PESTLE Analysis of Malaysia

Pestle analysis of Malaysia. Malaysia is a country located in the southeast of the Asian continent. Two major regions Peninsula of Malaysia and East Malaysia of Borneo are divided by the South China Sea. The capital of Malaysia is Kuala Lumpur. Her neighboring countries are Singapore, Thailand, Indonesia, and Vietnam.

The Malay kingdom came to an end with the arrival of the British Empire in the 18th century. The union of Malaysian Union happened in 1946 and it founded the Federation of Malaysia in 1948. The federation acquired its independence from the colonial British Empire on August 31, 1957.

Malaysia is the world’s 66th largest country in terms of size with an area of 330,803 square Km. She’s the world’s 43rd most populated country with a total population of over 32,730,000 people.

Today, we’ll discuss the pestle analysis of Malaysia. Here we’re going to analyze the macro-environmental factors like political, economic, social, technological, legal, and environmental. For internal factors, check out the swot analysis of Malaysia. Here’s the pestle analysis of Malaysia as follows;

Political factors Impacting Malaysia 

Government & Administration

Malaysia has divided its country into 3 federal territories and 13 states. She follows the western parliamentary democracy as the system of government where the head is the Prime minister. Federal constitutional monarchy is part of the system where the elected monarch is the head of the state. 9 Sultans from the different states choose the monarch for five years.

Stable Political Environment

Malaysian political environment is stable. She follows the rule of neutrality and peace in worldly political affairs and she manifests the same in her foreign policy. She used to have conflicts and political tension with China on the disagreement of the South China Sea. Both of them have come to an amicable resolution.

After the resolution of the conflict, Malaysia has made a defense, energy, tech, and many other deals with China.


According to the ranking of Transparency International, Malaysia ranks at the 57th position out of 180 countries in 2020. It shows that the corruption level has increased in recent years. Even the government has arrested many high-ranking officers and politicians. But it doesn’t seem to reduce the corruption level.

Malaysian people called the bribery “sweetener” to get things done. It means that the people have to pay some bribery in order to have basic facilities like justice, health, medicine, education, and etc. The corruption level isn’t good for the country’s image.


Malaysia has alliances and memberships with organizations like the United Nations, Organization for Islamic Cooperation (OIC), Commonwealth of Nations, ASEAN, APEC, EAS, and Non-Aligned Movement.

Economical factors affecting Malaysia 


According to the financial report, Malaysia’s annual GDP was 900,426 billion US dollars and it’s the 29th highest in the world. Out of which, the per capita earning was 27,287 dollars and it’s 51st highest in the world. The economic crisis has slightly dropped her GDP and per capita income.

Industrial Economy

Malaysia has a knowledge-based industrial economy. It has helped the country in many ways of decreasing the unemployment rate and growth of technology. The industrial economy is increasing the standard of living of people and the productivity of the workforce by making them more efficient.

Imports & Exports

Some of the major exports of Malaysia are office machine parts, palm oil, integrated circuits, petroleum gas, and refined petroleum. Her exporting countries are Hong Kong, Japan, Singapore, China, and the USA.

Some of the major imports of the country are crude petroleum, office machine parts, integrated circuits, broadcasting equipment, and refined petroleum. Her importing countries are Japan, the USA, Singapore, and the USA.

Unemployment Rate

According to a study, the Malaysian unemployment rate has increased from 3.2% to 4.8% during the period of 2019 to 2020. The economist blames the global economic recession due to the pandemic of covid-19 and the shutdown of businesses. The employment opportunities have fallen by 0.8%.

Social factors affecting Malaysia 

Diverse Demographics

Malaysia is a diverse country comprising of different ethnicities, religions, cultures, and backgrounds. Islam is the majority religion in the country and other prominent religions are Buddhism, Christianity, Hinduism, Chinese, Sikhism, and others. Her people are living in harmony besides all the differences. Malay is the official language of Malaysia while other languages are English, Malayalam, Tamil, Chinese, and Telugu.


Malaysian people live a wealthy lifestyle if you compare it with other neighboring countries. It’s because the country has a lower income tax, lower cost of fuel, household products, a social welfare system, and a free healthcare system. Her teenagers face the issue of alcoholism and it’s a serious problem there. The government controls the media and dissemination of information.

Technological Factors Impacting Malaysia 

Tech Industry

The Malaysian tech industry is growing at a very high rate. Approximately more than 80% of her people have access to internet connectivity through mobile data. Many tech companies are showing great interest in Malaysia. It’s because of her IT infrastructure, availability of tech workforce, and strategic location.

Tech companies like IBM, Google, Cisco, DellMicrosoft, Intel, Facebook, HP, AmazonApple, and many others have developed a strong customer base there.

Hi-Tech Destination

The Malaysian government has been working to become the hi-tech destination of the world by the end of 2025. It would help her to attract investment. She’s facing the issue of keeping up with the fast technological changes, shortage of highly skilled tech workforce, and many others.

Space Program

Malaysia launched an educational and experimentation space program by the name of “Angkasa” in 2002. It developed a satellite “RazakSAT.” The international space flight program chose 3 Malaysians. She has been very helpful and resourceful to the interstellar development programs.  

Legal Factors Affecting Malaysia 

Legal System

Malaysian has two legal and judiciary systems; Sharia Law for Muslims and the British Common Law for the non-Muslim and secular. The purpose of both of these laws is to protect the rights of ordinary Malaysian citizens. Her parliament has the authority to impose laws across the country.

Environmental factors affecting Malaysia 

Environmental Challenges

Malaysia has achieved economic growth and progress through industrialization and urbanization. It resulted in the form of serious environmental challenges like carbon emission, polluted rivers, increasing waste, air pollution, natural disasters, climate change, deforestation, and the extinction of rare species.

Conclusion: Malaysia PESTLE Analysis Example Country

After an in-depth study of the pestle analysis of Malaysia, we’ve realized that Malaysia is indeed the top developing industrial country. The environmental issues, corruption, and the increasing unemployment rate are serious threats that the country has to face. Malaysia should develop a strategy to address these issues; while paying heed on the external political, economical, social, technological, legal, and environmental factors.

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