Malaysia vs Four Asian Tigers

The Tiger Cub Economies' Data For 2024

Rank	Country	Population in millions	GDP Nominal trillions of USD	GDP Nominal per capita thousands of USD	GDP (PPP) trillions of USD	GDP (PPP) per capita ← thousands of USD
ー	ASEAN	685.15	4.16	6.07	11.93	17.41
1	Indonesia	279.96	1.54	5.51	5.51	16.84
2	Thailand	70.27	0.543	7.73	1.67	23.71
3	Philippines	114.16	0.476	4.17	1.38	12.13
4	Vietnam	101.3	0.469	4.64	1.55	15.32
5	Malaysia	33.460	0.465	13.91	1.31	39.07

Strategies for Economic Growth

While the Tigers’ export-oriented model uses industrialization and global competitiveness, Malaysia’s resource-powered strategy showcases the benefits of investing in natural wealth for economic stability, showing two different paths to growth.

The Four Tigers Export-Oriented Policy versus Malaysia’s Resource-driven Approach

The Four Tigers

The first economy to undergo industrialization was Hong Kong, with the growth of the textile industry in the 1950s. By the 1960s, manufacturing included more sectors like electronics, clothing, and plastics for export. Singapore adopted national economic measures to boost the country’s manufacturing industry.

In the meantime, Taiwan and South Korea began industrialization in the mid-1960s with strong support from the government. Both countries were seeking export-oriented industries, such as Hong Kong and Singapore. These countries took an example from Japan’s rapid success and tried to repeat its tactic. To invest in the same fields: education and infrastructure. 

By the end of the 1960s, the levels of human and physical capital of the Four Tigers were above those of other countries with the same level of development, and it led to the growth of human capital income.

Besides investments, education was a major factor in the growth of the Four Asian Tigers before the 1997 economic crisis. The four nations achieved universal primary education by 1965. South Korea reached an 88% rate of secondary education enrollment by 1987. In addition, the gap between female and male enrollments was decreasing. All these factors ensured that the education of the Tigers provided a high level of education and cognitive abilities. 

The main reason for the Four Tigers' economic rise is their export policy; however, the four nations took different approaches.

• Hong Kong and Singapore adopted free trade regimes;
• South Korea and Taiwan used mixed strategies, such as export incentives and targeted support for specific industries. 

These measurements assure that the Tigers managed to sustain a 7,5% annual growth during three decades, transitioning the Four Tigers to the status of developed countries.

Malaysia

Malaysia is a Southeast Asian country. It is known now as one of the five Tiger Cubs, but Malaysia was on the path to becoming the fifth Asian Tiger. It couldn't reach that level due to an economic crisis in 1997 in Asia. In the present day, Malaysia is seemingly on the upward curve again.

When it gained its independence in 1963, Malaysia’s economy was dependent on its strategic location and natural resources such as oil and natural gas, large tin, palm, and rubber trees.

Malaysia’s economy was heavily dependent on these natural resources and agriculture, which didn’t primarily benefit the local population. The volatility of the natural resources price and the rising popularity of synthetic alternatives, like synthetic rubber. These reasons further weakened industries like rubber production, leading to unemployment and poverty. By the 1970s, Malaysia moved its focus to a third-sector-powered economy, emphasizing industrialization and manufacturing.

“It became very clear that manufacturing, in particular, was really the key to industrialization; commodity dependence was perpetuating underdevelopment,” Volz told World Finance.

Malaysia started to repeat the tactic used by the Tigers, basing its economy on manufacturing starting in the 1980s. External funds, such as significant support from Japan, played an important role. As a result, Malaysia achieved economic growth, keeping a GDP growth rate of 7% through the 1980s and 1990s. This is an impressive result for a nation recovering from decades of colonization.

Role of Government Policies

The role of government policies in shaping economies is significantly different between the Tigers’ private sector-driven approach and Malaysia’s New Economic Policy (NEP).

The Four Tigers’ private sector-driven approach

The Asian Tigers (Hong Kong, Singapore, South Korea, and Taiwan) centered their focus on export-oriented industrialization and depended heavily on private sector initiatives. The Governments of these countries played a crucial role by creating a beneficial environment for business. For instance, they invested in infrastructure, education, and technology. 

The four governments wanted their countries to benefit from skilled workers with high-level jobs, for example, doctors and engineers. That is why they focused on investing heavily in education, besides infrastructure. The Four Asian Tigers became global study hubs, and several universities from these nations are in the “QS World University Rankings 2024: Top global universities.”

• Hong Kong, the Hong Kong University of Science and Technology, and The University of Hong Kong; 
• Singapore, National University of Singapore (NUS), and Nanyang Technological University (NTU);
• South Korea, Seoul National University, and Korea Advanced Institute of Science and Technology (KAIST);
• Taiwan, National Taiwan University (NTU). 

Malaysia’s New Economic Policy (NEP)

The New Economic Policy (NEP) was a national program formulated by the National Operations Council (NOC). This policy was adopted in 1971 for 20 years and it was continued by the National Development Policy (NDP) in 1991.

The NEP had 3 main objectives: 

• To achieve national unity, harmony, and stability.
• Make a socio-economic restructuring of the society in Malaysia.
• To decrease the level of poverty in Malaysia.

This policy was looking for a rapid growth of the economy and reducing poverty by 1990. To reach this goal, the government chose a tactic of aggressive improvement of the economy and quality of life in Malaysia. This was made possible by: 

• giving access to land;
• physical capital, training; 
• public facilities. 

This policy was also trying to change the understanding that a specific ethnic race was associated with a particular economic group. For instance, this objective helped the integration of Bumiputera (indigenous Malays and other indigenous groups), in modern economic domains. 

The New Economic Policy introduced affirmative measures, for instance, quotas in education, employment, and business to upgrade the economic status of Malaysia. NED ended in 1990; it had a great influence on the following policies and is still a theme for discussion in Malaysia. 

Comparison of Their Outcomes

The Four Asian Tigers

• Fast Economic Growth achieved a high GDP and transformed into a high-income economy.
• Global competitiveness, Hong Kong and Singapore became global economic hubs, while South Korea and Taiwan excelled in manufacturing.
• Income equality maintained a relatively equal income distribution.

Malaysia

• With Moderate growth, Malaysia could become a middle-income economy but face troubles becoming a high-income one;
• Social impact, Malaysia reduced poverty, and erased the association of Bumiputera with specific economic groups;
• Structural challenges faced difficulties in private investments and innovations.

Innovation and Diversification

The technological strides of South Korea, Taiwan, Singapore, and Hong Kong are recognized as exemplary in encouraging innovation and diversification. On the other hand, Malaysia is enhancing its unique role in the rapidly transforming technology environment by combining global tech leadership with emerging opportunities. 

The Tiger’s Success

South Korea

South Korea is now known as a global leader in electronics, automobiles, and shipbuilding, with companies like Samsung, Hyundai, LG Electronics, and KIA known worldwide. This country has also invested greatly in research and development (R&D) and education, creating a culture of innovation.

Taiwan

Also known as “Silicon Island,” it is a center for electronics and computer hardware production. Taiwanese companies like Taiwan Semiconductor Manufacturing Company (TSMC) have assured to position Taiwan as a strong player in the global tech supply chain.

Singapore

This city-state is a globally known financial hub with a strong focus on innovation and technology. Its strategic investments in R&D and transparent government have attracted multinational companies and investors. Some companies from Singapore are said to own pretty-much everything according to Dollars and Sense. These companies are: Singapore Telecommunication Limited, DBS Group Holdings, CapitaLand Limited, and others.

Hong-Kong

While being most known for being an economic center, Hong Kong also has a strong environment for technologies, specifically in fintech. Thanks to its strategic location and business-friendly environment, Hong Kong became a gateway for investment and trade in Asia.

Malaysia’s Progress in Technologies and Diversification

Malaysia has made admirable progress in technology being the regional leader in Southeast Asia. Here are just some highlights:

Malaysia transitioned to 5G, with the government granting a second nationwide license to enhance connectivity and competition. The move to 5G was right for customer choice, long-term financial utilization, and Malaysia’s competitiveness as a tech and service economy.

Also, the technology industry is flourishing in Malaysia. Because of the investments in artificial intelligence, and also thanks to the global recovery in the semiconductor market, Malaysia’s tech industry experienced development and growth.

In 2024, Malaysia’s tech environment received funding from tech powerhouses like Google, Amazon Web Services (AWS), and Microsoft. The investments provided by these giant companies reached $16.9 billion, unprecedented funding for Malaysia. These factors make Malaysia a beneficial destination for technology growth.

Malaysia is rising as an appealing data center hub, especially favorable for Chinese companies due to their heavy investments in supporting AI. This country offers a combination of China-Malaysia relations, lower electricity utilities, and access to unavailable modern semiconductors unavailable in China because of the US restriction. Due to these reasons, Malaysia overtook Singapore as a preferred data center hub.

Malaysia’s Economic Aspiration

Hong Kong, Singapore, South Korea, and Taiwan, also known as the Four Asian Tigers, are known as the “Asian Miracle” due to their revolutionary economic growth. This growth was driven by export policies and industrialization, and the Tigers are set as an example for other countries. This example is also followed by Malaysia, which although made significant progress, has not yet reached the high-income status of the Tigers.