As the global economy shows tentative signs of recovery, Malaysia has seen it's competitive advantages well rewarded in the last 6 months. There is a noticeable degree of optimism amongst local business and foriegn investors alike, seeing a substantial recovery in the Kuala Lumpur Stock Exchange's Composite Index, especially in comparison to other South East Asian markets.

Part of this was due to a shift of foreign investor's attention to developing Asian markets, as US markets disappoint with a slow recovery. Combined with Malaysia's considerably lower business costs than neighbouring Singapore, and higher English skills than Thailand, Malaysia's economic and business prospects rose well in this quarter

However, this optimism should not lead to complacency. The stock market rise has levelled out and is now in a gradual decline. The good news is that the government is making noises about enhancing English skills by increasing it's importance in secondary education, and reducing the level of patronage in the ruling elite and government partners.

As Singapore struggles out of recession, Malaysia is starting to look as a more cost-effective base for regional or at least South East Asian operations. Several decisions in recent months by international shipping companies to use Malaysia's Klang port over Singapore has increased excitement both sides of the causeway, though Malaysia's plan to position their Kuala Lumpur International Airport as a hub for the region remains over-ambitious in the face of the location, convenience and reliability advantages of Singapore. Landing fees and costs have been reduced at KLIA to tempt international carriers and freight after setting very over-ambitious fees at commencement.

While consumer spending is relatively bouyant, it is still trade and export that will underpin any substantial Malaysian recovery, and much of that depends on a global recovery and import demand from North America and Europe.

On the economic front international agencies as well as the government itself have revised GDP estimates upwards for 2002.