Malaysias Economy

Question 1

Malaysia Industrialisation 58-70

Answer 1

Strategy: ISI for nationalism and create new class of indigenous wealthy elites
Rapid ISI growth (17% annually)
Largest producer of rubber and palm oil
Fastest growing sector of manufacturing; 12-13%
1958 Pioneer Industries Ordinance; tariff protection and import restrictions
1963 Tariff Advisory Board
Proton Car Project

Effects:
3-4% GNP per capital growth
Foundations for further industrial growth later
But later became a failure with Proton Car having RM$1.6 Billion burden

Question 2

Malaysian Industrialisation (late 60s)

Answer 2

Strategy: EOI focus on labour intensive industries
Investment Incentives Act 1968; tax exemptions and tariff exemptions
Restrictions of labour unions; MNCs could set strict regulations for low cost labour
Malaysian Industrial Development Authority (MIDA) to control foreign investment

Effects:
Quite limited in first phase
Foreign owned share capital at 60%

Question 3

Malaysian Industrialisation 70-80s

Answer 3

Strategy: greater focus on EOI
Free Trade Zone Act 1971; encourage EPZs like Penang; firms required to export 80% of output
Reserved 30% stock for Bumipeturas (Equity)
Industrial Master Plan (1986-1995); concentration in electronics and textile
Investment Promotion Act revision 1986; wider range of incentives

Effect:
8-9% growth rate for most of 90s

Question 4

Malaysia natural resources

Answer 4

Exports over 80% of crude oil production
PETRONAS supervises oil and gas production, sharing contracts with Shell and Esso

Question 5

Malaysian financial sector

Answer 5

Strategy: privatisation of the banking sector
Greater access to finance services, encouraged more investments
More relaxed finance regulations, more loans could be borrowed
Malaysian banks also partially / fully owned by government

Provided 2/3 of domestic funds for investment

Question 6

Malaysian Equity

Answer 6

Strategy: NEP 1971
Public enterprises set up to increase Malay ownership; promoted bumiputera interests
Established JV companies, training and land developments
PETRONAS increased Malay participation in supply of goods to petrol industries
Aimed for 30% capital ownership
Proton factory employees 94% Malays
Sent group of 90% Malay for training in Japan

Effect:
However target not met (still got 20%)
Foreign share fell but taken up by non locals
Reduced poverty from 30% to 15%