Malaysia is a relatively open state-oriented and newly industrialized market economy. The state plays a significant but declining role in guiding economic activity through macroeconomic plans. Malaysia has had one of the best economic records in Asia, with GDP growing an average 6.5 per cent annually from 1957 to 2005. In 2011, the GDP (PPP) was about $450 billion, the third largest economy in ASEAN and the 29th largest in the world. In 1991, former Prime Minister of Malaysia, Mahathir bin Mohamad outlined his ideal in Vision 2020, in which Malaysia would become a self-sufficient industrialized nation by 2020. Najib Razak said Malaysia could attain developed country status in 2018 much earlier from the actual target in 2020, he added the country has two program concept such as Government Transformation Programme and the Economic Transformation Programme.
In the 1970s, the predominantly mining and agricultural-based economy began a transition towards a more multi-sector economy. Since the 1980s, the industrial sector, with a high level of investment, has led the country's growth. The economy recovered from the 1997 Asian financial crisis earlier than neighboring countries did, and has since recovered to the levels of the pre-crisis era with a GDP per capita of $14,800. Economic inequalities exist between different ethnic groups. The Chinese make up about one-third of the population, but accounts for 70 per cent of the country's market capitalization. Chinese businesses in Malaysia are part of the larger bamboo network, a network of overseas Chinese businesses in the Southeast Asian market sharing common family and cultural ties.
International trade, facilitated by the shipping route in adjacent Strait of Malacca, and manufacturing are the key sectors. Malaysia is an exporter of natural and agricultural resources, and petroleum is a major export. Malaysia has once been the largest producer of tin, rubber and palm oil in the world. Manufacturing has a large influence in the country's economy, although Malaysia’s economic structure has been moving away from it. Malaysia remains one of the world's largest producers of palm oil.
In an effort to diversify the economy and make it less dependent on export goods, the government has pushed to increase tourism to Malaysia. As a result, tourism has become Malaysia’s third largest source of foreign exchange, although it is threatened by the negative effects of the growing industrial economy, with large amounts of air and water pollution along with deforestation affecting tourism. Between 2013-2014, Malaysia has been listed as one of the best place to retire in the world with the country stand at the third position on the Global Retirement Index. This as one of the result of the Malaysia My Second Home programme to allow foreigners to live in the country on a long-stay visa for up to 10 years.
The country has developed into a centre of Islamic banking, and is the country with the highest numbers of female workers in that industry. Knowledge-based services are also expanding. To create a self-reliant defensive ability and support national development, Malaysia privatized some of its military facilities in the 1970s. The privatization has created defense industry, which in 1999 was brought under the Malaysia Defense Industry Council. The government continues to promote this sector and its competitiveness, actively marketing the defense industry.
Science policies in Malaysia are regulated by the Ministry of Science, Technology, and Innovation. The country is one of the world's largest exporters of semiconductor devices, electrical devices, and IT and communication products. Malaysia began developing its own space programme in 2002, and in 2006, Russia agreed to transport one Malaysian to the International Space Station as part of a multi-billion dollar purchase of 18 Russian Sukhoi Su-30MKM fighter jets by the Royal Malaysian Air Force. The government has invested in building satellites in through the Razak SAT programme.
The infrastructure of Malaysia is one of the most developed in Asia. Its telecommunications network is second only to Singapore's in Southeast Asia, with 4.7 million fixed-line subscribers and more than 30 million cellular subscribers. The country has seven international ports, the major one being the Port Klang. There are 200 industrial parks along with specialized parks such as Technology Park Malaysia and Kulim Hi-Tech Park. Fresh water is available to over 95 per cent of the population. During the colonial period, development was mainly concentrated in economically powerful cities and in areas forming security concerns. Although rural areas have been the focus of great development, they still lag behind areas such as the West Coast of Peninsular Malaysia. The telecommunication network, although strong in urban areas, is less available to the rural population.
Malaysia's road network covers 98,721 kilometers and includes 1,821 kilometers of expressways. The longest highway of the country, the North-South Expressway, extends over 800 kilometers between the Thai border and Singapore. The road systems in East Malaysia are less developed and of lower quality in comparison to that of Peninsular Malaysia. Malaysia has 118 airports, of which 38 are paved. The country's official airline is Malaysia Airlines, providing international and domestic air service alongside two other carriers. The railway system is state-run, and covers a total of 1,849 kilometers. Relatively inexpensive elevated Light Rail Transit systems are used in some cities, such as Kuala Lumpur. The Asian Rail Express is a railway service that connects Kuala Lumpur to Bangkok, and is intended to eventually stretch from Singapore to China.
Traditionally, energy production in Malaysia has been based on oil and natural gas. The country has 13 GW of electrical generation capacity. However, the country only has 33 years of natural gas reserves, and 19 years of oil reserves, while the demand for energy is increasing. In response, the government is expanding into renewable energy sources. Sixteen per cent of electricity generation is hydroelectric, the remaining 84 per cent being thermal. The oil and gas industry is dominated by state owned Petronas, and the energy sector as a whole is regulated by the Energy Commission of Malaysia, a statutory commission that governs the energy in the peninsula and Sabah, under the terms of the Electricity Commission Act of 2001.