Malaysian Development Policies


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Malaysian Development Policies

  1. 1. Introduction• In the colonial period, Malaya was involved in production and processing of rubber and tin for export in return for imports of essential food and manufactured goods.• In the year of independence (1957-1960), the economy was still heavily dependent on rubber and tin exports.• Attempt to industrialize (1960s) was started with the implementation of import-substitution policy, which was quite unsuccessful.
  2. 2. • New Economy Policy (NEP) was introduced in 1970. it was a long term policy (1970-1990 =20 years) of reviving the Bumiputera as well as non-Bumiputera share of economic cake.• During NEP (1970-1990), the government embarked on the export-oriented strategy as a “double-edged sword” for achieving economic growth and equity.• During the implementation of export-oriented strategy, the government introduced new dimensions, namely; -The “Look East” policy, and -”Malaysian Incorporated” policy.
  3. 3. • In 1991, National Development Policy (NDP) was introduced to replace NEP.• Vision 2020 was also introduced in 1991. it is a long term vision (1991-2020=30 years) containing broad policy directions encompassing various dimensions, i.e. -economically -politically -psychologically -spiritually -culturally.• In summary, Malaysia’s key to economic success of the 1970s through the 1990s were; -Basic policy framework, & -Industrialization strategies.
  4. 4. Framework of the economy• The Malaysia’s framework of the economy started when the First Malaysian Plan 1966-1970 was introduced.• The economic framework was continued with the implementation of the First Outline Perspective Plan 1971- 1990(OPP1). The main policy formulated in OPP1 was the new Economic Policy (NEP)• Vision 2020 was launched in 1991 as the broad policy directions of Malaysia. It provides the much needed guidelines of becoming a fully developed & industrialized Malaysia by the year 2020.• In relations to vision 2020, the Second Outline Perspective Plan 1991-2000(OPP2) was introduced. The main policy implemented in OPP2 was the National Development policy(NDP).
  5. 5. CONT…• The economic framework was introduced to establish a progressive, prosperous, and united nation of Malaysia.• The core thrust of all policies implemented in Malaysia is the “ultimate goal of the national unity”.
  6. 6. Background NEP • The Malaysian New Economic Policy (NEP) or (DEB) for Dasar Ekonomi Baru in Malay was an ambitious & controversial socio-economic restructuring affirmative action program launched by the Malaysian government under the second Prime Minister Tun Abdul Razak Dato’ Hussein. • New Economy Policy (NEP) was introduced in 1970. • The NEP was hailed in some quarters as having reduced the socioeconomic disparity between Chinese minority & Malay majority
  7. 7. CONT…• The NEP targeted a 30% share of the economy for the Bumiputera, but according to official government statistics, the NEP did not succeed reaching this target.• NEP ended in 1990
  8. 8.  Establishment of new growth centers  The modernization of rural life  Rapid & balanced development of urban activitiesNEP  Provision of a wide range of social especially designed to raise the living standards of the low income group  Raising productivity & income of those in low productivity occupation  Expansion of opportunity for inter- sectoral movement from low productivity to higher productivity activity  The creation of a Malay commercial & industrial community in all categories & at all levels of operation
  9. 9. Strategy NEPEradicating poverty by raising income levels and increasing employment opportunities for all Malaysians Accelerating the process of restructuring Malaysia society to correct economic imbalance, to reduce & eventually eliminate the identification of race with economic function, and to ensure that Malay & other indigenous people will become full partners in all aspects of the economic life of the nation.
  10. 10. Second Malaysia Third MalaysiaPlan (1971-1975) Plan (1976-1980) Implementation NEPFourth Malaysia Fifth Malaysia PlanPlan (1981-1985) (1986-1990)
  11. 11. Evaluation of NEP (achievement) Increase in GDP - Malaysia real GDP growth during 1971-1990; averaged 7.1% annually. - In the 60s; averaged 5.2% - Grew from RM22.2 billion in 1971 to RM1,109 billion in 1990 per capita GNP grew by 8 times from RM1,109 to RM8,856 (US$ 860 to US$3406) - The annual inflation rate remained low. Fairer distribution of income -With the regard to the distribution of income, there has been an increasingly fairer distribution of income among the various income group.
  12. 12.  Increase employment opportunities -rapid economic growth; creation of job, from 3.4 million in 1970 to 6.7 million in 1990. -the unemployment rate dropped from 7.7% in 1970 to 5.1% in 1990 Change of economic structure -from agriculture to manufacturing sector. -the transformation had enabled more Bumiputera work in more productive sector of economy (secondary & tertiary sector)
  13. 13. National Development policy (NDP)• With the aim to fulfill the objectives of Vision 2020, OPP2 was introduced in 1991.• OPP2 (1991-2000) was accomplished through the policies, strategies, and programs implemented in -The sixth Malaysia Plan (1991-1995) -The Seventh Malaysia Plan (1996-2000)• National Development Policy was the main policy during OPP2.
  14. 14. National Vision Policy (NVP)• Was an extension of the NDP (1991-2000) and covers the 8th and 9th MP. – Also the second phase of Vision 2020• Objective : same as NDP i.e. national unity. The aims of NVP is to establish a united, progressive and prosperous Bangsa Malaysia that lives in harmony and engages in full and fair partnership• Was launched with a focus on building a resilient and competitive nation – Incorporates the past key strategies of eradicating poverty irrespective of race, restructuring society and pursuing balanced development .
  15. 15. • New policy :1) Developing Malaysia into a knowledge-based society.2) Generating endogenously-driven growth through strengthening domestic investment and developing indigenous capability, while continuing to attract FDI in strategic area.3) Increasing dynamism of the agriculture, manufacturing and services sector through greater infusion of knowledge.4) Addressing pocket of poverty in remote areas and among Orang Asli and Bumiputera minorities in Sabah and Sarawak as well as increasing the income and quality of life of those in the lowest 30% income categories.5) Achieving effective Bumiputera participation as well as equity ownership of at least 30% by 2010.6) Increasing the participation of Bumiputera in the leading sectors of the economy7) Reorienting human resource development to support knowledge-based society.
  16. 16. National Vision Policy (NVP)• The development thrust:1) Building a resilient nation by fostering unity, inculcating the spirit of patriotism, nurturing political maturity, cultivating a more tolerant and caring society with positive value, raising the quality of life as well as increasing economic resilience.2) Promoting an equitable society by eradicating poverty reducing imbalances among and within ethnic groups as well as regions.3) Sustaining high economic growth by strengthening the source of growth, the financial and corporate institutions as well as macroeconomic management.4) Enhancing competitiveness to meet the challenges of globalization and liberalization.5) Developing a knowledge-based economy as a strategic move to raise the value added of all economic sectors and optimizing the brain power of the nation.6) Strengthening human resource development to produce competent, productive and knowledgeable workforce.7) Pursuing environmentally sustainable development to reinforce long-term growth.
  17. 17. • Introduced in February 1991Vision 2020 • Aims to achieve the status of a developed country that is distinctive and molded according to its own features without following: – Developed not only in the economic sense but it must be fully developed along all dimension: -Economically -Spiritually -Politically -Technologically -Socially -Culturally
  18. 18.  United Malaysia objectives  Just and caring society  Mature democratic society  Sustainable development  Fully competitive, dynamic, and resilient economyVision 2020  Entrepreneurial
  19. 19. Vision 2020• Strategy : “Total Development” ; development which covers economics, politics social, spirituals psychologies and cultures.• challenges:1) To establish a united Malaysian nation with a sense of common and shared destiny2) To create psychologically liberated, secure and developed Malaysian Society3) To foster and develop a mature democratic society4) To establish a fully moral and ethical society5) To establish a matured, liberal and tolerant society6) To establish a scientific and progressive society7) To establish a fully caring society and caring culture8) to ensure an economically just society9) To establish a prosperous society, with an economy that is fully competitive, dynamic, robust and resilient.
  20. 20. Issue about the NEPI have been thinking about the NEP issue over Merdeka Day to seeif the problem can be solved. Yes, it can be solved and we cancelebrate our nations golden jubilee in two years time without theNEP lingering as an issue and dampening our spirits. How?Here is a practical way: 1. Instead of investing in Malaysia (and increasing theirpercentage of the economy), Chinese Malaysians could invest inother countries. By reducing their wealth and holdings in Malaysia,they would be reducing their percentage of the economy and wouldstill be able to enjoy returns from their investments in othercountries.
  21. 21. 2. They can accelerate this process by progressively selling their stakesand shares in Malaysian companies to Bumiputera firms and individuals. Themoney from these sales can be invested in other overseas markets.The net effect of these combined actions will reduce the percentage of theMalaysian economy held by the Chinese. The Bumiputeras percentage willincrease, and the 30% will be achieved in no time.Statistically, the NEPs target would have been achieved. The Bumiputeraswill be happy at having achieved the 30 percent. The Chinese will be happybecause they can still continue to prosper. As for the Indians, hopefully theywill also be happy and prosper and not continue to be a victim of the NEP.The above is intended to make one think about the pointlessness of talkingabout percentages with reference to the NEP as opposed to the value ofleveraging on all Malaysians capabilities and competencies besides helping allthose who really need help, regardless of race or religion.