Chapter 2

Topics: Economics, Economic growth, Economic development Pages: 7 (1161 words) Published: December 3, 2013
CHAPTER 2
BACKGROUND OF ECONOMIC DEVELOPMENT

Development Plans, First to Ninth Malaysia Plan

PERIOD
5 YEAR PLAN
OPP
Pre-NEP
(British colonization policy)
1956-1970
(15 years)
1st Malaya Plan
2nd Malaya Plan
1st Malaysia Plan
-
NEP
1971-1990
(20 years)
2nd Malaysia Plan
3rd Malaysia Plan
4th Malaysia Plan
5th Malaysia Plan
OPP 1
NDP
1991-2000
(10 years)
6th Malaysia Plan
7th Malaysia Plan
OPP 2
VISION
2
0
2
0

NVP
2001-2010
8th Malaysia Plan
9th Malaysia Plan
OPP 3

2011-2020
(10 years)

Note : OPP – Outline Perspective Plan
British Colonization Policies in Malaysia
PRE-NEP
Introduction
-laissez-faire approach.
-maximum growth and emphasized on export as the main income earner. -also touched on economic and rural development.
-non-intervention by the government in the eco. affairs of the country. -G confined their activities to the production of certain social and essential goods & services. -unchecked – rich become richer while the poor tend to remain poor. Objective

-usual laissez-faire objectives and ad hoc, i.e. growth, stability, employment & equity. Strategy
1. Venture commercially into many other crops – palm oil, cocoa, pineapple, rice & pepper. 2. Ventured into industrialization on a moderate scale.
3. Emphasis on rural development.
Achievements
Success:
-contributed significantly to the economy.
-greater economic growth rate (1956-60: 3.5%, 1961-1970: 5.2%) -Changes in agricultural sector. Eg: More areas were being open up for estate & plantations. -Rural sector: more rural households received facilities – schools, health centers, bridges &etc. -Industrialization: done on a moderate scale.

Weaknesses:
-the objectives to attain a more equitable distribution of income & wealth has not been successful. -unemployment rate increase (2% in 1957 – 7% in 1967).
-Program to increase the numb. Of Malays in commerce & industry failed.
New Economic Policy (NEP)
Approach used
-growth with equity and active G participation in eco.
Objective
-national unity.
Strategies
(1) Reducing absolute poverty.
(2) Restructuring society.
Strategy for poverty eradication
(1) The absorption of the poor rural households into the modern sector through non-agricultural development.
(2) The raising of the productivity of farmers.
(3) The provision of basic services.
Strategies to restructure society
Employment by sectors should commensurate more to the racial composition of the population (54% Malay, 35% Chinese, 10% Indians and 1% others. Bumiputera should own and manage at least 30 per cent of the equity of the corporate sector, other Malaysians 40% while foreigners 30% (30:40:30) The need to create Bumiputera Commercial and Industrial Community (BCIC). New measures introduced

Many public enterprises were set up through statutory bodies like MARA, PERNAS, UDA & SEDCs to facilitate the entry of Malays into modern urban sectors. Achievements
Increase in GDP.
Decrease in poverty.
Fairer distribution of income.
Increased employment opportunities.
Change of economic structure.
Improved quality of life.
Factors restrict the achievement of NEP goals
Recession of the 80’s.
Projects undertaken by the private sector was badly affected. The banking sector faced problems of unpaid loans.
The Bumiputera were relatively inexperienced in their business ventures. Many farmers still left behind development.
Some Bumiputeras did not understand the G aspiration under the NEP. Non-Bumiputera were very reluctant to help Bumiputera.
Subsidy mentality.
NATIONAL DEVELOPMENT POLICY (NDP)
Approach adopted
Balanced Development
Objective
National unity
Strategies
(1) Reduce & eventually eradicate poverty.
(2) Accelerate the process of restructuring the Malaysian society. Four new dimensions
(1) Shift the focus of anti-poverty strategy towards eradication of hard core poverty while at the same time reducing relative poverty. (2) Focus on...
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