Malaysia‘s independence in 1957 was a catalyst for growth. As the nation took charge of managing its own affairs, it continued to develop the goals and means necessary for a financial structure conducive to the economic growth observed today. Critical to the transition of Malaysia from a low-income country to one of high-income status has been the expansion of its economy. From a commodity and agricultural-based economy, the Southeast Asian nation is transitioning to a leading exporter of more complex goods. As the nation opens up to trade and investment, the World Bank and the International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA) continue to assist with its development.
Malaysia joined the World Bank following its independence on March 7, 1958, following a resolution to first join the International Monetary Fund. The World Bank continues to identify areas of growth necessary for the Malaysian economy. It cites a need for reduce poverty, income inequalities. Although the growth of the Malaysian economy has been significant, it still trails relative to regional and national competitors of a similar nature. Many of Malaysia’s loans from the World Bank have been concerned with infrastructure development relating to energy security and trade. As such, its first pivotal project was the creation of a hydroelectric power station and dam. Successive projects included funding allocating to the development of ports, roads, in tandem with the Ministry of Finance in Malaysia.
Malaysia received its first loan from the IBRD in 1958. The proposed loan expected the IBRD to provide 70% of financing, or around US$51.2 million. These funds were commissioned for the Cameron Highlands District, approximately 100 miles of Kuala Lumpur, as a part of a comprehensive plan to develop energy infrastructure. The hydroelectric power station created as a result of the loan channeled the several local waterways that flowed through the plateau-region. Project completion resulted in diversion tactics, new power stations, and a concrete damn. The project represented the needs greater power demand in the state.
Throughout the 1990s Malaysia continued to receive World Bank loans meant to assist the state’s development and diversify the growth of its predominantly agricultural and commodity-based economy. Following its receipt and use of IBRD loans, Malaysia choose to seek relations via a reimbursable advisory services framework (RAS). Malaysia now interacts with the World Bank Group as an upper-middle income economy as a member of the IDA.