister Mohamed NAJIB bin Abdul Razak's United Malays National Organization (UMNO) in May 2018, ending over 60 years of uninterrupted rule by UMNO. MAHATHIR resigned in February 2020 amid a political dispute. King ABDULLAH then selected Tan Sri MUHYIDDIN Yassin as the new prime minister.

occasional floods; severe droughts; tsunamis; earthquakes; volcanoes; forest fires

volcanism: Indonesia contains the most volcanoes of any country in the world - some 76 are historically active; significant volcanic activity occurs on Java, Sumatra, the Sunda Islands, Halmahera Island, Sulawesi Island, Sangihe Island, and in the Banda Sea; Merapi (2,968 m), Indonesia's most active volcano and in eruption since 2010, has been deemed a Decade Volcano by the International Association of Volcanology and Chemistry of the Earth's Interior, worthy of study due to its explosive history and close proximity to human populations; on 22 December 2018, a large explosion and flank collapse destroyed most of the 338 m high island of Anak Krakatau (Child of Krakatau) and generated a deadly tsunami inundating portions of western Java and southern Sumatra leaving more than 400 dead; other notable historically active volcanoes include Agung, Awu, Karangetang, Krakatau (Krakatoa), Makian, Raung, Sinabung, and Tambora; see note 2 under "Geography - note"

note 1: according to Indonesia's National Coordinating Agency for Survey and Mapping, the total number of islands in the archipelago is 13,466, of which 922 are permanently inhabited (Indonesia is the world's largest country comprised solely of islands); the country straddles the equator and occupies a strategic location astride or along major sea lanes from the Indian Ocean to the Pacific Ocean

note 2: Indonesia is one of the countries along the Ring of Fire, a belt of active volcanoes and earthquake epicenters bordering the Pacific Ocean; up to 90% of the world's earthquakes and some 75% of the world's volcanoes occur within the Ring of Fire; 80% of tsunamis, caused by volcanic or seismic events, occur within the "Pacific Ring of Fire"

note 3: despite having the fourth largest population in the world, Indonesia is the most heavily forested region on earth after the Amazon

Malaysia's multi-ethnic population consists of the bumiputera - Malays and other indigenous peoples - (62%), ethnic Chinese (21%), ethnic Indians (6%), and foreigners (10%).  The majority of Malaysia's ethnic Chinese and Indians trace their roots to the British colonialists' recruitment of hundreds of thousands of Chinese and Indians as mine and plantation workers between the early-19^th century and the 1930s.  Most Malays have maintained their rural lifestyle, while the entrepreneurial Chinese have achieved greater wealth and economic dominance.  In order to eradicate Malay poverty, the Malaysian Government in 1971 adopted policies that gave preference to the bumiputera in public university admissions, government jobs and contracts, and property ownership.  Affirmative action continues to benefit well-off urban bumiputera but has done little to alleviate poverty for their more numerous rural counterparts.  The policies have pushed ethnic Chinese and Indians to study at private or foreign universities (many do not return) and have created and sustained one of the world's largest civil services, which is 85-90% Malay. 

The country's age structure has changed significantly since the 1960s, as fertility and mortality rates have declined.  Malaysia's total fertility rate (TFR) has dropped from 5 children per woman in 1970, to 3 in 1998, to 2.1 in 2015 as a result of increased educational attainment and labor participation among women, later marriages, increased use of contraception, and changes in family size preference related to urbanization.  The TFR is higher among Malays, rural residents (who are mainly Malay), the poor, and the less-educated.  Despite the reduced fertility rate, Malaysia's population will continue to grow, albeit at a decreasing rate, for the next few decades because of its large number of reproductive-age women.  The youth population has been shrinking, and the working-age population (15-64 year olds) has been growing steadily.  Malaysia's labor market has successfully absorbed the increasing number of job seekers, leading to sustained economic growth.  However, the favorable age structure is changing, and around 2020, Malaysia will start to become a rapidly aging society.  As the population ages, Malaysia will need to better educate and train its labor force, raise productivity, and continue to increase the number of women workers in order to further develop its economy.

More than 1.8 million Malaysians lived abroad as of 2015, including anywhere from 350,000 to 785,000 workers, more than half of whom have an advanced level of education.  The vast majority of emigrants are ethnic Chinese, seeking better educational and job opportunities abroad because of institutionalized ethnic discrimination favoring the Malays.  The primary destination country is nearby Singapore, followed by Bangladesh and Australia.  Hundreds of thousands of Malaysians also commute across the causeway to Singapore daily for work.

Brain drain is an impediment to Malaysia's goal of becoming a high-income country.  The situation is compounded by a migrant inflow that is composed almost entirely of low-skilled laborers who work mainly in manufacturing, agriculture, and construction.  Officially, Malaysia had about 1.8 million legal foreign workers as of mid-year 2017 - largely from Indonesia, Nepal, the Philippines, and Bangladesh - but as many as 3 to 4 million are estimated to be in the country illegally.  Immigrants outnumber ethnic Indians and could supplant the ethnic Chinese as Malaysia's second largest population group around 2035.

Indonesia has the world's fourth-largest population.  It is predominantly Muslim and has the largest Muslim population of any country in the world.  The population is projected to increase to as much as 320 million by 2045.  A government-supported family planning program.  The total fertility rate (TFR) - the average number of births per woman - from 5.6 in the mid-1960s to 2.7 in the mid-1990s.  The success of the program was also due to the social acceptance of family planning, which received backing from influential Muslim leaders and organizations.

The fertility decline slowed in the late 1990's when responsibility for family planning programs shifted to the district level, where the programs were not prioritized.  Since 2012 the national government revitalized the national family planning program, and Indonesia's TFR has slowly decreased to 2.3 in 2020.  The government may reach its goal of achieving replacement level fertility - 2.1 children per woman - but the large number of women of childbearing age ensures significant population growth for many years. 

Indonesia is a source country for labor migrants, a transit country for asylum seekers, and a destination mainly for highly skilled migrant workers.  International labor migration, both legal and illegal, from Indonesia to other parts of Asia (most commonly Malaysia) and the Middle East has taken place for decades because of high unemployment and underemployment, poverty, and low wages domestically.  Increasing numbers of migrant workers are drawn to Australia, Canada, New Zealand, and the US.  The majority of Indonesian labor migration is temporary and consists predominantly of low-skilled workers, mainly women working as domestics.

Indonesia's strategic location between Asia and Australia and between the Pacific and Indian Oceans - and its relatively easy accessibility via boat - appeal to asylum seekers.  It is also an attractive transit location because of its easy entry requirements and the ability to continue on to Australia.  Recent asylum seekers have come from Afghanistan, Burma (Rohingyas), Iraq, Somalia, and Sri Lanka.  Since 2013, when Australia tightening its immigration policy, thousands of migrants and asylum seekers have been stranded in Indonesia, where they live in precarious conditions and receive only limited support from international organizations.  The situation for refugees in Indonesia has also worsened because Australia and the US, which had resettled the majority of refugees in Indonesia, have significantly lowered their intake.

New - Fighters of the Nation Party (Parti Pejuang Tanah Air) or Pejuang [former PM MAHATHIR bin Mohamad; interim president Datuk Seri Mukhriz Mahathir note - started August 2020] 

Other:
Pan-Malaysian Islamic Party (Parti Islam se Malaysia) or PAS [Abdul HADI Awang]
Progressive Democratic Party or PDP [TIONG King Sing]
Sabah Heritage Party (Parti Warisan Sabah) or WARISAN [SHAFIE Apdal]
Sarawak Parties Alliance (Gabungan Parti Sarawak) or GPS [ABANG JOHARI Openg] (includes PBB, SUPP, PRS, PDP)
Sarawak People's Party (Parti Rakyat Sarawak) or PRS [James MASING]
Sarawak United People's Party (Parti Bersatu Rakyat Sarawak) or SUPP [Dr. SIM Kui Hian]
United Pasokmomogun Kadazandusun Murut Organization (Pertubuhan Pasko Momogun Kadazan Dusun Bersatu) or UPKO [Wilfred Madius TANGAU]
United Sabah Alliance or USA (Gabungan Sabah)
United Sabah Party (Parti Bersatu Sabah) or PBS [Maximus ONGKILI]
United Sabah People's (Party Parti Bersatu Rakyat Sabah) or PBRS [Joseph KURUP]
United Traditional Bumiputera Party (Parti Pesaka Bumiputera Bersata) or PBB; note - PBB is listed under GPS above

Ambassador Sung Y. KIM (since 21 October 2020)

Malaysia, an upper middle-income country, has transformed itself since the 1970s from a producer of raw materials into a multi-sector economy. Under current Prime Minister NAJIB, Malaysia is attempting to achieve high-income status by 2020 and to move further up the value-added production chain by attracting investments in high technology, knowledge-based industries and services. NAJIB's Economic Transformation Program is a series of projects and policy measures intended to accelerate the country's economic growth. The government has also taken steps to liberalize some services sub-sectors. Malaysia is vulnerable to a fall in world commodity prices or a general slowdown in global economic activity.

The NAJIB administration is continuing efforts to boost domestic demand and reduce the economy's dependence on exports. Domestic demand continues to anchor economic growth, supported mainly by private consumption, which accounts for 53% of GDP. Nevertheless, exports - particularly of electronics, oil and gas, and palm oil - remain a significant driver of the economy. In 2015, gross exports of goods and services were equivalent to 73% of GDP. The oil and gas sector supplied about 22% of government revenue in 2015, down significantly from prior years amid a decline in commodity prices and diversification of government revenues. Malaysia has embarked on a fiscal reform program aimed at achieving a balanced budget by 2020, including rationalization of subsidies and the 2015 introduction of a 6% value added tax. Sustained low commodity prices throughout the period not only strained government finances, but also shrunk Malaysia's current account surplus and weighed heavily on the Malaysian ringgit, which was among the region's worst performing currencies during 2013-17. The ringgit hit new lows following the US presidential election amid a broader selloff of emerging market assets.

Bank Negara Malaysia (the central bank) maintains adequate foreign exchange reserves; a well-developed regulatory regime has limited Malaysia's exposure to riskier financial instruments, although it remains vulnerable to volatile global capital flows. In order to increase Malaysia's competitiveness, Prime Minister NAJIB raised possible revisions to the special economic and social preferences accorded to ethnic Malays under the New Economic Policy of 1970, but retreated in 2013 after he encountered significant opposition from Malay nationalists and other vested interests. In September 2013 NAJIB launched the new Bumiputra Economic Empowerment Program, policies that favor and advance the economic condition of ethnic Malays.

Malaysia signed the 12-nation Trans-Pacific Partnership (TPP) free trade agreement in February 2016, although the future of the TPP remains unclear following the US withdrawal from the agreement. Along with nine other ASEAN members, Malaysia established the ASEAN Economic Community in 2015, which aims to advance regional economic integration.

Indonesia, the largest economy in Southeast Asia, has seen a slowdown in growth since 2012, mostly due to the end of the commodities export boom. During the global financial crisis, Indonesia outperformed its regional neighbors and joined China and India as the only G20 members posting growth. Indonesia's annual budget deficit is capped at 3% of GDP, and the Government of Indonesia lowered its debt-to-GDP ratio from a peak of 100% shortly after the Asian financial crisis in 1999 to 34% today. In May 2017 Standard & Poor's became the last major ratings agency to upgrade Indonesia's sovereign credit rating to investment grade.

Poverty and unemployment, inadequate infrastructure, corruption, a complex regulatory environment, and unequal resource distribution among its regions are still part of Indonesia's economic landscape. President Joko WIDODO - elected in July 2014 - seeks to develop Indonesia's maritime resources and pursue other infrastructure development, including significantly increasing its electrical power generation capacity. Fuel subsidies were significantly reduced in early 2015, a move which has helped the government redirect its spending to development priorities. Indonesia, with the nine other ASEAN members, will continue to move towards participation in the ASEAN Economic Community, though full implementation of economic integration has not yet materialized.

one of the most advanced telecom networks in the developing world; strong commitment to developing a technological society; Malaysia is promoting itself as an information tech hub in the Asian region; closing the urban rural divide; 4G and 5G networks with strong competition, mobile dominance over fixed-broadband; government development of five-year fiber and connectivity plan; some of Malaysia's key exports are integrated circuits and broadcasting equipment to North America and China; importer of integrated circuits from Singapore and China (2021)

with large population, disbursed island geography, and slow economic growth, Indonesia's telecom sector is based on 3G/LTE mobile infrastructure and inadequate fixed-line capacity; market is attracting foreign investment, especially in data center and cloud based services; tests of 5G challenged by lack of spectrum; satellite improvements in 2020 (2021)

the International Maritime Bureau reports the territorial and offshore waters in the South China Sea as high risk for piracy and armed robbery against ships; numerous commercial vessels have been attacked and hijacked both at anchor and while underway; hijacked vessels are often disguised and cargo diverted to ports in East Asia; crews have been murdered or cast adrift; the Singapore Straits saw 23 attacks against commercial vessels in 2020, vessels were boarded in 22 of the 23 incidents, one crew was injured, another taken hostage and two threatened during these incidents

while the 2002 "Declaration on the Conduct of Parties in the South China Sea" has eased tensions over the Spratly Islands, it is not the legally binding "code of conduct" sought by some parties, which is currently being negotiated between China and ASEAN; Malaysia was not party to the March 2005 joint accord among the national oil companies of China, the Philippines, and Vietnam on conducting marine seismic activities in the Spratly Islands; disputes continue over deliveries of fresh water to Singapore, Singapore's land reclamation, bridge construction, and maritime boundaries in the Johor and Singapore Straits; in 2008, ICJ awarded sovereignty of Pedra Branca (Pulau Batu Puteh/Horsburgh Island) to Singapore, and Middle Rocks to Malaysia, but did not rule on maritime regimes, boundaries, or disposition of South Ledge; land and maritime negotiations with Indonesia are ongoing, and disputed areas include the controversial Tanjung Datu and Camar Wulan border area in Borneo and the maritime boundary in the Ambalat oil block in the Celebes Sea; separatist violence in Thailand's predominantly Muslim southern provinces prompts measures to close and monitor border with Malaysia to stem terrorist activities; Philippines retains a dormant claim to Malaysia's Sabah State in northern Borneo; per Letters of Exchange signed in 2009, Malaysia in 2010 ceded two hydrocarbon concession blocks to Brunei in exchange for Brunei's sultan dropping claims to the Limbang corridor, which divides Brunei; piracy remains a problem in the Malacca Strait

Indonesia has a stated foreign policy objective of establishing stable fixed land and maritime boundaries with all of its neighbors; three stretches of land borders with Timor-Leste have yet to be delimited, two of which are in the Oecussi exclave area, and no maritime or Exclusive Economic Zone (EEZ) boundaries have been established between the countries; all borders between Indonesia and Australia have been agreed upon bilaterally, but a 1997 treaty that would settle the last of their maritime and EEZ boundary has yet to be ratified by Indonesia's legislature; Indonesian groups challenge Australia's claim to Ashmore Reef; Australia has closed parts of the Ashmore and Cartier Reserve to Indonesian traditional fishing and placed restrictions on certain catches; land and maritime negotiations with Malaysia are ongoing, and disputed areas include the controversial Tanjung Datu and Camar Wulan border area in Borneo and the maritime boundary in the Ambalat oil block in the Celebes Sea; Indonesia and Singapore continue to work on finalizing their 1973 maritime boundary agreement by defining unresolved areas north of Indonesia's Batam Island; Indonesian secessionists, squatters, and illegal migrants create repatriation problems for Papua New Guinea; maritime delimitation talks continue with Palau; EEZ negotiations with Vietnam are ongoing, and the two countries in Fall 2011 agreed to work together to reduce illegal fishing along their maritime boundary