IV. Political Environment

The Malaysian political environment is strongly favorable to
international and domestic business development.  U.S. - Malaysian
bilateral relations are close and productive across the board.

Malaysia is a constitutional monarchy with a parliamentary system
of government.  In practice, power is strongly concentrated in the
Prime Minister.  He has traditionally been head of UMNO (the United
Malays National Organization), the principal party in the governing
coalition which has ruled Malaysia continuously since independence
from the UK in 1957.  The position of monarch, the Yang di Pertuan
Agong, is rotated among the rulers of nine of the thirteen states
of Malaysia.  The role has over time become almost entirely
ceremonial and symbolic.

The government has taken a strong pro-active role in the
development and industrialization of the Malaysian economy.  This
has included significant state sector investment, a close alliance
between government and the private business community, and a
variety of policies and programs to bolster the economic status of
the Malay and indigenous communities, commonly referred to as
"bumiputras".  Malaysia is a multi-ethnic society, with Malay,
Chinese, and Indian communities.  Tensions between these groups
were serious in the past.  However, with rapid economic growth, in
which all groups in the country have shared, these tensions have
become much less salient than previously.

Malaysia enjoys friendly relations with the United States and has
worked with the U.S. on many issues, including for example the U.N.
peacekeeping operations in Somalia.  Malaysia has also contributed
forces to U.N. operations in Cambodia and Bosnia.  Malaysia is a
member of ASEAN (Association of South East Asian States), founded
in 1967 with Indonesia, the Philippines, Singapore, Thailand and
Brunei.  The U.S. has strongly supported ASEAN, and participates in
an annual dialogue with ASEAN members at the level of Foreign
Ministers.  ASEAN is working to create AFTA (ASEAN Free Trade
Area), which if successful would create a single market of over 330
million people.  If, as expected, Vietnam, Laos, Cambodia, and
Burma also join ASEAN in the future, the group would include over
400 million people.  Malaysia is also a member APEC (Asia-Pacific
Economic Cooperation), which includes the U.S., China, Japan and
most of the other countries of the Pacific Rim.