2. LEARNING OBJECTIVES
• The study of this chapter should enable you to
understand:
i. British colonization policies
ii. Impact on socio economic problem
iii. Economic development plan
(NEP,NDP,NVP2,NEM)
iv. Others policies/izatioissues (Vision
2020,privatization,K economy,ICT,MSC etc)
3. BRITISH COLONIZATION POLICIES
(BEFORE INDEPENDENCE)
• During British rules, there was no specific
development plan.
• The economic activities were actually for the
welfare of the United Kingdom and not benefit of
the local people.
• Committed to protecting the predominantly British
plantation and mining interests
(Resource based development)
4. • During colonial rule large scale tin mining and
rubber, cultivation replaced petty commodity
production that was in place in pre colonial
Malaya
• Industrializing countries required ever larger
supplies of raw materials as well as foodstuffs
• Ample supply of virgin land and relative
proximity to trade route.
• What was lacking was an adequate supply of
capital and wage labor
5. Why focused on rubber and tin
• Expansion of the automobile industy in
Europe
• Weapon industries … during World War 1
6. DURING COLONIZATION, THERE ARE 4
POLICIES IMPLEMENTED BY THE BRITISH
Divide and Rule & Dualism
• Land law- to protect foreign investors. Torren Land
Law
• Labour policy- different races have a different job
specification. Immigrant China & India
• Development of Infrastructure- railways and rod
systems had contributed the increase of tin and
rubber production.
• Fund- British set up fund for Malaya`s industries.
• Education system- has been set up by British.
7. AFTER INDEPENDENCE (IMPACT OF
BRITISH COLONIZATION)
• Over dependence- has made the country vulnerable to the
changes in the economic conditions in other parts of the
world.
• Poverty- the rate of poverty was very high especially in the
rural areas.
• Unequal income distribution- problem of income distribute
between races and areas.
• Unemployment- it become serious.
• Dualism in economy- the economy divide into 2: modern and
traditional sector.
• Imbalance in the development-the development in Malaysia
imbalance between West and East.
8. OVERVIEW OF ECONOMIC DEVELOPMENT
• Shifted from laissez faire to government intervention.
The government formulated:
Policy Period Objective
Short Run
(Annual Budget)
Annual To reposition recent
economic policies
Long Run
i.Economic Plan
5 years plans
( First Malaya Plan
… 10th Malaysian
plan
To support OPP
ii. Outline
Perspective Plan
(OPP 1)
i,. New Economy
Policy (1970-1990)
National Unity:
i. Eradicate
poverty
ii. Restructring
Society
9. Outline Perspective Plan
(OPP 2)
National Development
Policy (NDP) 1991-2000
United society, political
stability and sustained
development
( strategic :
continue NEP policy)
Outline Perspective Plan
(OPP 3)
National Vision Policy
(NVP) 2001-2010
United nation
Full developed country
Overcoming nine strategic
challanges
Outline Perspective Plan
(OPP 4)
New Economic Model
(NEM) 2011-2020
I Malaysia, People First,
Performance Now
Quality of life,High Inome
US15,000, Sustainabilty &
Inclusiveness. Strategies:
i. ETP (Economic
Tranformation
Programme
ii. GTP (Government
Transformation
Programme
10. THE NEW ECONOMIC POLICY (NEP)
• The approach used was growth with equity and active
government participation in the economy
• To ensure equitable growth because different ethnic
groups were at different levels of economic development
• Government participation was necessary because the
weaknesses of the plan before NEP
Objectives;
1. National unity
Strategies;
1. Reducing absolute poverty
2. Restructuring society
11. Poverty Eradication and Restructuring Society
• The strategy to eradicate poverty was done by
increasing the access of the poor to land, capital,
training and other public amenities.
• The objective to restructure society aims at reducing
the dependence of the Malays and other indigenous
people on subsistence agriculture and at increasing
their role in the modern rural and urban sectors of the
economy.
• How the goals of restructuring was carried out:
1. Employment by sectors should approximate more to
racial composition of the population, about;
54% Malay & Bumiputra
35% Chinese
10% Indians
1%Others
12. 2. Bumiputera should own and manage at least 30% of
the share capital of the corporate sector. To ensure
success the new measures have been introduced to
facilitate the entry of Malays into the modern urban
sector.This explained the needs for public enterprises
through statutory bodies like the MARA, PERNAS, UDA
and SEDc (State Economic Development
Corporations).
3. Bumiputera commercial industrial community (BCIC)
was also planned because the critical shortage of
Bumiputera entrepreneurs. This is done through
wholly owned enterprises and joint ventures with
private sector.
13. THE PLANS BETWEEN 1971-1990 (NEP)
1971 1990
Unemployment 7.5% 5.1%
Per-capita income RM264 RM1163
Poverty rate 49.3% 17.1%
Stock market of
Bumiputera
2.4% 19.2%
Professional Malay &
Bumiputera
4.9% 29%
ACHIEVEMENTS OF THE NEP
14. DEVELOPMENT PLANS IN MALAYSIA
THE PLANS BETWEEN 1971-1990 (the NEP)
ACHIEVEMENTS OF THE NEP (cont.)
1. Significant improvements in the participation of Bumiputera in
the modern sectors since 1970.
2. The Malaysian manufacturing sector has been expanding
rapidly since 1970.
3. The rural areas the incidence of poverty decreased from 58.7%
in 1970 to 19.3% in 1990. The quality of life has also improved
tremendously.
4. The urban areas the incidence of poverty has decreased from
21.3% in 1970 to 7.3% in 1990.
5. There was a large number of Malays involved in the industrial
sector and those who stayed in agriculture sector mostly
adapted modern farming.
15. THE PLANS BETWEEN 1991-2000 (NDP)
After 20 years, NEP was replaced by new policy called National
Development Plan (NDP).
The plan reaffirmed relevance of the NEP by retaining its main elements
at the same time, in view of emergence of fresh challenges. It introduce
several new thrusts for balance development and set the pace for
Malaysia to become a fully develop country by the year 2020.
The objectives;
National unity remains the ultimate goals of socio-economic
development because a united society is fundamental for social and
political stability and sustained development. However under NDP,
national unity is to be achieved through Balanced Development.
16. THE PLANS BETWEEN 1991-2000 (NDP)
STRATEGIES
Development policies and strategies under the NDP take into
account of the diversities of Malaysian- ethnic, linguistic,
cultural and religious, regional social and political stability as
well as the efficient management of the economy.
The NDP maintains the basic strategies of NEP
1. to reduce eventually eradicate poverty
2. to accelerate the process of restructuring Malaysian
society
17. THE PLANS BETWEEN 1991-2000 ( NDP)
Why the policy in NDP still maintain basic NEP’s strategies because
income inequality between groups actually widened, poverty
incidences still persist, in the urban areas, as well as rural areas.
• However besides retaining the basic strategies of NEP, NDP has 4
new dimensions;
1. Shift the focus of anti-poverty towards eradication of hard core
poverty at the same time reducing relative poverty
2. Focus on employment and rapid development of an active BCIC
3. Rely more private sector to be involved in the restructuring objective
by creating greater opportunities for its growth
4. Focus on human resource development as a fundamental
requirement for achieving the objectives of growth and distribution
18. THE PLANS BETWEEN 1991-2000 (NDP)
• The NDP was also focused on providing skills for
Bumiputera to effectively retain and manage their
wealth. More attention were given towards
strengthening the capacities of Bumiputera to
effectively manage their own business.
• Development thrust for the NDP will encompass the following
critical aspects:
1. Growth and equity
2. A balanced development
3. Reducing and eliminating the social and economic inequalities
4. Strengthening national integration
5. Development a progressive society
6. Human resource development
7. Science and technology
8. Protection of environment and ecology
19. PLANS BETWEEN 1991-2000 (NDP)
ACHIEVEMENTS OF NDP
1991 2000
Unemployment 5.1% 3.1%
Per-capita income RM1163 RM8126
Poverty rate 15% 5.5%
Stock market of
Bumiputera
19.2% 19.1%
Professional Malay &
Bumiputera
29% 34%
20. VISION 2020 (1990-2020)
Vision 2020 called for total development and
envisages that, ` By the year 2020 Malaysia can be
FULLY DEVELOPED NATION WITH ITS OWN MOLD
:united nation, with a confident Malaysian Society,
infused by strong moral and ethical values, living in
society that is democratic liberal and tolerant,
caring, economically just and equitable, progressive
prosperous and in full possession of an economy
that is competitive robust, dynamic and resilient
21. VISION 2020 (1990-2020)
No The 9 Challenges
1 United Malaysian nation
2 A confident society
3 Mature democratic society
4 A society with strong moral and ethical value
5 A society that is democratic, liberal and tolerant
6 A society which is caring, economically just and equitable
7 A progressive society that innovative and forward-looking
8 A fair and equitable distribution of wealth of the nation
9 Establishing a prosperous society with economy that is fully
competitive, dynamic, robust and resilient
22. THE NATIONAL VISION POLICY (2001-2010)
• The introduction of NVP was an extension of the NDP program of
the government.
• Essentially, with the introduction of the Third Outline Perspective
Plan (OPP3) which stretches from 2001 to 2010, it represents the
second decade of development under Vision 2020.
• The National Vision Policy (NVP) was launched with a focus on
building a resilient and competitive nation.
• NVP incorporates with the past key strategies of eradicating poverty
irrespective of race, restructuring society, and pursuing balanced
development.
• It also introduced other new policy thrusts.
• The new thrusts require developing Malaysia into a knowledge-
based society; generating endogenously-driven growth through
strengthening domestic investment and developing indigenous
(local) capability.
23. THE NATIONAL VISION POLICY (2001-2010)
• The NVP continued to attract Foreign Direct Investment (FDI) in
strategic areas; increasing in dynamism of the agriculture,
manufacturing and services sector through greater infusion of
knowledge.
• The NVP addressing problems of poverty in remote areas and
among Bumiputera minorities in Sabah and Sarawak as well as
increasing the income and quality life of those the lowest 30
percent income category.
• Achieving more Bumiputera participation in the economy by re-
orientating human resource development to support knowledge-
based society.
24. THE NATIONAL VISION POLICY (2001-2010)
Objectives:
• National Unity
• Poverty eradication
• Socio-economic restructuring
• Enhancing competitiveness
• Developing knowledge-based society
• Promoting science and technology
• Promoting Information Technology (IT)
• Pursuing environmental sustainable to reinforce long-term
growth
25. THE NATIONAL VISION POLICY (2001-2010)
ACHIEVEMENTS
2001 2002
Unemployment 3.6% 3.5%
Per-capita income RM8030 RM8234
Poverty rate 5.3% 5.1%
Stock market of
Bumiputera
19.1% 18.7%
Professional Malay &
Bumiputera
34% 37.8%
26. A BRIEF ANALYSIS OF NEP, NDP AND NVP
• Both the NEP, NDP and later NVP policy of the Malaysian
government under UMNO have contributed immensely
in improving the overall economy and standard of living
of the people in Malaysia, focus on Malays and
Bumiputeras.
• The Bumiputeras in Malaysia have witnessed an
increase in their equity shares in the stock markets,
higher standards of living and per-capita income,
decrease in poverty rate , increase in Bumiputera
experts and professionals.
27. A BRIEF ANALYSIS OF NEP, NDP AND NVP
1971-1990
NEP
1991-2000
NDP
2001-2010
NVP
Unemployment 7.5%-5.1% 5.1%-3.1% 3.6%-3.5%
Per-capita
income
RM264-
1163
RM1163-
8126
RM8030-
8234
Poverty rate 49.3%-
17.1%
15%-5.5% 5.3%-5.1%
Stock market
of Bumiputera
2.4%-
19.2%
19.2%-
19.1%
19.1%-
18.75
Professional
Malay &
Bumiputera
4.9%-29% 29%-34% 34%-37.8%
28. NEW ECONOMIC MODEL (NEM) 2011-2020
• NEM is to be achieved through an Economic
Transformation Programme (ETP) which propel
Malaysia to being an advanced nation with
inclusiveness and sustainability
• Quality of life,High Inome US15,000, Sustainabilty &
Inclusiveness
• Driven by eight strategic Reform initiatives (SRIs)
• Two other pillars:
i.1Malaysia, People First, Performance Now
(concept to unite all Malaysian)
ii. Government Transformation Programme (GTP)
29. GOALS OF NEM
• Malaysia to be a developed country with high
quality of life
• Malaysia economy will be the marketed, well
governed, regional integrated, entrepreneurial
and innovatives
• Well governed and learner government :
performance based outcome
• The framework and environment to enhance
the entrepreneurial spirit
31. PRIVITIZATION POLICY IN MALAYSIA
CONCEPT
Privatization is the process of
transferring ownership of business
from the public sector (government) to
the private sector (business)
32. OBJECTIVES OF PRIVATIZATION POLICY
• To relieve the financial and administrative
burden of the government;
• To improve efficiency and increase
productivity;
• To facilitate economic growth;
• To reduce the size and presence of the public
sector in the economy;
• To assist in meeting the national
development policy targets
33. ADVANTAGE OF PRIVITAZATION
• Accurateness and commitment towards the
service
• Generates more revenue (taxes)
• Customer support and satisfaction
• Reduce administrative burden
• Efficiency and productivity
• Gain to employee
34. KNOWLEDGE ECONOMY (K-ECONOMY)
•Has abundant resources
•No location barrier
•A highly educated labour force
•A high level of per capita wealth
•Open cosmopolitan society attractive
to global talent
35. •Well connected to other global
knowledge nodes
•A shift from top-down hierarchical
organizational structures to flatter
shared-structures
•Skills and knowledge are key assets
Information and communications
technologies (ICTs) are pillars of the
knowledge-based economy
36. INFORMATION AND COMMUNICATION
TECHNOLOGY (ICT)
• as a catalyst to transform Malaysian economy
into value based economy with development
human capital, infrastructure and
applications
• an effort to move toward a knowledge
economic nation, an effcetive utilization of
ICT as tools as well as enabling access to all
levels of population to ICT
37. MUTIMEDIA SUPER CORRIDOR (MSC)
•A vehicle for attracting world-class technology-led
companies to Malaysia
•offering a productive and intelligent environment
• excellence with multimedia-specific capabilities,
technologies, infrastructure, legislation, policies,
and systems for competitive advantage
38. •A test bed for invention, research, and
other ground-breaking multimedia
developments spearheaded by seven
multimedia applications
•A global community living on the leading-
edge of the Information Society. Skills and
knowledge are key assets
•A world of Smart Homes, Smart Cities,
Smart Schools, Smart Cards and Smart
Partnerships
