Globalization has historically played an important role in the emergence of Malaysia as a

nation and its subsequent development. Almost every important aspect of globalization involving
trade, capital, labor migration, technology, and information flows has left deep imprints on
Malaysia’s economy and society. The nature and impact of globalization, however, have
changed over time. These changes include the economic transformation of an economy that was
highly dependent on primary commodities which are tin and rubber into one driven by
manufactured exports. Waves of migrant workers have also shaped the country into a multi-
ethnic society, especially since the 19th century. The openness of the country’s economy in
terms of trade and investment has also made it vulnerable to global economic shocks.

By about 1920 the structure of the colonial export economy was fully in place in terms of
the leading commodities, the types of production (estates, mines, smallholdings), the basic
infrastructure, and the ethnic division of labor.

Tin is the limited quantity of this commodity that has been produced in the Malay
peninsula for centuries, the depth of mining being limited by water seepage.

The tin industry went through several stages. The earliest involved ‘picking the eyes’,
that is, stripping the surface soil off the most accessible deposits and extracting the tin ore. The
second entailed mining at greater depths once the water-seepage problem had been overcome
using high-pressure hydraulic hoses to extract the tin-bearing gravel.

Rubber was an attractive crop for indigenous Malays and Javanese migrants from the
Dutch East Indies (now Indonesia). These were small farmers (later known as smallholders),
chiefly with 5–10 acres, but many with less. The seeds were easily collected, grew readily in the
climate, and could be interplanted with existing trees or on land switched from some other use,
for example, rice.

Smallholder rubber plantings were scattered, leading European planters and officials to
regard them as ‘unscientific’, with too dense planting compared with what the Europeans
regarded as more orderly estates.

● The period between the wars was marked by extreme volatility in trade and greatly
affected by the Great Depression.
Great Depression, is the worldwide economic downturn that began in 1929 and
lasted until about 1939. It was the longest and most severe depression ever
experienced by the industrialized Western world, sparking fundamental changes
in economic institutions, macroeconomic policy, and economic theory.
● Demand for Malaya’s primary commodities of rubber and tin was subject to booms and
slumps, which played havoc with production and prices, and led to restrictions aimed at
stabilizing prices.
 ● first was the Stevenson Scheme (1922–1928) Stevenson Scheme - The Stevenson Plan,
also known as the Stevenson Restriction Scheme, was an effort by the British government
to stabilize low rubber prices resulting from a glut of rubber following World War I.

○ The Stevenson Scheme had an initial ‘pivotal’ price of 1s 3d per pound, later
raised to 1s 9d
○ Each producer under the Stevenson Scheme was given a Standard Production
limit

● International Rubber Regulation Agreements (IRRAs), of 1934–1937 and 1937–1941

International Rubber Regulation Agreement - was a 1934 accord between the United
Kingdom, India, the Netherlands, France and Thailand that formed a cartel of major
rubber producing nations to restrict global rubber production and maintain a stable, high
price for natural rubber.

○ the IRRAs had no pivotal price.

○ the IRRAs only a quota, which was distributed domestically

all of which were initiated by the colonial government and administered by an international
committee with the aim of limiting exports to reduce world stocks and raise market prices. Tin
was subject to similar restrictions during 1931–1933 and 1934–1941.

REVISED:

Malaysia's emergence as a country and subsequent growth has traditionally been influenced by
globalization. Trade, finance, labor migration, technology, and knowledge flows have all left
deep imprints on Malaysia's economy and society. Globalization's existence and influence, on
the other hand, have evolved over time. These changes include the transition of an economy that
was heavily reliant on primary commodities like tin and rubber to one that is fueled by
manufactured exports. Since the 19th century, waves of migrant workers have helped to turn the
country into a multi-ethnic community. The country's economy is also vulnerable to global
economic shocks due to its openness in terms of trade and investment.

In terms of the leading goods, modes of production (estates, mines, smallholdings), basic
infrastructure, and ethnic division of labor, the colonial export economy was completely in place
by around 1920.
Tin is a small quantity of this product that has been mined in the Malay peninsula for decades,
with water seepage limiting the extent of mining. Tin output increased during the 19th century,
mostly due to Chinese miners, but after the discovery of large deposits on the peninsula's west
coast around 1850, the industry was transformed, and (sometimes hostile) rivalry between rival
clans arose. After 1870 the arrival of the tin-plate industry in the West (particularly in England)
caused the tin trade to increase. However, it was tedious and expensive to ship tin for sale, and
mostly it was achieved with water.

The tin industry progressed through various phases. The earliest methodologies involved 'eye
selection' or removal of the surface soil from one of the most available deposits and mining of
the tin ore below. The second included using high-pressure hydraulic hoses to remove the tin-
bearing gravel from greater depths until the water-seepage problem had been solved. The
majority of this operation was carried out with Chinese capital and migrant laborers. The
Chinese controlled about 80% of the tin mines in 1912. The third level, which began around
1912 and used the tin-dredge, needed a lot more money. This was mostly a European operation,
with the majority of the companies being British-owned (65 percent by 1931).

In 1876 the British Government imported Rubber from Brazil, and for about 20 years patented
farmers using private funds experimented on this new crop, Hevea Brasiliensis. They lacked
capital to set up their estates, however, and were encouraged to float their estates as a public
joint-stock business, either because of speculative profits domestic or because of connections
with mostly British merchant companies in Singapore. These commercially connected mercantile
houses played a critical role in connecting landed interests in Malaya with investors in the West,
often gaining appointments as managing agents of estates that they then controlled as "groups."

Rubber was an attractive crop to indigenous Malaysian and Dutch East Indian migrants (now
Indonesia). They were small farmers, most of them 5–10 acres (later known as smallholders),
and many less. Seeds were collected easily, grew quickly in the climate, and could be planted
with established trees or on land that was changed for other use, e.g. rice. According to the 1921
census of population, farmers from Malaya worked on over 800,000 acres, relative to 1,3 million
acres of plantations in Europe and Asia.

There have been dispersions of Smallholder Rubber Plantings, which have led European plants
and government officials to view them as 'unscientific.' Officials were unsatisfied that
Malaysians were 'trafficking' in their ancient land such as the one on rice and fruit trees, an area
that Europeans regarded as an integral part of village life. The result was the Malay Reservations
Enactment in 1913, in which gazetted areas were allowed for the selling of land solely to other
Malaysians. This was later spread from the Malay peninsula to other nations.

Between the wars, there was extreme commercial instability and the Grand Depression had a
major impact. The demands on Malaya's main rubber and tin commodities were subject to booms
and slumps that were disastrous for output and prices, leading to price stabilization restrictions.
The Stevenson Scheme (1912-1928) was followed by two IRRAs of 1934-37 and 1937-41 which
all were set up by colonial governments and operated by foreign commissions to restrict exports
in order to reduce global stocks and boost market prices. Their aim has been to reduce export
growth and to increase the cost of exports by reducing global stocks. During 1931–1933 and
1934–1941 tin underwent similar limitations.

The first 'pivotal' price of the Stevenson Scheme was 1s 3d per pound, then 1s 9d, but there was
no pivotal price for the IRRAs. A standard production cap was imposed on every producer under
Stevenson's scheme, but only a quota was distributed domestically under the IRRAs. Prices rose
generally, especially when inelastic export prices in 1925-26 brought prices to almost five
minutes a pound, triggering a plantation boom in both malaya and the Netherlands. The industry
argued a lot about the alleged unfairness in the allocation of Standard production limits and
quotas. Only short-term progress was achieved with the various plans and the interests were the
main advantage.

Lee, C. (2019). Globalisation and Economic Development: Malaysia’s Experience. Retrieved

from https://www.eria.org/uploads/media/discussion-papers/Globalisation-and-Economic-
Development-Malaysia-Experience.pdf

Drabble, J. (n.d). Economic History of Malaysia. Retrieved from

https://eh.net/encyclopedia/economic-history-of-malaysia/

REVISED: