Malaysian Economy
Bachelor of Business Administration (BBA)
Professor Dr. Ahmad Bin Othman
School of Business and Management
University College of Technology Sarawak (UCTS)
96000 Sibu, Sarawak
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Today’s Agenda
(Week #5)
Industrial policy and Industrialization
 Phases of industrial policy
 Five-year Malaysian Plans (10 plans)
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Phases of Industrial Policy
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Introduction
 In the colonial period, Malaya was involved in production and processing of
rubber and tin for export in return for imports of essential food and
manufactured goods.
 In the year of independence (1957-1960), the economy was still heavily
dependent on rubber and tin exports.
 Attempt to industrialize (1960s) was started with the implementation of importsubstitution policy, which was quite unsuccessful.
Framework of the economy
 The Malaysia’s framework of the economy started when the First Malaysian Plan
1966-1970 was introduced.
 The economic framework was continued with the implementation of the First
Outline Perspective Plan 1971-1990(OPP1). The main policy formulated in OPP1
was the New Economic Policy (NEP)
 Vision 2020 was launched in 1991 as the broad policy directions of Malaysia. It
provides the much needed guidelines of becoming a fully developed & industrialized
Malaysia by the year 2020.
 In relations to vision 2020, the Second Outline Perspective Plan 1991-2000(OPP2)
was introduced. The main policy implemented in OPP2 was the National
Development policy(NDP).
 In 1991, National Development Policy (NDP) was introduced to replace NEP.
 Vision 2020 was also introduced in 1991. it is a long term vision (1991-2020=30
years) containing broad policy directions encompassing various dimensions, i.e.





Economically
Politically
Psychologically
Spiritually
culturally.
 In summary, Malaysia’s key to economic success of the 1970s through the 1990s
were;
 Basic policy framework, &
 Industrialization strategies.
Planning Horizon . . .
l
l
l
LONG TERM PLANNING
•
Vision 2020, 1991-2020
•
First Outline Perspective Plan (OPP1), 1971-1990
•
Second Outline Perspective Plan (OPP2), 1991-2000
•
Third Outline Perspective Plan (OPP3), 2001-2010
MEDIUM TERM PLANNING
•
Five-year development plans, such as the Ninth Malaysia Plan (2006-2010)
•
Mid-term review (MTR) of the five-year Plans
SHORT TERM PLANNING
•
Annual Budget
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Summary of Malaysian Development Policies
RMK10
RMK10
RMK9
RMK9
RMK8
RMK8
RMK7
RMK7
RMK6
RMK6
RMK5
RMK5
RMK4
RMK4
RMK3
RMK3
RMK2
RMK2
RMK1
OPP3
RMK1
Vision 2020
OPP2
OPP2
Outline Perspective Plan (OPP1)
OPP1
66-70
71-76
77-80
81-85
86-90
91-95
96-00
01-05
06-10
11-15
16-20
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New Economic Policy (NEP) (1971-1990)
 Establishment of new growth centers
 The modernization of rural life
 Rapid & balanced development of
urban activities
 Provision of a wide range of social
especially designed to raise the living
standards of the low income group
 Raising productivity & income of
those in low productivity occupation
 Expansion of opportunity for intersectoral movement from low
productivity to higher productivity
activity
 The creation of a Malay commercial
& industrial community in all
categories & at all levels of operation
Strategy of New Economic Policy
Eradicating poverty by raising
income levels and increasing
employment opportunities for all
Malaysians
Accelerating the process of restructuring
Malaysia society to correct economic
imbalance, to reduce & eventually
eliminate the identification of race with
economic function, and to ensure that
Malay & other indigenous people will
become full partners in all aspects of the
economic life of the nation.
New Economic Policy (NEP) (1971-1990)
Second
Malaysia Plan
(1971-1975)
Third Malaysia
Plan (1976-1980)
Implementation
NEP
Fourth Malaysia
Plan (1981-1985)
Fifth Malaysia
Plan (1986-1990)
Evaluation of NEP (achievement)
Increase in GDP
 Malaysia real GDP growth during 1971-1990; averaged 7.1% annually.
 In the 60s; averaged 5.2%
 Grew from RM22.2 billion in 1971 to RM1,109 billion in 1990 per capita GNP
grew by 8 times from RM1,109 to RM8,856 (US$ 860 to US$3406)
 The annual inflation rate remained low.
Fairer distribution of income
 With the regard to the distribution of income, there has been an
increasingly fairer distribution of income among the various income
group.
Evaluation of NEP (achievement)
Increase employment opportunities
 rapid economic growth; creation of job, from 3.4 million in 1970 to 6.7
million in 1990.
 the unemployment rate dropped from 7.7% in 1970 to 5.1% in 1990
Change of economic structure
 from agriculture to manufacturing sector.
 the transformation had enabled more Bumiputera work in more
productive sector of economy (secondary & tertiary sector
National Development Policy (NDP) (1991-2000)
With the aim to fulfill the objectives of Vision 2020, OPP2 was introduced in 1991.
OPP2 (1991-2000) was accomplished through the policies, strategies, and programs
implemented in
-The sixth Malaysia Plan (1991-1995)
-The Seventh Malaysia Plan (1996-2000)
National Development Policy was the main policy during OPP2.
VISION 2020
NATION:
ECONOMY
• Competitive
• Dynamic
• Robust
• Resilient
• United Malaysian Nation
• Common and Shared Destiny
•Territorially Integrated
•Ethnically Integrated
•Living in Harmony
• Full Partnership
• Fair Partnership
• One ‘Bangsa Malaysia’
• Political Loyalty
• Desicated to Nation
MORAL AND ETHICS
ORIENTATION TOWARDS
SCIENCE AND TECHNOLOGY
• Scientific and Progressive Society
• Innovative
• Forward Looking
• Contribute to Scientific and
Technological Society
• Matured Democratic
• Society
• Consensual
• Community Oriented
WELFARE
• Fully Caring Society
• Fully Moral and
Ethical Society
• Strong in Religion
• Highest Ethical
Standard
POLITICS
and Culture
• Society Comes Before
Self
• Walfare – Family
Responsibility
THE SOCIETY
RESOURCE
DISTRIBUTION
• Just
• Fair and Equitable
Distribution of Wealth
• Full Partnership in
Progress
MENTAL FRAMEWORK
• Psychological
Liberated
• Psychological
Secure
• Self Confident
• Justifiably Proud
• Robust in Facing
Adversity
•Pursuit of Excellence
• Aware of its potentials
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Vision 2020
Introduced in February 1991
Aims to achieve the status of a developed country that is distinctive
and molded according to its own features without following:
Developed not only in the economic sense but it must be fully
developed along all dimension:
-Economically
-Spiritually
-Politically
-Technologically
-Socially
-Culturally
Vision 2020
United Malaysia objectives
Just and caring society
Mature democratic society
Vision 2020
Sustainable development
Fully competitive, dynamic, and resilient economy
Entrepreneurial
Vision 2020
challenges:
1)
2)
3)
4)
5)
6)
7)
8)
9)
To establish a united Malaysian nation with a sense of common and
shared destiny
To create psychologically liberated, secure and developed Malaysian
Society
To foster and develop a mature democratic society
To establish a fully moral and ethical society
To establish a matured, liberal and tolerant society
To establish a scientific and progressive society
To establish a fully caring society and caring culture
to ensure an economically just society
To establish a prosperous society, with an economy that is fully
competitive, dynamic, robust and resilient.
ECONOMIC PERFORMANCE
Average 1971- 80
Average 1981- 90
Average 1991- 2000
Average 2001- 05
2000
2001
2002
2003
2004
2005
2006e
Real GDP Growth . .
7.5 %
5.8 %
7.1 %
4.5 %
8.5 %
0.3 %
4.4 %
5.4 %
7.1 %
5.3 %
6.0 %
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DEVELOPMENT PLANNING MACHINERY
PARLIAMENT
Cabinet Ministers
National Economic
Action Council (NEAC),
National Economic
Consultative Council
(NECC)
Secretariat
Draft
Policy
National Development
Planning Committee
Draft
Economic Planning Unit
Private Sector
Dialogue
National
Action
Council
National Planning Council
Proposal
Implementation &
Coordination Unit
General framework
Inter-Agency Planning Group (IAPG)
Proposal
Circulars
Federal Ministries & Agencies
Proposal
Consultations
Circulars
State Governments
Private Sector
Ninth Malaysia Plan, 2006 – 2010
The National Mission, 2006 – 2020
5. Strengthening the
country’s institutional &
implementation
capacity ~ establish a
more effective
implementing &
monitoring mechanism
4. Improving the
standard and
sustainability of the
quality of life
1. Moving the
economy up the
value chain
Five Key
Thrusts
2. Raising the capacity
for knowledge and
innovation, and
nurturing “first class
mentality”
3. Addressing
persistent socioeconomic inequalities
constructively and
productively
To achieve the goals & objectives of Vision 2020
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Thank You
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