PEMIKIRAN SOSIAL SEMASA

(ALEA 2110)
Tajuk :
ECONOMIC OF MALAYSIA @ 50 YEAR
Nama Pelajar: TENGKU MOHAMAD KARIME EZANI BIN TUAN
MOHAMAD ZAKI
No Metrik : AEL 120021
Nama Pensyarah : Encik Kamal Solhaimi Bin Fadzil

Introduction
Malaysia has grown and changed a great deal since it was formed on 16 September 1963. It
was then seen as an unlikely nation hastily put together as a federation of British controlled
territories in the region. Brunei's refusal to join at the eleventh hour and Singapore's secession
before its second birthday only seemed to confirm such doubts. Yet, it has not only survived,
but even thrived, often cited as a developing country worthy of emulation. Ruled by the same
ruling coalition since the mid-1950s, it has been tempting to emphasize continuities, and
there certainly have been many. Looking back at its last half century, this volume first
considers changes in development policy in response to national as well as international
developments. The remaining three parts consider how public policy has been influenced by
and has, in turn, influenced economic distribution, public finance and economic federalism.
Besides the familiar focus on ethnic disparities, regional and other distribution issues are
considered. The discussion of government taxation as well as spending also focuses on
distribution implications. Although constitutionally a federation, Malaysia has been more
centralized than most federal states. The way forward requires greater sensitivity to the
complex political economy of Malaysia's unlikely, but nonetheless resilient federation and
ruling coalition.

Malaysia Past and Now

Malaysia In Or Under Development , Distribution and Disparities
Policies and strategies to create balanced economic development in Malaysia has long been
emphasized. After more than 50 years of independence, the impact of British colonialism on
Malaya which create conditions of economic dualism in terms of regions and ethnic groups
still felt. Over the past decade the Malaysian economy experienced growth. High economic
growth rate reached Malaysia among the top performers in the ASEAN region. However,
economic growth alone is not necessarily guaranteed benefits can be distributed fairly among
society. In the co-development approach of economic growth, economic development is not
just limited to the growth in the Gross Domestic Product (GDP) or GDP per capita, but
should take into account the spread of the benefits of growth to all sections. In Malaysia, the
distribution actually takes a long time to resolve. Absolute poverty reduction goals can be
achieved in almost 35 years. The government had to work hard to create a balanced
distribution of income among ethnic groups. Success is not able to survive in the event of a
radical change in the global economy while the idea of globalization of Western axis totally
reject government intervention. In this context, the main challenge that we face is to ensure
that globalization does not affect claims objective to achieve a more balanced development of
the whole. Balanced economic development goals can only be achieved through intervention
and support from the government. Thus the implementation of economic development
policies and strategies that efficiently and effectively is necessary. Discussion of the chapters
in this book is to focus on this aspect. The existence of a balance between economic growth
and well-being include social justice, poverty and the distribution of balanced, harmonious
living environment and the environment and quality of human capital formation should dibari
serious consideration because it will determine the success of the country's future
development.

Malaysia of Today, is at another crossroads, confronted as we are with a crisis that clearly
necessitates a review of our current form of economic and enterprise development. It is
therefore probably opportune to review the history of development in Malaysia.
Looking East, Looking West
The most important consequence of May 13 was the New Economic Policy (NEP), an
affirmative action endeavour to help, among other things, redistribute wealth more equitably.
In the corporate sector, the NEP would come to involve targeting a select group as recipients
of government-created concessions to promote the rise of bumi-putra-owned firms. But other
important development policies have simultaneously been employed by the Government over
the past four decades to cultivate and support domestic enterprise. This included an attempt to
replicate Japans economic and industrial development, which its government had nurtured
exponentially over just a few decades after the end of World War II. This form of
development, known in academic circles as the developmental state model, was first
propagated by the Government from the early 1980s through buzzwords such as Look East
and Malaysia Inc.
As with the NEP, under the developmental state model, the Government had to intervene
actively in the economy to plan and structure industrial and corporate development. The
Governments primary intention was to employ this model to cultivate domestic enterprises,
specifically to encourage the rise of large business groups. The Government, strongly
influenced as it was by East Asian corporate models such as the South Korean chaebol and
the Japanese zaibatzu, appeared particularly intent on developing huge, well diversified
industrial firms. But the Government was then also equally inspired by a vastly different
development model: neoliberalism. The doctrine of neoliberalism, in deep contrast to the
developmental state model, espoused limited government intervention in the economy and
pushed for an endorsement of privatization and deregulation. Neoliberalism had been
vigorously and successfully pursued by influential politicians such as Margerat Thatcher and
Ronald Reagan who had advocated the need for a small government and the virtues of
allowing the private sector to drive economic growth. The active deployment of privatization
and the stock market, pivotal features of neoliberalism, to foster big business had an immense
impact on the pattern of development of publicly-listed companies in Malaysia.

This nix of development models, along with the implementation of affirmative action, was
ostensibly a reflection of the Governments pragmatism. Ideas, if viable, were acceptable,
even if they were fundamentally different to each other. Our own version, if you like, of a
Third Way. Two key questions now need to be answered. First, what has been the impact of
this mix of development and redistribution policies on the corporate sector? Second, have
large publicly-listed firms been able to sustain their presence in the corporate sector over a
protracted period given this mix of policies?.
(The corporate sector, 1969-2009 )A review of Malaysias corporate history over these past
four decades reveals some astonishing facts. None of the top 20 publicly-listed firms in 1969
had managed to retain its position by 2009. No bumiputra has ownership of a top 10-quoted
firm. The Government presently has majority ownership of more than half of the top 10
publicly-listed companies, through what is known as government-linked companies (GLCs),
while the remaining are Chinese-held. There has, however, been a considerable decline of
foreign equity ownership since 1969, with only one of the top 20 being a foreign enterprise.
And, very importantly, there is no evidence of wealth concentration, with wide dispersal of
ownership of the top quoted companies. No group of companies under the control of one
family or individual dominates the leading listed corporations.
But while these equity ownership and control outcomes are commendable, other important
features of the corporate sector include the fact that no Malay-owned firm is among the
industrial sectors top enterprises, raising serious questions about the Governments capacity
to cultivate large competitive enterprises. Most Malay-owned firms are involved in finance,
construction, property development and telecommunications, suggesting the failure of the
Governments long-standing endeavour to create a bumiputra industrial community.
Other issues of major concern arise is an assessment of the manufacturing sector. A
comparison of the list of the top 100 in 1969 with that in the present period indicates that only
one has managed to retain its top 20 position: foreign-owned Rothmans. In terms of domestic
firms in manufacturing, of the top 100 firms, barely a fifth of them are involved in this sector.
A majority of them are foreign-owned-in addition to Rothmans, there is Nestle, Malayan
Cement, Carlsberg, Guiness Anchor, RJ Reynolds, Malaysian Oxygen and Shell.

Manufacturings decline
Most manufacturing companies in the top 100 are Chinese-owned, a distinguishing feature of
this sector since independence. But, even here there is only one enterprise that has maintained
a long and prominent presence in this sector- the Hong Leong group of companies, for
example MPI (in electronics) and Hong Leong industries(a tiles manufacturer). This clearly
suggests that manufacturing firms of old have fallen behind in terms of investing in new
plants and equipments, introducing new products or pursuing new markets. This provides
further credence to the long-held view that Malaysian companies simply do not invest
sufficiently in research and development (R&D). For this reason also it is not surprising that
none of the leading Bursa Malaysia firms is involved in new technologies or in chemicals,
pharmaceuticals, electronics and computers, a common feature of many industrialised
countries.
This is a point of much concern, especially in these times, given the contention that an
economys growth is dependent not merely on its natural resources, labour and managerial
skills, available capital and size of internal markets, but also on how its technologies are
organised and developed. The fact that no domestic firm in the top 20 in 1969 has managed to
retain its position in 2009 draws attention to a number of crucial issues. The Governments
eclectic or mix-and-match approach to enterprise development has had serious
repercussions on the corporate sector and the economy. The industrial sector has failed to
flourish in spite of phenomenal government support.
Lesson of the past
Meanwhile, small and medium scale businesses have not been able to thrive because of the
lack of attention, while the economy remains dependent on foreign firms to drive industries,
seen in the latters control of the countrys leading industrial firms. Malaysias foremost
publicly quoted firms, in spite of privatisation and affirmative action, are the GLSs- another
indication of the parlous state of privately-owned Malay capital. Moreover, the prominence
of the GLCs in the corporate sector has been achieved by default, partly attributable to the
Governments takeover of large Malay firms following the 1997 currency crisis.
While neoliberalism has now been seriously discredited, following the economic crisis in the
United States, the same need not necessarily be true of the developmental state or of
affirmative action in Malaysia. Many of the problems within the corporate sector may be due

to the pattern of implementation of development and redistribution of these policies. But what
is clear, given the current state of the corporate sector and the economy, is that a serious
review is required of Malaysias future development agenda. It is, without doubt, the time for
change, for a conception of atruly new economic policy. Anyway, A nation's 50th anniversary
is perhaps a useful benchmark to take stock of the countrys 50 years of developments, in
order to assess its future growth path.Malaysia is a young and forward-looking nation, which
has the essential qualities of ingenuity and enterprise to push the nation forward.
For the past 50 years, the checks and balances of a diversified economy have paid handsome
dividends as well as provided the needed cushion to weather the swings and vagaries of
external cycles. The facts and figures are compelling by international standards. At the time
of independence in 1957, per capita income was US$200. Fifty years later today, it is
expected to hit US$5,806. Bank Negara Malaysias international reserves, a measurement of
the countrys overall wealth accumulation, ballooned to US$98.4 billion as at end-May 2007,
a multiple of 289 times of 1959s US$340 million. There were, of course, challenges,
obstacles and problems that had to be overcome during the last 50 years. And the journey
ahead will be even more challenging and demanding.

The Malaysian economy is still growing and undergoing structural changes. Globalisation has
intensified interdependence and competition between economies. It is thus clear that a
globalising economy, while formulating and evaluating its domestic policy cannot afford to
ignore the possible actions and reactions of policies and developments in the rest of the
world. Hence, it is crucial for policymakers to plan and formulate economic, fiscal, monetary
or social policies with more certainty and confidence. The writing is already on the wall. Our
economy has to move into fast-growth gear and economic and financial transformation needs
to be accelerated. Malaysians must be bold and brave enough to adapt radical policy changes
and reforms in order to become a truly competitive global player. The key for the future is
whether the economy is flexible enough to adjust and adapt. There is no easy way out. From
todays vantage point, I would like to see the following transformations take place over the
next 50 years. The next 10 to 15 years are important milestones for Malaysia to make a
quantum leap in its quest to attain developed nation status by 2020.

First, a nation blessed with well-being, equitable wealth and income distribution, and
balanced development between growth and the environment. The yardstick of a developed
country is not only benchmarked against real GDP growth and income per capita, but most
importantly, against the attainment of good quality of life, strong human capital development,
a caring society, the sharing of economic prosperity, credible public institutions and solid
corporate governance. Second, high quality economic development to be spearheaded by a
dynamic, competitive, innovative and risk-taking private sector. Malaysian indigenous
companies continue to make a strong presence as competitive contenders in the global sphere,
covering plantation, Islamic finance, construction as well as other services providers. Central
to the governments strategy to promote private sector investment is the liberalisation of
restrictive laws and practices, as well as the deregulation of cumbersome rules and
regulations. Third, an accelerated pace of transformation within sectors of the economy.
Malaysia was already sufficiently diversified in the manufacturing and agriculture sectors.
We need to accelerate the pace towards building a modern, dynamic, as well as competitively
priced service-oriented economy. Having the world class hardware and software
infrastructure is not good enough. What is lacking is getting the right person to do the job.
The challenges ahead are related more to our efforts at deepening and value adding to the
broad-based services sector, backed by a knowledge-based, information savvy and versatile
workforce. Fourth, a world class education system that produces knowledge workers with the
right attitude, mindset and character for our nation building. We must be open-minded,
practical and creative.
Looking 50 years into the future is like star gazing with a touch of science fiction, and is
actually a dizzy activity in hazardous guessing. Half a century from now, Malaysia in all
probability, will be a post-industrial society which will increasingly be knowledge-based, that
is, we have attained, possibly by 2020, what is now considered the status of a developed
country, joining the ranks of the high income group, and moved beyond that for another more
than 30 years of industrial growth. The pace of economic growth for the 2021-2057 period
could be in the 3-3.5% per annum range, compared with the expected slightly more than 6%
per annum growth for the 2006-2020 phase - halving the average gross domestic product
(GDP) expansion rate as the growth curve tapers off.

By 2020, the manufacturing sectors share of GDP will be slightly more than a quarter (28%),
agriculture 7% and services about two thirds. Beyond 2020 in a post-industrial society,
agriculture in the economy will keep on shrinking but what remains will be very modernised
and producing new high-tech agricultural products, as rural industrialisation picks up pace.
Employment in agriculture will decline as farms are expected to be much larger and
technology use will displace labour. Employment in the manufacturing sector will also fall
but it will produce much more high-tech products, especially non-resource based products.
New products, for example, for semiconductors, industrial electronics and consumer
electronics, will appear and new technologies will be utilised as we move up the value-added
chain. We will still remain an open economy and be dependent on exports to world markets
but the shape of the worlds trading pattern will change. China and India will be new
economic forces, and other emerging, but as yet unidentified economies and competitors, will
appear. Services will probably take up more than 72% of GDP by 2057 and Malaysia will be
a service economy. Financial services and wholesale and retail services will be even more
important. New services will certainly crop up to meet new and changing tastes with the rise
in incomes. Foreign direct investment in services has been increasing and this trend will
probably persist. The liberalisation in services to increase the competitiveness of the economy
will be a key determinant for the long-term growth of the economy.
Over the past 50 years, Malaysias population increased almost fourfold from about 9 million
in 1963 to 28 million in 2013. In 50 years time, with the decline in population growth rate,
there will probably be about 52-55 million people in Malaysia. Far more Malaysians than
now, irrespective of race, will be residing abroad as they become more global and rootless in
outlook. The bumiputra population will rise to more than two thirds of the total population
while the number of non-bumiputra will decline. Urbanisation will continue to rise, and there
will be a convergence of urban agglomeration and industrial conurbations, and the share of
rural population will shrink.Average life expectancy is likely to increase further and reach 7678 years in the post-industrial society.These developments will mean that absolute poverty, as
we know it today, will disappear but new forms of relative poverty and deprivation will
emerge, even in high income countries. Structural changes in the economy will mean that
new sources of wealth will emerge, especially for income earned from financial and physical
assets as income from labour will be reduced.

However, there is no certainty, as income increases in the post-industrial growth phase, that
this will be a linear trend. There can be episodes of widening inequality, as the top 5%-10%
of households increase their share of total income. In absolute terms, however, income
disparities will be persistently large. What all these will mean for the welfare and happiness
of Malaysians is anyones guess.

In-Conclusion
This volume has revisited several less explored less explored dimension of Malaysiaan
economic history with a view to considering economic development and distribution issues,
particularly in relation to the role of the federal state. Three themes were given special
attention in the preceding, namely public finances ,fiscal federalism and the privatization of
state owned enterprises . To provide an overview of the larger context, the first part
identified and reviewed five stages of economic development over the first four decades of
Malaysia economic development. Finally, it also raises difficult questions for those who
would take comfort in simplistic solutions such as democracy, devolution or good
Governance