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During the late 18th and 19th centuries, Great Britain established colonies and protectorates in the area of current Malaysia; these were occupied by Japan from 1942 to 1945. In 1948, the British-ruled territories on the Malay Peninsula formed the Federation of Malaya, which became independent in 1957. Malaysia was formed in 1963 when the former British colonies of Singapore and the East Malaysian states of Sabah and Sarawak on the northern coast of Borneo joined the Federation. 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.

Executive branch:

chief of state: Paramount Ruler Tuanku SYED SIRAJUDDIN ibni Almarhum Tuanku Syed Putra Jamalullail, the Raja of Perlis (since 12 December 2001)

head of government: Prime Minister ABDULLAH bin Ahmad Badawi (since 31 October 2003); Deputy Prime Minister Mohamed NAJIB bin Abdul Razak (since 7 January 2004)

cabinet: Cabinet appointed by the prime minister from among the members of Parliament with consent of the paramount ruler

elections: paramount ruler elected by and from the hereditary rulers of nine of the states for five-year terms; election last held 12 December 2001 (next to be held in 2006); prime minister designated from among the members of the House of Representatives; following legislative elections, the leader of the party that wins a plurality of seats in the House of Representatives becomes prime minister

election results: Tuanku SYED SIRAJUDDIN ibni Almarhum Tuanku Syed Putra Jamalullail elected paramount ruler

Legislative branch:

bicameral Parliament or Parlimen consists of the Senate or Dewan Negara (70 seats; 44 appointed by the paramount ruler, 26 appointed by the state legislatures) and the House of Representatives or Dewan Rakyat (219 seats; members elected by popular vote to serve five-year terms)

elections: House of Representatives - last held 21 March 2004 (next must be held by 2009)

election results: House of Representatives - percent of vote by party - BN 91%, DAP 5%, PAS 3%, other 1%; seats by party - BN 199, DAP 12, PAS 6, PKR 1, independent 1

Judicial branch:

Federal Court (judges appointed by the paramount ruler on the advice of the prime minister)

Political parties and leaders:

ruling-coalition National Front (Barisan Nasional) or BN, consisting of the following parties: Gerakan Rakyat Malaysia Party or PGRM [LIM Keng Yaik]; Liberal Democratic Party (Parti Liberal Demokratik - Sabah) or LDP [LIEW Vui Keong]; Malaysian Chinese Association (Persatuan China Malaysia) or MCA [ONG Ka Ting]; Malaysian Indian Congress (Kongresi India Malaysia) or MIC [S. Samy VELLU]; Parti Bersatu Pakyat Sabah or PBRS [Joseph KURUP]; Parti Bersatu Sabah or PBS [Joseph PAIRIN Kitingan]; Parti Pesaka Bumiputra Bersatu or PBB [Patinggi Haji Abdul TAIB Mahmud]; Parti Rakyat Sarawak or PRS [James MASING]; Sabah Progressive Party (Parti Progresif Sabah) or SAPP [YONG Teck Lee]; Sarawak United People's Party (Parti Bersatu Rakyat Sarawak) or SUPP [George CHAN Hong Nam]; United Malays National Organization or UMNO [ABDULLAH bin Ahmad Badawi]; United Pasokmomogun Kadazandusun Murut Organization (Pertubuhan Pasko Momogun Kadazan Dusun Bersatu) or UPKO [Bernard DOMPOK]; People's Progressive Party (Parti Progresif Penduduk Malaysia) or PPP [M.Keyveas]; Sarawak Progressive Democratic Party or SPDP [William MAWANI]; opposition parties: Democratic Action Party (Parti Tindakan Demokratik) or DAP [KARPAL Singh]; Islamic Party of Malaysia (Parti Islam se Malaysia) or PAS [Abdul HADI Awang]; People's Justice Party (Parti Keadilan Rakyat) or PKR [WAN AZIZAH Wan Ismael]; Sarawak National Party or SNAP [Edwin DUNDANG]; opposition coalition Alternative Front (Barisan Alternatif) or BA - consists of PAS and PKR

Economy - overview:

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. As a result, Malaysia was hard hit by the global economic downturn and the slump in the information technology (IT) sector in 2001 and 2002. GDP in 2001 grew only 0.5% because of an estimated 11% contraction in exports, but a substantial fiscal stimulus package equal to US $1.9 billion mitigated the worst of the recession, and the economy rebounded in 2002 with a 4.1% increase. The economy grew 4.9% in 2003, notwithstanding a difficult first half, when external pressures from Severe Acute Respiratory Syndrome (SARS) and the Iraq War led to caution in the business community. Growth topped 7% in 2004 and 5% in 2005. As an oil and gas exporter, Malaysia has profited from higher world energy prices, although the cost of government subsidies for domestic gasoline and diesel fuel has risen and offset some of the benefit. Malaysia "unpegged" the ringgit from the US dollar in 2005, but so far there has been little movement in the exchange rate. Healthy foreign exchange reserves, low inflation, and a small external debt are all strengths that make it unlikely that Malaysia will experience a financial crisis over the near term similar to the one in 1997. The economy remains dependent on continued growth in the US, China, and Japan - top export destinations and key sources of foreign investment.