Malaysia’s Growth and Development Story
Steven C.M. Wong
Assistant Director General
Institute of Strategic and International Studies (ISIS)
Malaysia
MALAYSIA’S GROWTH & DEVELOPMENT STORY
1. Ethno-religious and territorial divisions – legacies of
British colonial rule – required formation of multiracial
coalition prior to granting of Independence in 1957
2. Multiracial coalitional politics largely successful;
opposition parties not able to garner nationwide support
for greater part of past 50 years
3. Critical factor in establishing legitimacy to govern is
ability to deliver development therefore close political
and economic nexus
MALAYSIA’S GROWTH & DEVELOPMENT STORY
4. After 1969 race riots, stability of multiracial coalition
politics tested; response was to introduce sharing of
development among races; enter New Economic Policy
5. Maintaining strong political leadership and control
over the bureaucracy essential; Executive has strong
political interest in ensuring public service efficiency
6. Five-Year Development Plans central to organising
and communicating development to the population;
system is ‘top-down’, hierarchical and paternalistic
MALAYSIA’S GROWTH & DEVELOPMENT STORY
7. Close political-economic nexus also necessitated
being trade, market and private enterprise-friendly to
large degree
8. Policy exigencies and priorities occasionally shifts
(towards ethno-nationalism) but poor economic results
lead to eventual relaxation/reversal
9. Growth and development story incomplete without
(A) primary commodities, (B) foreign direct investment,
and (B) oil and gas to furnish foreign reserves
MALAYSIA’S GROWTH & DEVELOPMENT STORY
10. In late 1980s to mid-1990s, growing economic
confidence led to massive infrastructure privatisation,
supported by foreign capital inflows
11. Malaysia moved from being ‘someone else’s
production platform’ to recognition as a significant
economic entity and market in its own right
12. 1997 Asian Financial Crisis meant “openness” now
threatened stability of multiracial coalition; politicaleconomic nexus, however, was not at risk
MALAYSIA’S GROWTH & DEVELOPMENT STORY
13. Measures to address adverse effects of AFC seen
as “backtracking” on commitment to economic nexus;
domestic political rhetoric partly to blame
14. Post-AFC environment fundamentally different;
economic growth and private investments are generally
much lower than past
15. Factors include global (A) market liberalisation, (B)
competition for FDI, especially from China & Vietnam
and (C) difficulties integrating into global supply chains
MALAYSIA’S GROWTH & DEVELOPMENT STORY
16. Per capita income of US$6,800 (2009) clearly
significant achievement but seemingly caught in
“middle income” trap; how to rise above present levels?
17. Major preoccupation with identifying new sources
of economic growth; episodic promotion of ICT,
biotechnology, Islamic finance, halal foods, tourism,
services, etc.
18. Key policy thrusts include human resource
development, innovation clustering, etc. i.e. knowledgedriven activities
MALAYSIA’S GROWTH & DEVELOPMENT STORY
19. Developing knowledge-driven activities is holistic,
i.e. institutional, socio-economic and political; also
broad-based participation not always possible
20. Added factor is much greater political contestation;
After the 1999 and 2008 General Elections, multiracial
coalition politics tested as never before.
21. After 50 years of empowerment through
development, citizens are educated, have choices and
less susceptible to patronage
MALAYSIA’S GROWTH & DEVELOPMENT STORY
22. Purely materialistic concepts of development also
no longer satisfactory; demands for spirituality, freedom
of expression, human rights, etc.
23. Compounding problem is growing relative income
and wealth inequalities; efforts to correct wide
disparities in past 5 years not particularly effective
24. Major questions now are future of the politicaleconomic nexus given (A) weakened multiracial
coalition politics, (B) reinvigorated (though fragmented)
opposition and (C) global economic crisis
MALAYSIA’S GROWTH & DEVELOPMENT STORY
25. Whether political-economic nexus will be broken
hinges on whether political-social system – which
strives for stability –has capacity to undertake change
Nexus will continue to remain robust so long as
interests are aligned
- Is race-based/racialised politics the way forward?
- Is the process of social change and progress grinding
to a halt (or devolving)?
- Is the erosion of governance and institutions
inevitable and consequential?