Tomorrow I leave Malaysia for Thailand, starting with 4 nights in Phuket. My Malaysian journey has been limited to Peninsular Malaysia (rather than Malaysian Borneo), taking in Melaka, Kuala Lumpur, Penang and Langkawi, and my overwhelming impression is the friendliness and peacefulness of the people. I found this most striking in Kuala Lumpur: a capital city where people are warm and respectful to one another is a curious and wonderful anomaly in my experience of capital cities. Now you are aware that I am accompanied by a family and that might influence the way people react and behave around me, so here is supportive evidence from a couple of studies.

Firstly, the annual Forbes friendliest countries rankings puts Malaysia in 10th spot globally:

1. Cayman Islands

2. Australia

3. United Kingdom

4. Canada

5. New Zealand

6. Spain

7. United States

8. Bermuda

9. South Africa

10. Malaysia

Secondly, the Global Peace Index by the Institue for Economics and Peace, which measures safety, security and conflict, ranks Malaysia in 20th spot globally:

1. Iceland

2. Denmark

3. New Zealand

4. Canada

5. Japan

6. Austria

7. Ireland

8. Slovenia

9. Finland

10. Switzerland

11. Belgim

12. Qatar

13. Czech

14. Sweden

15. Germany

16. Portugal

17. Hungary

18. Norway

19. Bhutan

20. Malaysia

Malaysia also was rated the second happiest nation in South East Asia after Singapore, in the UN World Happiness Report (measured between 2005 and 2011).

When I asked Malaysians why there was such apparent harmony and friendliness, the response was that this is a country of several peoples and cultures living together as one: out of the diversity has come unity (it is around 50% Malay, 24% Chinese, 11% indigenous, 7% Indian and 7% various others).

Clearly, in other countries disparate groups living together has led to conflict and unhappiness, so whether it be cultural, religious, political or social influences at work, it is what is, and the Malaysian people made it a real pleasure to be in their country – so we have been in no hurry to leave. Even in the rawer parts of Kuala Lumpur, I found the atmosphere remained safe and respectful.

Similar to Singapore, for an Englishman like myself, there is a nice blend of the familiar and the exotic. The legacy of British Empire rule is English language everywhere, driving on the left, UK plug sockets and the colonial-styled luxury of the Shangri-La in KL. Yet, the influence of Islam, the multi-cultural cuisine reflecting the multi-cultural society, the 30 degree heat, the tropical storms, the palm plantations, the rain forests, the monkeys and lizards, and the marine life on the reef all made for a terrific novel exotic experience. The icing on the cake was a cost of living that I found to be overall about half that of the UK – our accommodation, transport and dining. In an odd twist, eating out worked out cheaper than self-catering from the supermarket. How is that reverse premium possible?

One contributing factor to the lower cost of living is Malaysia’s oil production and associated energy subsidies (several oil-producing country governments subsidise fuel, to benefit their economies). Malaysia also has a rich natural resource heritage – it is a leading global producer and exporter or rubber and palm oil, and also wood and wood products. But it has also become a diversified economy, including becoming the world’s leading Islamic finance and banking centre, and operating one of the world’s only six 5-star airlines. In short, it is an economic success story since becoming independent half a century ago, and is the 28th largest economy in the world. GDP has grown at an average 6.5% per annum in that time, charted below:

Source: World Bank

The Asian Banking Crisis of 1997 made for the biggest dip in economic development, but it fairly swiftly recovered to trend. Debt to GDP is around 50%, a manageable level.

The housing market has been the 9th hottest real estate market in the world over the last 5 years, but property prices remain very reasonable relative to other hot property markets such as Switzerland and Singapore. The stock market (the KLCI) has also performed well, as shown below, but is currently valued at at p/e of 15 and a CAPE of 20, so does not represent an interesting opportunity at the moment.

Source: Bloomberg

There is also a government scheme to encourage foreigners to live in Malaysia on rolling 10 year passes, with fairly low entry criteria compared to most other countries. Details here.

Like anywhere, there are negatives, and the following are my such perceptions. Whilst the infrastructure and public transport is generally of a high standard, the common taxis are largely decrepit. Whilst the area of Kuala Lumpur around the Petronas Towers is very nice – there are large chunks of the capital city which are, to be blunt, an eyesore. Whilst Penang is a cosmopolitan island with some plush developments, there is also a fairly large contrast there between the poor and the rich. The open drainage system throughout the country causes some bad odours, and capital punishment and certain particularly harsh laws may not appeal to everyone.

As this is a country that can be currently considered in transition from a developing country to a developed country, it is easy to imagine some of these issues being resolved with continued growth. There is a lot of new build development occurring in Johor, Melaka and Penang – a lot of ambitious investment. I can contrast that with large parts of the UK where building has slowed to a standstill and high streets remain partially empty since the 2008 recession. All in all, Malaysia’s people, natural resources, sustained economic growth and investment, and geographic position in the world for this century (expecting Asia to lead global growth) make it an exciting and appealing country. I really can’t praise it enough.

Some pics. The Petronas Towers in KL – the tallest ‘twin-towers’ in the world. Chinese clans still living on stilts in the sea on Penang. The rainforest island of Langkawi. And monkeys everywhere…