Malaysia

Case: Malaysia in the 1990s

Prime Minister Mahathir main challenges:

• Ambitious economic strategy
• The use of natural resources
• Country’s relations with environmentalists and other groups

History

First controlled by the Portuguese and then by the Dutch. British later assumed control. In the colonial period, British brought workers from India. Additionally, many Chinese went also to Malaysia.

Malaya became independent in 1957 and later was joined by Singapore in the new federation called Malaysia. Singapore withdraw from the federation in 1965.

Economic Strategy

At the new nation creation of Malaysia, the main export revenues came from rubber. Throughout 60s and 70s tin, timber, petroleum and natural gas became important export resources as well. By creating an economic strategy, the government used a variety of policy instruments to encourage export-oriented growth such as free trade zones, tax holidays and lenient technology-sharing requirements. Because of these instruments, many companies built assembly plants in Malaysia during 1070s and 1980s such as Intel and National Semiconductor.

As a natural resource diversification, timber production and exports increased steadily during the 1960s and 1970s. By the late 1980s, both rubber and oil palm trees were grown on plantations after the original forest was cleared away. At this period, however, most of the rubber was exported in raw form rather than in finished products.

The Malaysian government planned for increasing exports of manufactured goods. However, during 1990s revenues from fuels, tin, logs and lumber exportation were expected to fall slightly. (Exhibits 3 to 8)