Malaysian Economy Bachelor of Business Administration (BBA)

1. Malaysian EconomyBachelor of Business Administration (BBA) Professor Dr. Ahmad Bin Othman School of Business and Management University College of Technology Sarawak (UCTS) 96000 Sibu, Sarawak

2. Today’s Agenda (Week #5) Industrial policy and Industrialization Phases of industrial policy Five-year Malaysian Plans (10 plans)

3. Industrial Policy Phases of

4. 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 ofimport-substitution policy, which was quite unsuccessful.

5. 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).

6. 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.

7. Planning Horizon . . . • 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

8. Summary of Malaysian Development Policies 16-20

9. 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 inter-sectoral movement from low productivity to higher productivity activity • The creation of a Malay commercial & industrial community in all categories & at all levels of operation

10. Strategy of New Economic Policy • Eradicating poverty by raising income levels and increasing employment opportunities for all Malaysians First 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. Second

11. 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)

12. 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.

13. 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

14. 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.

15. VISION 2020 THE SOCIETY

16. 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

17. Vision 2020 Vision 2020 United Malaysia objectives Just and caring society Mature democratic society Sustainable development Fully competitive, dynamic, and resilient economy Entrepreneurial

18. Vision 2020 9 • challenges: • 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.

19. Real GDP Growth . . ECONOMIC PERFORMANCE Average 1971- 80 Average 1981- 90 Average 1991- 2000 Average 2001- 05 2000 2001 2002 2003 2004 2005 2006e 7.5 % 5.8 % 7.1 % 4.5 % 8.5 % 0.3 % 4.4 % 5.4 % 7.1 % 5.3 % 6.0 %

20. DEVELOPMENT PLANNING MACHINERY PARLIAMENT Cabinet Ministers National Planning Council National Action Council National Economic Action Council (NEAC), National Economic Consultative Council (NECC) Draft Policy National Development Planning Committee Draft Secretariat Implementation & Coordination Unit Economic Planning Unit Private Sector Dialogue Proposal General framework Inter-Agency Planning Group (IAPG) Proposal Consultations Proposal Circulars Circulars Federal Ministries & Agencies State Governments Private Sector

21. To achieve the goals & objectives of Vision 2020 Ninth Malaysia Plan, 2006 – 2010 The National Mission, 2006 – 2020 1. Moving the economy up the value chain 5. Strengthening the country’s institutional & implementation capacity ~ establish a more effective implementing & monitoring mechanism 2. Raising the capacity for knowledge and innovation, and nurturing “first class mentality” Five Key Thrusts 3. Addressing persistent socio-economic inequalities constructively and productively 4. Improving the standard and sustainability of the quality of life

22. You Thank