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20. economic policy

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  • 1. ECONOMIC POLICY Malaysian Studies MQA 3063
  • 2. NEW ECONOMIC POLICY (OPP1) • • • i. ii. • The New Economic Policy (NEP) was launched in 1970. Was planned for the next 20 years until 1990, with four 5-year Malaysia Plans. The objectives: To reduce and eradicate poverty regardless of ethnicity; To restructure the society - eliminate community identification through economic sectors. Both objectives were aimed at integrating the multiracial society of Malaysia.
  • 3. • i. The strategies outlined to eradicate poverty : Modernize the living conditions of the lower income group, by increasing further the provision of basic facilities; ii. Expand employment opportunities for all Malaysian citizens regardless of race; iii. Encourage participation in sectors of high productive capacity; iv. Improve further the productivity of the poor, thereby increasing their income • • The strategy outlined in the NEP to eradicate poverty was not directed at any one group. The NEP target group was the poor, regardless of age, generation or settlement location.
  • 4. • The strategies carried out to restructure society: i. Raise the people’s ownership in the private sector; ii. Build a business society among the bumiputeras; iii. Develop areas that have remained backward but are high in potential; iv. Enhance education opportunities within and outside the country.
  • 5. • It cannot be denied that the implementation of efforts to remove the economic imbalance between urban and rural sectors was successful. • What was yet to be achieved was an equitable distribution of the economic pie. • However, the inability of the NEP to deliver was not left unnoticed by the government wanting to create a nation that was strong and respected. • Because of that, the government proceeded with new policies as a continuation of the efforts started by the NEP in the subsequent Outline Perspective Plan 2 (OPP2).
  • 6. NATIONAL DEVELOPMENT POLICY (OPP2) • The purpose of the National Development Policy (NDP) was to create a fairer and more united Malaysian society. • This phase covered a period of 10 years (1991 – 2000) and consisted of two 5-year Malaysian Plans. • OPP2 was the initial stage of the country’s stride towards being a developed country as envisaged in Vision 2020. • 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. • Like the NEP that tried to overcome poverty regardless of race, the OPP2 also nursed the same ambition. • Clearly expressed in the government document, which stated that the implementation of the NDP to reduce poverty took into consideration the needs of all social groups.
  • 7. • The second objective of NEP too was continued under OPP2. • The focus would be on developing a society of bumiputera traders and industrialists in the corporate and noncorporate sector. • The involvement of the bumiputera community was still low as compared to other communities. • Hence, the government’s various efforts to support and assist these groups through its agencies. • Government also improved and extended further the social facilities to be enjoyed by all citizens. • Active involvement of the private sector contributed to the development of the nation’s economy by providing employment opportunities. • The country’s development policy did not focus only on national economic growth to become a developed nation but also comprehensive development that includes quality of life, social justice and a harmonious life with good values.
  • 8. • The NDP aims at creating a pattern of development that is more balanced and which encompasses the following aspects: i. To create optimum balance between economic growth and apportionment; ii. To ensure balanced development among the main economic sectors; iii. To eliminate social and economic inequality among the people of Malaysia; iv. To encourage and strengthen national integration by reducing the imbalance in economic development; v. To build a society that is progressive; vi. To build a disciplined and productive work force; vii. To make science and technology an important aspect in socioeconomic planning and development; viii. To ensure that proper attention is paid to the preservation of the environment and ecology.
  • 9. NATIONAL VISION POLICY (OPP3) • National Vision Policy (NVP) is also known as Outline Perspective Plan 3 (OPP3). • This plan covers a period of 10 years, starting 2001 to 2010 (Eight and Ninth Malaysia Plan). • The essence of this long-term plan is still too bring about a balanced development. • A balance in development, touches specifically on development starting from the agricultural sector, small to medium industries right up to industries based on high technology and information technology. • The thrust of NVP is the creation of an enduring and competitive Malaysian society.
  • 10. • i. ii. iii. iv. v. vi. vii. To carry on and popularize the spirit to compete and to endure, the NVP presented a number of basic principles: To build an enduring nation; To create an equitable society; To sustain high economic growth; To improve competitiveness to face the challenges of globalization and liberalization; To develop a knowledge-based economy as a strategic step to increase value added to all economic sectors; To stabilize the development of human resource to produce a productive and knowledgeable work force; To continue sustained development of the environment for the purpose of long term development.
  • 11. ECONOMY-BASED POLICY 1. • • • • • NATIONAL INCORPORATION POLICY (1983) Defined as a company that is a joint venture between the private and public sector. Group of workers in both sectors play a part in contributing towards enhancing output to raise the productivity of a “Malaysian Company” or semi-government body that is jointly owned. Was created because on awareness on the part of the government that there are still a number of important competitive and opposing matters and issues between the private and public sector. Symbolizes the readiness of the government sector to distribute business opportunities, join or cooperate with the private or public sector to organise effective services for the people in integrated manner. To attain the objective of this policy, private and public sector cooperation is very important.
  • 12. 2. NATIONAL PRIVATIZATION POLICY (1983) • The sale or transfer of control of a company, agency or an industry that is owned/controlled by the government to the private sector. • Outcome: – TV3 – Port Klang container service – Telekom Malaysia – Indah Water • Reasons: i. Reduce financial & administration burden ii. Improve efficiency and productivity iii. Accelerate economic growth iv. Reduce the size of public sector and its involvement in the economy v. Help to achieve the objectives of the NEP.
  • 13. 1. NATIONAL INDUSTRIALIZATION POLICY • Aim at making Malaysia an industrial nation • Industrial development programmes in the 1970s and early 1980s encountered several weaknesses: i. Level of technology was still low; ii. Exports of Malaysian-made goods largely involved a handful of industries; iii. Quality of products was not very satisfactory; iv. Export industries that were set up lacked valueadded quality. • i. ii. To overcome these weaknesses, the government conducted 2 major troubleshooting studies in 1983: National Industrial Policy Study (NIPS) Industrial Master Plan (IMP)
  • 14. • NIPS was aimed at re-examining and modifying existing industrial policies and incentives for investors. • IMP outlined 3 objectives: i. To use the manufacturing sector as a catalyst for industrial growth in the country; ii. To encourage the full use of the country’s natural resources; iii. To raise the level of technological research and development (R&D). • Outcome: i. identifying sectors that have high potentials for economic growth ii. arrival of foreign investors