In order to understand the complexity of the development process in Malaysia, it is necessary to look into Malaysian history and its legacies ; the ethnic composition of society, political institutions, public policy and the nature of the political bargaining process ; economic growth ; and the views of scholars and observers on the future of its political society.
One of the major factors which has influenced Malaysia’s public policy in the economic and social fields is the ethnic composition of its society. The census of 198026 had reported that the Malays had constituted 56.7 per cent, the Chinese 33.7 per cent, and the Indians 10.1 per cent of its population. That, however, was not the case in 1931. Much to the surprise of everyone, the census revealed that there were more Chinese in the then Malay than the Malays themselves. The figures27 were Malays 1644173 : Chinese 1709392. That indeed came as a shock to the Malays who regarded themselves as much older settlers in the peninsular region. This particular realisation had always been present when the formation of the Malay Union was being discussed, or when Singapore separated or when public policy concerning educational facilities and economic opportunities for various ethinic groups were discussed.
Then there were the tribals or Orang Asli, especially in the regions of Sabah and Sarawak. Their lack of full assimilation and international investments and interests in those two regions evoked sterner measures from the Capital, Kualalumpur, to keep them in line. But despite the diversity of the ethinic groups and their tenacity in holding on to their own cultures, in relative terms Malaysia, had much less ethinic violence than elsewhere in Asia.
Let us now look briefly at the ethnic diversity of Malaysia and see how it has shaped the general framework of its development process. In this connection how to examine the background and evolution of its four major ethnic groups : the Malays, the Chinese, the Indians, and the Orang Asli or the Tribals. While one can use generic terms such as ‘the Indians’, ‘the Orang Asli’ and so forth, they themselves are by no means hormogenous groups. Their internal differences become more pronounced when we look at them as groups. However, what is more significant is the way in which their ethnic diversity influences their development process, on the one hand and Malaysia’s emerging political society, on the other.
Unlike most other developing countries, Malaysia as far as its society was concerned had to start afresh when the colonial administration ended. It was also left with some marked disadvantages and challenges of farreaching significance, for while its society was technically designated a ‘plural society’, it was in fact more complex than that. It was a fractured society with mutual suspicion on the part of its various ethnic components that would run to the state with complaints and demand concessions and favours against other groups. Malaysia would not have been able to hold itself together, had it not been for accommodating measures on the part of this rulers, and a commonsensical and practical disposition of give and take on the part of its seemingly unreconcilable ethnic components. With these advantages it was able to rebuild its resource-blessed economy and then transform it into a manufacturing economy.
Now we examine the principal features of Malaysia’s political economy and the persistent disparities within it. Malaysia, like Thailand, surprised the industrial world and became the envy of emerging countries when it reported that its exports for 1992 consisted of a relatively higher proportion of manufactured goods than raw materials. This shattered the stereotype image of Malaysia as a merely resource-based economy with rubber, tin, oil palm and in recent years, petroleum and nothing else. What was brought home to the world, instead of those resources, had also persuaded various offshore investors to invest in its newly established industries and then to export manufactured goods. This had rightly earned it the title of a NIC28 (Newly Industrializing Country), and a newly arrived cub on the Asian scene.
During Mahathir’s years in power, Malaysia’s economic policy has changed constantly. In the works of R. S. Milne, Dr. Mahathir’s policies may be divided into six categories29 “Look East Policy” ; “Malaysia Inc” ; “privatization” ; “the policy to emphasize heavy industry”, “a shift in population policy” ; “and the New Agricultural Policy”. Further, any revision of the NEP must take account of the overriding requirement of growth.
Ethnicity and Economy
Despite such an impressive economic performance, Malaysia’s basic problem of the ‘dual economy’ reappeared, and this time worked ‘within ethnic demarcations. In other words, the pluralism of society squared with the dualism of the economy. Such squaring off then supplied the matrix within which its subsequent development process was cast.
Furthermore, Prime Minister Mahathir had South Korea as his model. Ever since he took over, he has emphasised the need to ‘look East30 and emulate its labour discipline’, work ethic’, ‘increased productivity’, and so on. But while economic prosperity in South Korea and elsewhere in East Asia may have presented new social problems, in Malaysia they further deteriorated its already tangled ethnic situation. Such a situation undermined the class differences, which were at the root of the problem.
Everything political or economic in Malaysia is dominated, and must be dominated, by considerations of “racial arithmetic”. That was the view of Milne and Mauzy who have watched the Malaysian political scene for nearly three decades. Malaysia, despite its impressive economic performance since independence, has had a troubled political evolution because of ethnic cleavages in society. The presence of large groups of people brought in from outside did not present too many problems as long as Malaysia was under foreign domination.
After independence the newly independent Malaysians were forced to enter into complex negotiations and accommodations for which they had little or no experience. This case study leads to the conclusion and recommendation of those specific lessons to be drawn by other developing countries like Bangladesh, from the experience of Tiger countries for overall development of their economies.