Malaysia-Indonesia Economic Relations | Lotus Remit

International economics and economic relations are becoming increasingly important fields of focus over the years and for the time to come. Economic relations are an important sub-sector to investigate, this field focuses on the consequences of economic interaction among countries. There are many forms of economic relations between two countries such as direct investment, foreign trade, foreign capital, the capitalist world, foreign exchange, trade, and Money transfer. However, in this article, we are taking a closer lookat the factors contributing to the relationship and at how remittance contributes to the economic relations between these two countries. Remittance can affect economic growth in individual countries as well as joint growth. There is empirical evidence that remittances contribute to economic growth through their positive impact on consumption, savings, and investment. On a contrary to that, they can also have a negative impact on growth in recipient countries by reducing incentives to work, and therefore reducing labour supply (IMF working paper -JemaDridi, TurcGumsoy, Hector Perez-Saiz, and Mounir Bani).

Foremost, we take a closer look at the relationship between these countries and their historical similarities. Indonesia and Malaysia established diplomatic relations in 1957. It is known as one of the most important bilateral relationships in Southeast Asia. Indonesia and Malaysia are two neighbouring nations that share similarities in many aspects. Both have many common characteristics and traits, including standard forms of reference in history, culture, and religion. The national languages Indonesian and Malaysian Malay are closely related and largely mutually intelligible. Both nations are Muslim-majority countries, the founding members of ASEAN (Association of Southeast Asia Nations) and APEC (Asia-Pacific Economic Cooperation), and members of the Non-Aligned Movement, United Nations, and so on (Indonesia-Malaysia -Wikipedia). Bilateral ties have continued to be fundamentally strong. Malaysia’s cooperation with Indonesia continues to expand and generate greater trust and mutual benefits for both countries. There is a strong commitment on both sides to further strengthen our relations at every level in all fields.

Furthermore, there is also so much to Malaysia and Indonesia as independent economies. Here we take a closer look at their current economic status and growth. Malaysia has a newly industrialized market economy, which is relatively open and state-oriented. The Malaysian economy is highly robust and diversified with the export value of the high-tech product in 2020 standing at USD 92 billion, the second highest in ASEAN. The economy of Malaysia is the third largest in Southeast Asia and the fourth largest in the world in terms of Growth Domestic Product (GDP). According to the Global Competitiveness report 2021, the Malaysian economy is the 25th most competitive economy in the world. Malaysians enjoy a relatively affluent lifestyle compared to many of its neighbouring countries (Economy of Malaysia- Wikipedia). The economy registered a stronger growth of 14.2% in the third quarter of 2022 (Economic and Finance Developments in Malaysia in The Third Quarter of 2022-Bank Negara Malaysia). As for Indonesia, Bank Indonesia projects solid national economic growth in Indonesia in 2023 at 4.5-5.3%, in 2024 underpinned by private consumption, investment, and positive export performance against a backdrop of global economic moderation (Bank Indonesia). The GDP of Indonesia is expected to reach 1245.00 billion USD by the end of 2022, according to Trading Economics global Macro models and analyst expectations. Today, Indonesia is the world’s fourth most populous and tenth largest economy in terms of purchasing power parity (The World Bank Indonesia).

Nonetheless, there are many factors that are contributing to the economic alliance between Malaysia and Indonesia. These forms of economic relations are suggested above. However, remittance serves as one of the important contributors to the relationship and economic growth between both nations.The United Nations Sustainable Development Goals (SDGs) identify remittance as a lifeline for many struggling families and communities in developing countries. Here at Lotus Remit, we make it easier to send money from Malaysia to Indonesia. In fact, Indonesia is an important corridor for remittance services provided. We can help clients to send money abroad in the shortest time without hassle. Our international services from Malaysia to Indonesia are dependable and transparent. Lotus Remit also provides one of the best competitive rates they have to offer here in Malaysia. We provide affordable services which are secure and safe which would serve as the best possible choice.

In conclusion, the economic relations between the two countries may open up many economic opportunities such as employment, trade, exchange, and much more. These will contribute to the economic growth of both countries. However, it is important that the government and higher officials involved come up with constant plans and strategies to maintain relationship sustainability between these countries. In a larger context, the economic relations between Indonesia and Malaysia are rather significant due to the factors stated in the article above. With that being said, it is essential that both countries keep cultivating ways to sustain the relationship and improve their economic positioning and growth over the years to come.