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Malaysia is a country in South East Asia whose strategic sea-lane position brought trade and foreign influences that fundamentally influenced its history. Hindu and Buddhist cultures imported from India dominated early Malaysian history. They reached their peak in the Sumatran-based Srivijaya civilisation, whose influence extended through Sumatra, Java, the Malay Peninsula and much of Borneo from the 7th to the 14th centuries.

Although Muslims had passed through Malaysia as early as the 10th century, it was not until the 14th and 15th centuries that Islam first established itself on the Malay Peninsula. The adoption of Islam by the 15th century saw the rise of number sultanates, the most prominent of which was the Melaka (Malacca). Islamic culture has had a profound influence on the Malay people, but has also been influenced by them. The Portuguese were the first European colonial powers to establish themselves in Malaysia, capturing Malacca in 1511, followed by the Dutch. However, it was the British, who after initially establishing bases at Jesselton, Kuching, Penang, and Singapore, ultimately secured their hegemony across the territory that is now Malaysia. The Anglo-Dutch Treaty of 1824 defined the boundaries between British Malaya and the Netherlands East Indies (which became Indonesia). A fourth phase of foreign influence was immigration of Chinese and Indian workers to meet the needs of the colonial economy created by the British in the Malay Peninsula and Borneo.

Japanese invasion during World War II ended British domination in Malaysia. The subsequent occupation of Malaya, North Borneo and Sarawak from 1942 to 1945 unleashed nationalism. In the Peninsula, the Malayan Communist Party took up arms against the British. A tough military response was needed to end the insurgency and bring about the establishment of an independent, multi-racial Federation of Malaya in 1957. On 31 August 1963, the British territories in North Borneo and Singapore were granted independence and formed Malaysia with the peninsular states on 16 September 1963. Approximately two years later, the Malaysian parliament passed a bill to separate Singapore from the Federation. A confrontation with Indonesia occurred in the early-1960s. Race riots in 1969 led to the imposition of emergency rule, and a curtailment of political life and civil liberties which has never been fully reversed. Since 1970 the "National Front coalition" headed by United Malays National Organization (UMNO) has governed Malaysia. Economic growth dramatically increased living standards by the 1990s. This growing prosperity helped minimize political discontent.

Stone hand-axes from early hominoids, probably Homo erectus, have been unearthed in Len gong. They date back 1.83 million years, the oldest evidence of hominid habitation in Southeast Asia. The earliest evidence of modern human habitation in Malaysia is the 40,000 year old skull excavated from the Niah Caves in Borneo in 1958. A study of Asian genetics points to the idea that the original humans in East Asia came from Southeast Asia. The oldest complete skeleton found in Malaysia is 11,000-year old Perak Man unearthed in 1991. The indigenous groups on the peninsula can be divided into three ethnicities, the Negritos, the Senois, and the proto-Malays. The first inhabitants of the Malay Peninsula were most probably Negritos. These Mesolithic hunters were probably the ancestors of the Semang, an ethnic Negrito group who have a long history in the Malay Peninsula.

The Senoi appear to be a composite group, with approximately half of the maternal mitochondrial DNA lineages tracing back to the ancestors of the Semang and about half to later ancestral migrations from Indochina. Scholars suggest they are descendants of early Austroasiatic-speaking agriculturalists, who brought both their language and their technology to the southern part of the peninsula approximately 4,000 years ago. They united and coalesced with the indigenous population.

The Proto Malays have a more diverse origin and had settled in Malaysia by 1000 BC. Although they show some connections with other inhabitants in Maritime Southeast Asia, some also have an ancestry in Indochina around the time of the Last Glacial Maximum about 20,000 years ago. Anthropologists support the notion that the Proto-Malays originated from what is today Yunnan, China. This was followed by early-Holocene dispersal through the Malay Peninsula into the Malay Archipelago. Around 300 BC, they were pushed inland by the Deutero-Malays, an Iron Age or Bronze Age people descended partly from the Chams of Cambodia and Vietnam. The first group in the peninsula to use metal tools, the Deutero-Malays was the direct ancestors of today's Malaysian Malays, and brought with them advanced farming techniques. The Malays remained politically fragmented throughout the Malay Archipelago, although a common culture and social structure was shared.

In the first millennium CE, Malays became the dominant race on the peninsula. The small early states that were established were greatly influenced by Indian culture. Indian influence in the region dates back to at least the 3rd century BCE. South Indian culture was spread to Southeast Asia by the south Indian Pallava dynasty in the 4th and 5th century.

The Malay Peninsula was known to ancient Tamils as Suvarnadvipa or the "Golden Peninsula". It was shown on Ptolemy's map as the "Golden Khersonese". He referred to the Straits of Melaka as Sinus Sabaricus. Trade relations with China and India were established in the 1st century BC. Shards of Chinese pottery have been found in Borneo dating from the 1st century following the southward expansion of the Han Dynasty. In the early centuries of the first millennium, the people of the Malay Peninsula adopted the Indian religions of Hinduism and Buddhism, religions which had a major effect on the language and culture of those living in Malaysia. The Sanskrit writing system was used as early as the 4th century.

There were numerous Malay kingdoms in the 2nd and 3rd century, as many as 30, mainly based on the Eastern side of the Malay Peninsula. Among the earliest kingdoms known to have been based in what is now Malaysia is the ancient empire of Langkasuka, located in the northern Malay Peninsula and based somewhere in Kedah. It was closely tied to Funan in Cambodia, which also ruled part of northern Malaysia until the 6th century. According to the Sejarah Melayu ("Malay Annals"), the Khmer prince Raja Ganji Sarjuna founded the kingdom of Gangga Negara (modern-day Beruas, Perak) in the 700s. Chinese chronicles of the 5th century CE speak of a great port in the south called Guantoli, which is thought to have been in the Straits of Malacca. In the 7th century, a new port called Shilifoshi is mentioned, and this is believed to be a Chinese rendering of Srivijaya.

Between the 7th and the 13th century, much of the Malay Peninsula was under the Buddhist Srivijaya empire. The site of Srivijaya's centre is thought be at a river mouth in eastern Sumatra, based near what is now Palembang. For over six centuries the Maharajahs of Srivijaya ruled a maritime empire that became the main power in the archipelago. The empire was based around trade, with local kings (dhatus or community leaders) swearing allegiance to the central lord for mutual profit.

The relation between Srivijaya and the Chola Empire of south India was friendly during the reign of Raja Raja Chola I but during the reign of Rajendra Chola I the Chola Empire attacked Srivijaya cities. In 1025 and 1026 Gangga Negara was attacked by Rajendra Chola I of the Chola Empire, the Tamil emperor who is now thought to have laid Kota Gelanggi to waste. Kedah—known as Kedaram, Cheh-Cha (according to I-Ching) or Kataha, in ancient Pallava or Sanskrit—was in the direct route of the invasions and was ruled by the Cholas from 1025. A second invasion was led by Virarajendra Chola of the Chola dynasty who conquered Kedah in the late 11th century. The senior Chola's successor, Vira Rajendra Chola, had to put down a Kedah rebellion to overthrow other invaders. The coming of the Chola reduced the majesty of Srivijaya, which had exerted influence over Kedah, Pattani and as far as Ligor. During the reign of Kulothunga Chola I Chola overlordship was established over the Sri Vijaya province kedah in the late 11th century.

Pattinapalai, a Tamil poem of the 2nd century CE, describes goods from Kedaram heaped in the broad streets of the Chola capital. A 7th-century Indian drama, Kaumudhimahotsva, refers to Kedah as Kataha-nagari. The Agnipurana also mentions a territory known as Anda-Kataha with one of its boundaries delineated by a peak, which scholars believe is Gunung Jerai. Stories from the Katasaritasagaram describe the elegance of life in Kataha. The Buddhist kingdom of Ligor took control of Kedah shortly after. Its king Chandrabhanu used it as a base to attack Sri Lanka in the 11th century, an event noted in a stone inscription in Nagapattinum in Tamil Nadu and in the Sri Lankan chronicles, Mahavamsa.

At times, the Khmer kingdom, the Siamese kingdom, and even Cholas kingdom tried to exert control over the smaller Malay states. The power of Srivijaya declined from the 12th century as the relationship between the capital and its vassals broke down. Wars with the Javanese caused it to request assistance from China, and wars with Indian states are also suspected. In the 11th century CE the centre of power shifted to Melayu, a port possibly located further up the Sumatran coast at near the Jambi River. The power of the Buddhist Maharajas was further undermined by the spread of Islam. Areas which were converted to Islam early, such as Aceh, broke away from Srivijaya’s control. By the late 13th century, the Siamese kings of Sukhothai had brought most of Malaya under their rule. In the 14th century, the Hindu Java-based Majapahit Empire came into possession of the peninsula.