Malaysia Malaysia Background Malaysia was formed in 1963 through a federation of the former British colonies of Malaya and Singapore, including the East Malaysian states of Sabah and Sarawak on the northern coast of Borneo. The first several years of the country's history were marred by Indonesian efforts to control Malaysia, Philippine claims to Sabah, and Singapore's secession from the federation in 1965. Malaysia Economy Malaysia, a middle-income country, transformed itself from 1971 through the late 1990s from a producer of raw materials into an emerging multi-sector economy. Growth was almost exclusively driven by exports - particularly of electronics - and, as a result Malaysia was hard hit by the global economic downturn and the slump in the Information Technology (IT) sector in 2001. GDP in 2001 grew only 0.5% due to an estimated 11% contraction in exports, but a substantial fiscal stimulus package mitigated the worst of the recession and the economy rebounded in 2002. Healthy foreign exchange reserves and relatively small external debt make it unlikely that Malaysia will experience a crisis similar to the one in 1997, but the economy remains vulnerable to a more protracted slowdown in Japan and the US, top export destinations and key sources of foreign investment. Malaysia Location Southeastern Asia, peninsula and northern one-third of the island of Borneo, bordering Indonesia and the South China Sea, south of Vietnam Malaysia Flag 14 equal horizontal stripes of red (top) alternating with white (bottom); there is a blue rectangle in the upper hoist-side corner bearing a yellow crescent and a yellow fourteen-pointed star; the crescent and the star are traditional symbols of Islam; the design was based on the flag of the US
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