Summary: | Malaysian economic development policies since independence have been strongly
influenced by the relationship between the two major ethnic groups, Malays and Chinese, and
by the political complexion of the state which is dominated by the Malays. Ethnic
considerations in shaping economic development policies resulted in official preference of
foreign investment in financing Malaysia's industrialization and economic growth. The
preference was most obvious since the implementation of the New Economic Policy (NEP) in
1971. The NEP, a sweeping affirmative action program, had two official objectives: poverty
eradication irrespective of race and the restructuring of society to abolish the identification of
race with economic function. Determined to advance Malay economic status in relation to
Chinese, the Malaysian government throughout the 1970s employed various policies to
redistribute wealth in favour of the Malays. Foreign investment was encouraged to finance the
country's industrialization, particularly the development of the manufacturing sector, and to
provide new job opportunities and business ventures to the Malays. Restrictions on industrial
investment were implemented at the expense of the non-Malays, especially Chinese. The
strategy to align with foreign capital remained central to government policies in the 1980s to
achieve NIC status thorugh heavy industrialization. The economic recession in 1985-86 forced
the government to rely even more on foreign investment to generate growth need for
redistribution to take place. The pursuit of this strategy exacerbated ethnic relations under the
implementation of the NEP from 1971 to 1990. To remain legitimate in the context of
Malaysian politics, the Malay dominated government after 1990 pressed for a strategy of
growth with distribution to enhance Malay economic strength vis-a-vis Chinese through the
anticipation of continued influx of foreign investment since 1988. === Arts, Faculty of === Asian Studies, Department of === Graduate
|