Executive Summary

From this assignment we are required to research and submit an assignment on

economy development policy in Malaysia based on the Malaysian history especially learning

the information about how the country has developed and how successful it is. Besides that,

students are required to research and do analysis with relevant examples applied in this topic.

Students must include a written expression to show and prove the fact of each issue. Students

were also required to state what each prime minister has contributed to the development of

the country and also their effect. Through this assignment we will get to know how the

Malaysian economy has developed in the past few years. The last thing that we have learned

through this assignment is that the referencing method or also known as Harvard Referencing

Method that students are required to use.

Table of content

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1.0 History of Malaysia……………………………………(2-7)

2.0 Economy development Policy ……………………… (12- 17)

3.0 Conclusion ……………………………………………. (18)

4.0 Bibliography……………………………………………. (19)

Introduction

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History of Malaysia

Scientists have found archaeological confirmation of human population in the Niah

caves in Sarawak about 40,000 years ago. The initial proof of population on the Malay

Peninsula that has been found is from about 10,000 years ago. Most scholars believe the

earliest settlers on the Malay Peninsula come overland from Southern China in small groups

over a period of thousands of years. (http://kiat.net/malaysia/past-PM.html)

After 1,000 BC metal-using farmers came to Malaya. They made tools from bronze

and iron and they settled along the coast and along rivers. They lived partly by fishing, partly

by growing crops. In the 2nd and 3rd centuries AD centralised states arose in Malaya. The

Greatest was Kedah in the North. The Malayan became highly civilised. Malayan civilisation

was heavily influenced by India. (Malayan traded with India from the 3rd century AD. After

that contact with India was common.) Malayan laws and writing show Indian influence. The

religions of Buddhism and Hinduism were also introduced into Malaya at that time.

(http://localhistories.org/malaysia.html)

Golden Age of Melaka (1400-1511)

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Melaka also spelled Malacca. A city steeped in history was founded in 1400 by a

fleeing Palembang prince named Parameswara. He founded it at the end of the 14th century.

He becomes ruler of Temasik on Singapore Island. According to the legend when he was

hunting a mouse deer turned and kicked one of his dogs. Parameswara took this an omen and

decided to found a settlement there. Since he was standing under a Melaka tree at the time he

named it Melaka. (http://www.localhistories.org/malaysia.html)

Its rise from a village of royal refugees to a wealthy kingdom and international centre

for the spice trade was swift. It attracted from throughout the world. In mid 1400s, Melaka

became a Muslim kingdom. During the 15th century the new settlement prospered and grew.

The great wealth of the city-state of Melaka came to the notice of the Portuguese. Thus began

a colonial legacy that would last well into 20th century.

(http://www.localhistories.org/malaysia.html)

Colonial Era

Malaysia was once a colonised land. Although it is classified as one of the Commonwealth

countries, that is as a former British colony, it was subjected by other powers for

approximately 446 years (from 1511 until 1957). The Portuguese, Dutch, British, Japanese

and even the Siamese had colonizing almost the whole country before, but only the British

and the Japanese succeeded in colonizing almost the whole country and left an impact on the

people. The others merely concentrated on certain states. The colonial era reflects the

attraction of the country and of the Malay Archipelago to the foreign countries. (Nazaruddin,

Ma’rof, Asnarulkhadi, Ismail, pg 8)

Colonists and the Features of Domination

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Portuguese (1511-1641)

It was mainly in Malacca, was opposed by the Malays of Malacca with the aid of

Acheh. They did not leave behind many traces, except in the areas of languages and dance.

(Nazaruddin, Ma’rof, Asnarulkhadi, Ismail, pg 9)

Dutch (1641-1824)

It was also mainly in Malacca and did not leave many traces, focused on colonising

Indonesia, was opposed by the Malays who frequently received help from the Bugis.

(Nazaruddin, Ma’rof, Asnarulkhadi, Ismail, pg 9)

British (1824-1957)

British colonized the whole of Peninsula Malaysia. They left behind significant

influence on the way of the life of the people (political, economic and social). It was strongly

opposed by the country’s population. (Nazaruddin, Ma’rof, Asnarulkhadi, Ismail, pg 9)

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Siamese (1821-1909)

It was a long time lord of the states in the north of the Malay Peninsula, but history

dates it as having started in 1821. They stayed mainly in the northern states of the Malay

Peninsula namely, Perlis, Kedah and Kelantan, traces of influence very evident in the states

in the north, especially in the areas of religion (Buddhists) and art. (Nazaruddin, Ma’rof,

Asnarulkhadi, Ismail, pg 9)

Japanese (1942-1945)

They colonized the entire country. They also greatly influenced the life of the people,

especially in terms of relations between the races and were opposed by the whole country.

The factors for colonising Malaysia are closely tied to the vast natural resources and

other sources of wealth much sought after by the colonialists. Furthermore, the Malay

Archipelago was also a place for them to extend their political influence and Christian faith.

(Nazaruddin, Ma’rof, Asnarulkhadi, Ismail, pg 9)

.

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Independence from British

From the 1890’s the British invested heavily in what was the called Malaya,

developing transportation and rubber plantation. Coupled with the power of the White Rajahs

in Borneo, Britain ruled over Malaya until 1941 when the Japanese invaded Malaya and

captured Singapore in early 1942. Japan occupied British Malaya and much of Asia until

losing the war in 1945. World War II and its aftermath brought the end of British Rule.

After World War II ended in 1945, the British tried unsuccessfully to organize

Malaya into one state due to a mature independence movement organized as an alliance under

YTM Tunku Abdul Rahman. This led to the birth of nationalism, which opposed a colonial

status. In 1946 the United Malay National organization (UMNO) was established. Britain

dissolved the Straits Settlements in 1946. In 1948, the kingdoms on the Malay Peninsula, plus

Melaka and the island of Penang united to form the Federation of Malaya, a partially

independent territory under British protection. Singapore, North Borneo and Sarawak became

separate crown colonies. In the same year the Malayan Community Party was formed and

began a guerrilla uprising against the British that became known as the Emergency. With

Malay help, the British finally subdued the Emergency in 1960, three years after

independence. In 1955 the Malayan Chinese Association (MCA) joined UMNO in an

anticommunist, anticolonial coalition that won 51 of 52 parliamentary seats. The British

relinquished their powers, and in 1957 the Federation of Malaya had gained complete

independence from Britain. Singapore, which had a mostly Chinese population, remained

outside the federation as a British crown colony. Peninsula Malaysia became an independent

nation called Malaya in 1957. When the British flag was finally lowered in Kuala Lumpur’s

Dataran Merdeka in 1957, Tunku became the first prime minister of Malaysia.

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Economic Development Policy

Development is highly complex both in terms of concept as well as in

implementation. As an independent and sovereign country Malaysia had launched a unique

national development policy. The basic objective of development is to improve the quality of

the life of the people. Economic development is always tied to changes in income. Normally,

increases in national or per capita income or the monthly income of a citizen are indicators or

signs of economic development. (Nazaruddin, Ma’rof, Asnarulkhadi, Ismail, pg 198,199)

National development policy

Before independence

When the British ruled Malaya, there was no national development policy aimed at

taking care of the welfare of the people under their rule. The colonialists at the time

concentrated only on economic activities like the rubber industry and tin mining in the

Peninsula, petroleum and black paper in Sabah. It had been the colonialists’ policy to exploit

the conquered land of its products and profits and to bring them back to their homeland. The

people generally lived in want. Economic activities got worse with the colonialists’ open door

policy of allowing foreign labour to carry out the economic activities thus creating three

obviously different types of economies based on race. The Chinese monopolised tin mining,

the Indians, the rubber estates and the Malays, agriculture. As centres of mining activity that

gave substantial returns to the economic interests of the colonial masters, these mining and

urban areas were supplied with minimum basic facilities. In other words, during the colonial

period, development was confined only to urban. (Nazaruddin, Ma’rof, Asnarulkhadi,

Ismail, pg 201)

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The colonialists’ policies and their economic systems resulted in two differential

development gaps between areas. The first is that between the urban and rural areas. In the

rural sector, the Malays lived by practising a self practising a self supporting or subsistence

economic system by involving themselves in farming, paddy planting, vegetable gardening or

fishing. The Indians in the plantation sector lived in very poor conditions earning a meagre

pay. The Chinese, who endeavoured and worked in the mining sector, which happened to

become town centres indirectly, were fortunate and had the chance to enjoy the facilities

provided by the British. The implication here is that development was not balanced between

resettlement sectors. This unbalanced development policy also gave birth to a Malaysia

society, in which the ethnic groups can be identified through their economic activities.

(Nazaruddin, Ma’rof, Asnarulkhadi, Ismail, pg 201)

The second development gap is the difference between geographical areas, between

the East Coast and the West Coast. Due to its location, the East Coast, which is difficult to

access and is not annually rich in tin ore was left in the tide of development during that

period. The situation is more or less similar for native population living in Sabah and

Sarawak. The colonialists’ economic policy focussed strictly on profit exploitation activities

with little consideration for the citizen’s welfare had further enlarged the poverty gap

between sectors, areas and ethnic groups. (Nazaruddin, Ma’rof, Asnarulkhadi, Ismail, pg

201)

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After independence

Malaysia inherited after independence, the leftovers of the colonialists’ development

policies. This something the country’s citizens had to accept. The main challenge that

confronted the Alliance government after independence was to develop the economy to

benefit the country’s own citizens so as to narrow the differential development gap and

subsequently to get rid of poverty. (Nazaruddin, Ma’rof, Asnarulkhadi, Ismail, pg 202)

Government planning in achieving the above national development objectives is set

out in the national development policies themselves. The national development policies can

be found in government documents, known as the Five Year National Development Plan

(NDP), released every five years. The NDP can be considered the main agenda in the

planning and implementation of economic development for the people of Malaysia. Every

NDP is a national development agenda with definite philosophies, objectives and aims, focus,

programs and implementation strategies. The main themes or foci of national development

are not static, they change with the passage of time. They are programmed to suit the latest

domestic and global challenges by taking into account achievements and problems of earlier

policies. The action has as objective, the peace and prosperity of the people. This made the

NDP very pragmatic in nature. A system of reviewing known as the Five Year National

Development Plan Mid-Term Review is applied to each five-year. (Nazaruddin, Ma’rof,

Asnarulkhadi, Ismail, pg 202)

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The national development plan can be divided into four main phrases of development which

is New Economic Policy (NEP), Outline Perspective Plan 1(OPP 1), Outline Perspective Plan 2

(OPP 2), and Outline Perspective Plan 3(OPP 3). These long term phases cover several five-year

development plans. Every phase had its own definite policies and focus or theme of development.

Every policy and focus of development has objectives followed by implementation strategies to

ensure the attainment of the objectives. (Nazaruddin, Ma’rof, Asnarulkhadi, Ismail, pg 202).

So far Malaysia has gone through ten Five Year National Development Plans. Which are

First Malayan Plan (1956-1960), Second Malayan Plan (1961-1965), First Malaysian Plan

(1966-1970), Second Malaysian Plan (1971-1975), Third Malaysian Plan (1976-1980), Fourth

Malaysian Plan (1981-1985), Fifth Malaysian Plan (1986-1990), Sixth Malaysian Plan (1991-1995),

Seventh Malaysian Plan (1996-2000), Eight Malaysian Plan (2001-2005). (Nazaruddin, Ma’rof,

Asnarulkhadi, Ismail, pg 202).

First Malayan Plan to First Malaysian Plan

Phase One started with the First Malayan Plan until the First Malaysian Plan covering

three five-year development plants that went on for 15 years. The early stage of the national

development policy concentrated on rural society, including efforts to provide facilities for

infrastructure, social services and agricultural development. With the opening of more areas for

agriculture, developed through the opening of new land under the Federal Land Development

Authority (Felda) scheme and also the grouping of small-sized land into larger, more economically

developed areas under the Peripheral Land Programme under Federal Land Consolidation and

Rehabilitation Authority (Felcra) and the State Group Land Programme (Group Settlement Act,

1960,) small farmers and the landless had the chance to earn a living, enjoy increased income and

finally the ability to improve their standard of living. All the developmental efforts launched by the

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government are available to all Malaysian who meet the conditions. (Nazaruddin, Ma’rof,

Asnarulkhadi, Ismail, pg 207).

The government’s commitment to prioritize rural development in the first stage of the

national development policy was hardly political but more to address the problem left behind by the

colonialists. For 83years the British were in power in Malaya, beginning with their intervention in the

internal affairs of Perak, followed by the 1874 Pangkor Treaty, there was no attempt whatsoever at

overall development. The most disastrous effect resulting from the economic imbalance between

sectors and communities left behind by the colonialists is the 1969 13th riots. As a reinforcement to the

formation of a united nation, the New Economic Policy was introduced a year after the May 13

incident. (Nazaruddin, Ma’rof, Asnarulkhadi, Ismail, pg 207).

Outline Perspective Plan1 (OPP1) – The New Economic Policy

The NEP as a framework for a long-term plan extends over a period of 20years (1971-

1990). It involved four five-year Malaysia plans (MP) starting with MP2 and ending with

MP. As a policy, the NEP was transparent in its objectives and specific strategies. The two

main objectives of the NEP were to reduce and eradicate poverty regardless of ethnicity and

restructure the society so as to eliminate community identification through economic sectors.

Both objectives were aimed at integrating the multiracial society in Malaysia. (Nazaruddin,

Ma’rof, Asnarulkhadi, Ismail, pg 208).

Generally, the NEP succeeded in curbing racial violence from erupting again as it did

in 1969. The philosophy of the NEP, to create national unity and integration through development

with fair distribution has apparently been fruitful. The NEP succeeded in generating national

economic growth and also reduced the overall poverty rate among the people although there were still

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communities that could not afford to enjoy basic facilities. (Nazaruddin, Ma’rof, Asnarulkhadi,

Ismail, pg 209).

Outline Perspective Plan 2 (OPP2)- National Development Policy

The purpose of the National Development Policy (NDP) was to create a fairer and more

united Malaysian society. The third phase covered a period of 10years (1991-2000) and embraced

two five-year Malaysian plans, the sixth and seventh Malaysia Plans. It was shorter as compared to

OPP1. OPP2 was the initial stage of the country’s stride towards being a developed country as

envisaged in Vision 2020. The Prime Minister proclaimed this vision for the first time on 28 February

1991. The NDP implemented as OPP2 was oriented towards a balanced development. By balanced

development is meant one that generates rapid socio-economic growth followed subsequently by

income distribution. (Nazaruddin, Ma’rof, Asnarulkhadi, Ismail, pg 210).

The focus this time moreover, oriented more towards poverty among the poorest groups and

also relative poverty between and within ethnic groups. The government’s commitment to the

realization of the concept of balanced development, particularly to ensure poverty is overcome, is

clear with the establishment of the National Development Council chaired by the Prime Minister

himself. As stated in Order No.1.1991 (National Development Policy Implementation Coordination

Machinery), the Council meets every month. It was also responsible for determining strategies and

implementation as well as tracking and evaluating programs and projects of the NDP and the 6 th

Malaysian Plan. The purpose was to ensure the success of the strategies to eradicate poverty and to

restructure society in OPP2, based on distribution through economic growth. (Nazaruddin, Ma’rof,

Asnarulkhadi, Ismail, pg 210).

These efforts continued well into the Seventh Malaysian Plan. The thrust of the Seventh

Malaysia Plan was to increase the growth of output potential, intensify the structural transformation

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and balanced development. Thus, the focus of the seventh Malaysia Plan was to enhance productivity

and efficiency; the initiative and involvement of the private sector added momentum to the process.

(Nazaruddin, Ma’rof, Asnarulkhadi, Ismail, pg 211).

The involvement of the private sector in contributing to the national economic growth was not

something new; rather it had started in the Fourth Malaysian Plan with the National Privazation

Policy. The only difference was that the later Malaysia plan stressed on improving skills, capital

expansion and technology development that could contribute to improving efficiency and productivity

to sustain and improve national economic competitiveness. This was what meant by a competitive

economy. It must be emphasized here that the country’s development policy did not focus only on

national economic growth to become a developed nation but also comprehensive development.

(Nazaruddin, Ma’rof, Asnarulkhadi, Ismail, pg 212).

Outline Perspective Plan3 (OPP3) – A National Vision Policy

Efforts to develop the nation and to provide prosperity to the people is a continuous process

made possible by a government. After OPP2, ended in 2000, the government presented another long

term plan known as Outline Perspective Plan 3(OPP3) which is also known as the new long-term

National Vision Policy (NVP). This long term plan for another 10years, starting 2001 to 2010 covers

the Eighth and Ninth Malaysia Plan. OPP3 as a continuation of OPP2 is also the second phase in the

second phase in the nation’s framework to achieve Vision 2020 which began in 1991. A balance in

development put forward this time, touches specifically on development starting from the agriculture

sector, small to medium industries right up to industries based on high technology and information

technology. The focus of development on various levels and sectors means at the same time that the

government is continuing its endeavour to bring prosperity to all strata of society or entrepreneurs

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involved directly or indirectly in these sectors. (Nazaruddin, Ma’rof, Asnarulkhadi, Ismail, pg

212).

The spirit and ability to endure and to compete that prevailed, succeeded in sustaining the

nation’s economy thus making it possible to continue developing and prospering her citizens. The

implications can be seen when the country, on the other hand, tries to sustain stability and political

harmony and racial unity. (Nazaruddin, Ma’rof, Asnarulkhadi, Ismail, pg 212).

On close examination, the core principles of the NVP can be looked upon as an effort to

create a shield to ward off external inroads while building internal strength. The NVP contains three

important components which are unity and resilience of the people of Malaysia, the people as

potential resources, and the related question of improving the economic situation and structure of

Malaysian society thereby removing the traces of poverty and strengthening the country’s macro-

economy. These three components are interconnected, which means that if one component is not fine

then it might affect the other components. If all parties, citizens and government agencies are able to

successful manage the seven proposed fundamentals, the hope, spelt out in the NVP, (to build an

enduring nation by sustaining efforts to eradicate poverty and develop a knowledge-based society (K

economy) can be achieved. Indeed, both OPP2 and OPP3 direct and support efforts to transform

Malaysia into a developed country as aspired by Vision 2020 itself. (Nazaruddin, Ma’rof,

Asnarulkhadi, Ismail, pg 213).

Vision 2020

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This vision is not a concrete policy from policy perspective. But it is a crusade slogan or

motto, that is, a fight based on a slogan picked by the government to empower citizens to transform

Malaysia into a developed nation. The targeted developed nation standard is one patterned upon the

country itself taking into account the diversity of races, religion, historical and cultural background,

customs and eastern values. (Nazaruddin, Ma’rof, Asnarulkhadi, Ismail, pg 213).

The government has allocated a time frame of 30years from the time of its inception to realise

the target. The attempt to produce a developed country that is macro in nature is definitely not as easy

as shaping and building a human being. But if the process occurs side by side with the potentials of

the people regardless of race, supported by different expertise and skills accompanied by allegiance,

mutual trust, sacrifice for the country, tenacity and dedication, this noble can surely become a reality.

(Nazaruddin, Ma’rof, Asnarulkhadi, Ismail, pg 213).

The Sixth and Seventh Malaysia Plans considered the gateway and the first 10 years of vision

2020. Consequently, it can be observed that the national development policies and strategies outlined

and implemented under these two Malaysian plans are parallel to and in tune with Vision 2020.

Furthermore, it can be observed that the challenges outlined in the Seventh Malaysian Plan are

reinforced and complement by the challenges set out in Vision 2020(Nazaruddin, Ma’rof,

Asnarulkhadi, Ismail, pg 214).

The Nine Challenges Are:

1. Create a Malaysian nation that is united and with a common objectives.

2. Create a society that is free, peaceful and advanced, confident of its own capabilities,

successfully proud and strong in facing problems

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3. Create and develop a democratic society that is matured and practises a shared

philosophy.

4. Create a moral and ethical society with strong religious and spiritual values.

5. Create a society that is tolerant and liberal and free to practise its own customs,

culture and religion.

6. Create a scientific and progressive society that is forward-looking and farsighted and

is thus able to contribute to improving civilization based on science and technology.

7. Create a caring society and practise a caring culture.

8. Create a society that is the fair in the distribution of national wealth regardless of race.

9. Create a prosperous society with a competitive economy.

Although this country was shaken by the world economic slowdown at the end of the

Seventh Malaysia Plan, the stable economic foundations laid by the NEP and further far

reinforced as planned by the OPP2 through the Sixth and Seventh Malaysia Plans, have so far

managed to protect the country’s economy. (Nazaruddin, Ma’rof, Asnarulkhadi, Ismail, pg

214)

In the Malaysian context, economic development succeeded in providing social peace

and guaranteeing national unity. It is certain all this did not happen coincidentally but was

produced since a long time by Malaysians from all walks of life that have learned from past

experiences and further strengthened by the younger generation. (Nazaruddin, Ma’rof,

Asnarulkhadi, Ismail, pg 214).

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Conclusion

The essence of the national development policies was development for prosperity for

all through the distribution of wealth with the ultimate aim to create an integrated society.

Development policies that were promoted through Five Year Development Plans also had the

purpose of correcting the imbalance in development based on sector, territory and

community. Any disregard for these aspects can jeopardize the construction of a Malaysian

national community that is multi-ethnic in nature. The 13 May 1969 bloody incident is a

lesson and reminder to all. Indeed, development in Malaysia is not measured only by the

increase in income per capita or increase in the Gross National Domestic Product or the

sustained rate of economic growth. Prosperity that can be commonly enjoyed without giving

risk to feeling of envy or suspicion will create a harmonious society. National prosperity can

be further enhanced by peaceful living environment.

Development efforts or policies brought about by the government would find it hard

to achieve success without the support and cooperation from all strata of the society. In the

context of Malaysia, participation from all praiseworthy spirit of the citizens will be

tolerance, loyalty, compromise, cooperation, readiness to learn from past experience,

sensitivity as well as respect for past history.

.

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Bibliography

1. (http://www.localhistories.org/malaysia.html)

2. (http://kiat.net/malaysia/past-PM.html)

3. Malaysian Studies Book, Pearson, Prentice Hall,

Author;

Nazaruddin Hj Mohd Jali

Ma’rof Redzuan

Asnarulkhadi Abu Samah

Ismail Hj.Mohd Rashid

- Nationhood and citizenship

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