MALAYSIA'S FREE TRADE ZONES AND THEIR IMPACT ON MALAYSIAN ECONOMY

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The Free Trade Zones (FTZ) are the most important and effective single physical means instituted by the Malaysian government to bring about the internationalization of the Malaysian economy. They are also the main instrument to rearticulate the economy towards international productive capital. The Free Zones Act. of 19711 was basically directed towards the attraction of foreign investment (foreign capital and technology) to assist the Malaysian economy to take off, and at the same time to help resolve the growing problem of unemployment. However, it might be doubted whether the FTZ industries are bringing in as much of the foreign exchange, transfer or technology and linkages with and within the local economy tihat they were envisaged to effect, and Whether what they are doing is being done unproblemmatically.

The purpose of this article is to examine and evaluate the historical development of Malaysia’s Free Trade Zones and their economic performance, to discuss the extent to which Malaysia has so far benefitted from them, and at the same time to show how they have served the internationalization of the Malaysian economy.