MALAYSIA

Complex ethnic rivalries, a struggle between the national government and traditional sultanates, and economic instability pose serious problems for Malaysia. The first two problems can be traced to the 1957 constitution, which foresaw a multiethnic Malaysia in which the political and administrative dominance of the Malays would be balanced by the continuing economic importance of the Chinese and the Indians. Within the parliamentary system, the interests of these groups would be represented by their respective elites, the United Malay National Organization (UMNO), the Malaysian Chinese Association (MCA), and the Malaysian Indian Congress (MIC), which would negotiate policies aimed at preserving the status quo and then at achieving equal social standing of the three communities. It was expected that the Malays would achieve a greater share of the economy while the Chinese and Indians would obtain more political influence. At the same time this ideal political state was being formed, the sultans'positions were enshrined in the constitution, but their power was essentially ceremonial. Nine of the states of Malaysia are ruled by sultans who are totally exempt from the law. For Malays, the sultans are the upholders of Malay tradition and the symbolic heads of Islam. Thus, the royal families have emerged as a modern elite, are very active in government and business, and are very influential in modern Malaysia. The third serious problem facing Malaysia is a fluctuating economy, which during the 1970's was one of the fastest growing economies in Asia, in 1994 was the ninth fastest growing economy in the world, and in 1997 experienced rapid and sharp decline.

Although Malaysia began an economic recovery in 2000, it was vulnerable to a general economic slowing throughout Asia. Malaysia's status as one of the world's largest exporters of semiconductors was an important source of economic growth at the beginning of the twenty-first century, but this also made the country sensitive to drops in demand in the global market for personal computers and telecommunications.